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What Are Life Insurance Rate Bands?

The Role of Life Insurance Rate Bands: How to Buy More Insurance for Less Money in [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.

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?

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.

Life insurance companies begin with the first rate band of $100,000. Purchasing a policy with a face amount under $100,000 will cause you to pass up the first 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.


What Type of Life Insurance Do Insurers Apply Rate Band Discounts?

All forms of life insurance plan designs utilize rate band discounts. Most people by far purchase term life insurance because of the low cost. Here is a list of the main plan designs that utilize these money saving discounts.

1. Term Life Insurance
2. Whole Life Insurance
3. Return 0f Premium Life Insurance
4. No-Medical-Exam Life Insurance
5. Universal Life Insurance
6. Final Expense Life Insurance

Examples Demonstrating the Application of Rate Bands

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 – $200,000 face amount vs $250,00

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 – $400,000 vs $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.

Example #3 – $900,000 vs $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.

The affordability of buying a $1,000,000 life insurance policy is surprising, given the substantial discounts on premium rates.

Life insurance rate bands are also known as banded rate discounts.

Compare Rate Bands With Our Quoting System

Take advantage of our quoting system that will allow you to compare over 40  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:pm. We use quick and straightforward telephone applications to simplify and streamline the application process when you decide to apply.

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

All the best,
Jack Venturi

Should you have any questions or need further assistance, please don’t hesitate to call us at 815-390-7545 for an immediate response. We’re here to help!

Jack Venturi Independent Life Insurance Agent

Jack Venturi

Independent agent and founder of

Jack Venturi has over 30 years of experience educating and helping people find the best life insurance products at the lowest possible premiums over the phone (815)-390-7545 and online.

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