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What Are Life Insurance Rate Bands?


Life insurance rate bands explained: Find out how to minimize your life insurance expenses by modifying your coverage amount and obtaining premium reductions.

The Role of Life Insurance Rate Bands in Premium Reduction: A Guide for [2024]

What are life insurance rate bands? It’s likely that you’re pondering the concept of life insurance rate bands. Introducedwhat are life insurance rate bands by insurance companies long ago, they are essential tools to help you secure the most favorable life insurance rates.

The primary objective when buying any product or service, including life insurance, is to minimize the amount paid.

Life insurance rate bands represent savings opportunities that are readily available for those in the know. A few consumers I’ve encountered have been aware of their existence, let alone utilized them effectively.

The topic of rate bands is seldom initiated by agents for the purpose of potential gain. I will clarify the concept of rate bands thoroughly to help you maximize your savings. Life insurance rate bands are nothing less than a discount that is there for the taking.

I’ve never come across a consumer who had prior knowledge or experience with this subject, enabling them to maximize their benefits. Agents usually don’t bring it up during conversations with their clients.

We will get into rate bands in detail so you can understand how they work and save money by utilizing them. Keep reading because the best is yet to come!



How Can I Use Rate Bands to Effectively Lower My Premiums?

Read this section carefully because this scenario happens to someone everyday and they pay higher premiums because of it.

One of the first decisions a life insurance applicant must make is how much life insurance they need to apply for. This refers to the face amount, otherwise known as a death benefit. A face amount is a number you must carefully choose so you are adequately insured.

Most of the time, consumers will just pull a number out of their heads with little or no thought. For example, I have found that many applicants will ask for a $200,000 face amount. In many cases this will be a logical number to select for their face amount, but is it the right choice?

They don’t realize that they just passed up receiving a considerable discount. If they had selected a $250,000 death benefit, they would be receiving a rate band discount allowing them to purchase an extra $50,000 in coverage for less money on top of it.

Essentially, $250,000 policy will cost less than the $200,000 they initially requested. In many cases the agent will go along with their choice and the applicant would be approved for their new $200,000 policy and never know what actually happened. 

Remember that this is where their agent should have come to the rescue and advised them of the rate band discount and adjusted the application to correct this issue. We will go into more detail as we move along in this blog post.

Life insurance companies begin with the first rate band of $100,000. If you use a quoting system such as ours and quote $50,000 or $75,000, you eliminate the carriers with the most competitive rates and you are also missing out on the very first-rate band discount.

How are Life Insurance Rate Bands Utilized?

 Suppose you are shopping for life insurance and are interested in purchasing less than $100,000 coverage, such as $50,000 or $75,000. The rates per thousand will be at the very highest point. 

The rate band will reduce your rates if you ask for $100,000 coverage. This is because the very first-rate band commonly starts at $100,000. This will typically be the case for up to $249,000 in coverage for this face amount. 

 The next rate tier will typically begin at $250,000 allowing you to save 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 be taking advantage of the second-rate tier band.

This is because you will now be paying even less per thousand, which means you will purchase more coverage for less money again and to a higher degree than before. As you read below, we will shop you what happens at the next level of death benefits.

Examples Demonstrating the Application of Rate Bands

We will cover all four levels with examples of even higher face amounts.

The very first rate discount begins at $100,000 to $249,000. Our imaginary applicant is 30 years old and wants towhat are life insurance banded rates purchase a 20-year term policy.

He wants to know his options for 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 a very competitive Banner Life insurance company in this example. The applicant’s premium would be $191.98 for a $200,000 face amount.

Example #1 – Using a $250,000 face amount instead of $200,00

In this example, a $250,000 face amount will be $193.99 per year. This breaks down to only $2.01 for an additional $50,000 in life insurance coverage. So most of the time, the $250,000 will cost less than the $200k policy. 

Example #2 – Applying for $400,000 compared to $500,000

This example reflects a face amount of $400,000 which would cost $274.38. However, a bump to $500,000 would cost only $318.99 which would break down to an extra $100,000 coverage for only $44.61 more per year. Does that sound good? You bet it does.

The rate band discounts are now rising higher than ever!

Example #3 – of a $900,000 face amount and then re-quoted to $1,000,000

This next example reflects this individual and 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.

This means an additional $37.81 for an extra 100,000 increase in face amount for a year, not a month for one year! You can now see how rate bands can considerably reduce premiums.

Example #4 – A $1,000,000 face amount has even greater savings!

A $1,000,000 face amount is much more affordable than you think due to even additional rate discounts.

Looking at this final breakdown of premiums, we will see a rate of .96 cents per thousand dollars in coverage vs. the first quote of a $200,000 face amount.

This 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 life insurance for less money. We always consider this when we are working with our clients. This is one of the many ways and advantages an independent agent such as ourselves can help you secure the best policy for the lowest premium.


Life Insurance Rate Bands Are Also Known as Banded Rate Discounts, Take Advantage of Them

Nobody wants to pay anymore than they have to but most people don’t even know about these beneficial discounts.

Purchasing life insurance is just like any other product or service. You don’t want to pay any more than you have to save money using rate bands Using life insurance rate bands to your advantage is one way.

Another way is to make sure you choose the best life insurance companies for your needs and budget.

Premiums vary from one company to another, so you have to shop the market and choose the carrier that will offer you the lowest rates available. This will mainly depend on your health history. Your agent can do all this work for you quickly and easily.

This is why the most important asset you will have is the agent you will be working with. Paying a life insurance premium is not a one-payment event. Payments are due year after year, just like a mortgage. That is why you have to get the lowest premiums possible.

Considering the Three Primary Categories of Life Insurance Policies

Your three main options to consider will be:

You should always know your options to make an educated buying decision. All three of these plan designs work the same in regards to rate bands. You can click on the links to learn more about each product type.

To cut through all the smoke related to the different types of life insurance. You will find that affordable term life insurance is by far the most cost-effective with no close second.

Remember that Whole Life insurance is no longer cost-effective by today’s standards. Universal Life is the number one product for permanent life insurance products. Term Life insurance is the most purchased life insurance product due to its affordable premiums.


Use Your Time Wisely and Productively

Most consumers make buying life insurance difficult and spend weeks looking at the same redundant rates over and over. Well over 50% get frustrated and give up without ever applying.

Most consumers go online and bounce from one website to another, looking at premium quotes. However, the one essential concept you must remember is that life insurance rates are regulated by law.

This means no agent or broker can sell the exact same insurance product from one carrier for more or less than another. Consumers can also compare term life insurance quotes from multiple website quote engines when the rates are exactly the same.

They all get more confused each day until many abandon the whole idea of purchasing life insurance altogether.


Act Intelligently When Purchasing Life Insurance and Allow Your Agent to Handle All the Tasks

Instead of getting more confused looking at numbers and companies you don’t understand, ask for help. A professional can point you in the right direction in just a few minutes.

If you have any medical conditions, we can run a quick health assessment before you apply, so there are no surprises later. Unfortunately, many agents will not take the time to pre-screen potential applicants, resulting in an unwanted surprise during the underwriting process.


Compare Rates by Utilizing Our Website’s Quoting System

Take advantage of our quoting system that will instantly display over 40 of the highest-rated life insurance companies in less than a minute. It will also help you visualize life insurance rate bands when comparing face amounts. Of course, you will need help choosing the right company to apply with, but your agent can help you choose the right one.

The most crucial issue will be choosing the carrier that will provide you with the best health classification, and we can help you with that right over the phone. Therefore, selecting a suitable company is critical when shopping for the best life insurance rates.

All companies underwrite applications differently, so choosing the right company to fit your specific profile is very important.


Our Final Thoughts

You must have many questions you would like answered, so don’t be afraid to ask. You are welcome to call us seven days weekly, from 9:am to 9:pmwhat is a life insurance rate band. We use quick and straightforward telephone applications to simplify and streamline the application process when you apply.

I hope this blog post on life insurance rate bands has answered many of your questions.

All the best,
Jack Venturi

*For any questions you might have, our live chat system is at your disposal or call us at 815-390- 7545 and we will provide a quick answer.

If you have questions about life insurance rate bands, contact us and let us answer them with no obligation. You can also set up a specific time to get all your questions answered. 


Jack Venturi Independent Life Insurance Agent

Jack Venturi

Independent agent and founder of

Jack Venturi has over 30 years of experience selling individual and commercial insurance including Property & Casualty, Health, Disability and Life insurance. Jack has helped thousands of people all across the United States purchase the best life insurance products at the lowest possible premiums over the phone (815)-390-7545 and online.

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