You can purchase a higher face amount and spend less money if you simply understand how life insurance rate bands work!
Did you know that life insurance companies reduce their rates when you purchase higher face amounts?
Here is how this works, all the companies use a concept of rate bands to calculate premiums for life insurance. These rate bands are broken down into batches of 3 to 5 different band categories depending on the company. Each of these bands contain a rate per thousand dollars in life insurance coverage. The philosophy, is the more you buy the lower the rate per thousand of coverage. If you are looking for Term life insurance quotes, this information can really help you reduce your premiums.
Here are some examples
If you are shopping for low cost life insurance and let’s say you are interested in purchasing $100,000. The rate band will be at its highest point for this $100,000 category. Please note that some carriers will offer less than $100,000 face amounts also. This will normally hold true for this face amount all the way up to $249,000 in coverage. The bottom line here is if you are looking for a smaller face amount between $100,000 to $249,000. The life insurance cost per thousand will be at the most expensive point. The next rate tier will normally be $250,000 to $999,000 which will save you more money per one thousand dollars of coverage.
A good example at this point is if you are planning on purchasing a $250,000 face amount. You will now be paying less money per thousand which means you will be purchasing more coverage for less money. If you are considering the purchase of a $200,000 policy. It would be more cost effective to apply for $250,000 instead. This way you will be able to take advantage of the rate band effect and put it to work for you.
If you $1,000,000 face amount the rates will go down even more
In essence you will be applying the technique of buying in bulk. Here is a good example of the breakdown.
An applicant who is 30 years old wants to purchase a 20-year term policy. He wants to know his options in face amounts and premiums. The applicant asks his agent to give him a term quote for a $200,000 face amount with an A+ rated company. We will use the Banner Life insurance company for this example. The applicants premium would be $191.98 for a $200,000 face amount.
A $250,000 policy would represent a considerable rate reduction
A $250,000 face amount will be $193.99. This breaks down to only $2.01 for an additional $50,000 in life insurance coverage.
Here is another good example, a face amount of $400,000 would cost $274.38. A bump to $500,000 would cost only $318.99 which would breakdown to an extra $100,000 of coverage for only $44.61.
The last example for you would be. If this individual was interested in a $900,000 20-year term policy from Banner Life, the premium would be $526.18. A simple face amount increase to $1,000,000 would be $563.99. This would represent an additional $100,000 in coverage for only $37.81 per year.
A $1,000,000 face amount means a much greater savings in rates
If we take a look at this final breakdown of premiums, we will see a rate of $96 cents per thousand dollars of coverage with the first quote of a $200,000 face amount. His last quote of a $1,000,000 policy would break down to a rate of $.37 per thousand. This is close to 1/3 the cost between these two face amounts. To summarize the premiums, we went from a rate of $.96 per thousand of life insurance coverage to $.37 per thousand by taking advantage of the rate band effects.
Taking advantage of the rate bands can make a considerable difference in premiums dollars and allow you to buy more coverage for less money. We always take this into consideration when we are working with our perspective clients. This is one of the ways an independent insurance agent can help you secure the best policy for the lowest premium possible.
There are three main types of life insurance to consider
Your three main options to consider will be:
You should always know what you options are so you can make an educated buying decision. All three of these types work the same way with rate bands. You can click on the links to learn more about each type of product.
Your time is valuable so put it to good use
Most consumers go on the internet and bounce from one website to another looking at premium quotes. The one concept you need to keep in mind is that life insurance rates are regulated by law. This means no agent or broker can sell the exact same insurance product from the exact same carrier for more or less than another. Consumers also compare quotes from multiple website quote engines when the rates are all exactly the same. All they end up doing is getting more confused each day until many of them just give up on the whole idea of purchasing a new plan all together.
Be smarter than the average consumer
Like the telephone companies used to say “let your fingers do the walking”. Pick up the phone and call an independent agent (hopefully us) and let him do all the work for you. Instead of getting more and more confused looking at numbers and companies you don’t understand, ask for help. A professional can point you in the right direct in just minutes. If you have any medical conditions your agent can run a quick medical pre-screen before you apply so there are no surprises.
Utilize our websites quoting system and see for yourself
Our quote engine will display the rates of over 40 of the highest rated life insurance companies in less than a minute. You will need help choosing the right company but an agent can make quick work of that. The only place you will need help is choosing the proper health classification and we can help you with that right over the phone. Choosing the right carrier is critical when shopping for the lowest life insurance rates. All companies underwrite applications differently so choosing the correct company to fit your specific profile is very important.
There you have it!
Having a lot of questions is perfectly normal so don’t be afraid to ask. You are welcome to call us toll free 7 days a week for answers to all your questions. If you decide to apply, we use simple and quick telephone applications to make the job simple.
All the best,
*We are here to help you with no cost or obligation. Take a moment to set up a time to discuss your life insurance needs.