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A couple talking to an insurance rep, learning about how life insurance works

Life Insurance 101: Rates, When to Apply, and Proper Coverage

How Does Life Insurance Work?

Most adults don’t think they need life insurance, or assume employer-provided coverage is adequate. Unfortunately, employer-provided life insurance basically disappears once someone leaves a given company. Life insurance isn’t designed for the covered individual, either. It’s designed to take care of the beneficiaries after someone passes away. The average person doesn’t think about what will happen to their loved ones after they themselves die. After someone realizes they might need coverage, it’s often too late. Now, let’s answer the question of “how does life insurance work?”

How Rates Are Determined by Carriers

Carriers base life insurance rates off someone’s age and overall health, among other factors. Therefore, a young, healthy person is the best candidate for low cost life insurance. Older individuals can still secure affordable rates when they’re in good health with the right steps. Smokers, disabled persons, and other high-risk individuals may encounter difficulties finding coverage. In fact, individuals with certain characteristics may find themselves barred from coverage by insurance carriers.

Life insurance for smokers is always available, assuming no other disqualifying traits are present. Sadly, the rates for smokers are sometimes double the rates for non-smokers in similar health. An individual can often find life insurance for disabled people as well, but there may be some limitations. Insurance carriers may accept disabilities that don’t affect life expectancy, but those that impact life expectancy will result in higher rates. It shouldn’t surprise anyone that life insurance for high-risk individuals costs more, too.

How to Lower Life Insurance Rates While Stuck in a High-Rate Tier

Individuals can take various steps to ensure the best coverage rates possible. A few life insurance tips could save someone thousands of dollars. For instance, someone that currently smokes could quit smoking for an extended period. Doing so would be a smart choice for long-term health. Quitting for good and staying away from cigarettes for five years could put someone back into a favorable non-smoker rating. Likewise, someone could treat their disability to the point where it doesn’t impact life expectancy.

What’s The Right Time to Apply For Life Insurance?

Generally speaking, life insurance costs less for younger individuals in good health. A given person should apply for life insurance young. Term life insurance is quite affordable and comes with permanent life insurance conversion rights. Locking in a healthy rating now could save someone thousands of dollars down the road. Otherwise, someone in less-than-great health can employ a few tactics to improve their coverage rate. Not all health problems guarantee an individual will be disqualified from coverage.

Not Everyone Needs to Pay High Rates For Coverage

Low cost life insurance is available from a variety of insurance carriers. Then again, life insurance for high-risk persons often costs more money. Life insurance for smokers or life insurance for disabled people doesn’t have to cost a fortune. Individuals need to understand how to work the system in order to obtain more favorable rates. Likewise, everyone needs to understand why life insurance is so important. Everyone can benefit from life insurance coverage in this day and age.

If a family’s breadwinner passes away unexpectedly, the remaining family might not be able to survive comfortably. Families lose their homes all the time in these situations, and entire families suffer dire consequences. In the end, life insurance remains an invaluable tool for individuals to take care of their loved ones in death. Permanent life insurance comes with a variety of other benefits, like cash value, as well. Some people see life insurance as a relic of past times, but it’s more important today than ever before.