Term Life Insurance Rates: 5 Questions You Should Ask

5 questions to help you get cheap term life insurance

Getting the best term life insurance rates requires that you talk to an agent at some point. You can compare online life insurance for a ballpark idea, but to get cheap term life insurance, there are 5 questions you definitely want to ask.

Before you talk to an agent, keep this in mind. Agents should not use high-pressure sales tactics. A life insurance policy is an important purchase. You should feel comfortable and informed making your decision. If an agent pressures you, consider someone or somewhere else.

Here are the 5 questions to help you get cheap term life insurance ─ without unpleasant surprises.

 

Question 1: Is the premium guaranteed for the entire life insurance term?

There's a common belief that all term life insurance rates stay the same for the entire life insurance term. This isn't necessarily so. For example, annual renewable term insurance rates increase.

Level term life insurance rates are either guaranteed to stay the same the entire life insurance term, or for a specific time period.

When comparing term insurance rates, be sure ask the agent if the rate changes so that you can do a true apples-to-apples comparison.

 

Question 2: What is the term life insurance company rated?

 

Affordable term life insurance doesn't mean much if the carrier doesn't honor the claim, or if there is frustrating red tape. The point of term insurance is to give your loved ones financial security and peace of mind. Not financial hardship and stress.

To help consumers assess term life insurance companies, there are third-party companies that rate them. Among these are the A.M. Best, Fitch, Moody's Investor Services, Standard & Poor's and Weiss Ratings, Inc.

The rating companies evaluate many factors to score the carriers. These include financial strength, company history, performance in settling claims, management stability and more.

Be aware that the companies rate term life insurance companies using different methods. For example, one might use A+ or A++, while another uses AAA.

 

Question 3: What is the term life insurance company's financial strength?

Similar to inquiring about a term life insurance company's ratings, talk to an agent specifically about the company's financial strength. How does it rate? Financially strong term life insurance companies tend to have the ability to offer the cheapest term life insurance, and also the long-term ability to settle claims. Aim for the highest ranking in financial strength.

 

Question 4: Does cheap term life insurance have hidden fees?

Affordable term life insurance doesn't typically have fees beyond the premium itself. Other types of life insurance policies might. Still, you want to make sure the supposedly cheap term life insurance isn't really more expensive because of a hidden cost. Examples include an administrative cost, processing fee, agent commission, or a cost to convert the policy to permanent later.

When you start the term insurance application process, you receive an estimate of your term life insurance rates. After you complete the process and receive your life insurance policy, you will find out your actual premium. Compare the rates and if you have questions, talk to an agent. You will have a review period that allows you to cancel without any questions or obligations.

 

Question 5: Can the term insurance policy be converted?

Term insurance is guaranteed for the life insurance term you select. If your goal is a cheap term life insurance rate, this is a good way to go.

But there may come a point when you want to convert your term life insurance policy to a permanent policy such as universal life insurance or whole life insurance. Some term policies offer the option to convert all or part of your policy.

Converting a policy typically does not require a medical examination. It is usually possible regardless of age or a decline in health. One of the big advantages to converting is that your life insurance policy then accrues cash value.

Talk to an agent to learn if the life insurance policy you are considering qualifies for conversion. You might decide to benefit from affordable term life insurance now, and the chance to convert later.