What in the world is a life insurance rate band? Here is how life insurance rate bands work. All the companies use a concept of rate tiers to calculate premiums for life insurance.
These tiers are broken down into batches of 3 to 5 different 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 becomes.
If you are looking for low cost life insurance quotes, this information can really help you reduce your premiums. Keep in mind that these are also known as “banded rates”.
Table of Contents
- Using life insurance rate bands to your advantage
- Examples of banded life insurance rates
- Buying by volume can reduce your premiums
- The three main types of life insurance to consider
- Your time is valuable, so put it to good use
- Becoming a smarter life insurance consumer
- Utilizing our websites quoting system
- Our final thoughts
If you are shopping for affordable life insurance quotes and say you are interested in purchasing less than $100,000 of coverage. The rates per thousand will be at the highest point.
The rate per thousand will cost a little less if you ask for $100,000 of coverage. 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 more expensive. Also, please note that many life insurance companies have a minimum death benefit of $100,000.
The next rate tier will normally be $250,000 to $499,000 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 next rate band and reduce your cost per thousand. By the way, a $250,000 policy will cost less than a $200,000 policy.
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.
In this example we will use the highly rated and competitive Banner Life insurance company for this example. The applicants premium would be $191.98 for a $200,000 face amount.
Now watch what happens to a $250,000 rate quote!
A $250,000 face amount will be $193.99 in this example. This breaks down to only $2.01 for an additional $50,000 in life insurance coverage. Most of the time the $250,000 will cost less than the $200k policy.
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. Sound good?, you bet it does.
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. This means $37.81 for an extra 100k a year, not a month. You can now see how rate bands can make a huge savings in premiums.
A $1,000,000 face amount means a much greater savings in your policies premiums
A $1,000,000 face amount is much more affordable than you would think due to an additional rate discount. If we take a look 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 coverage for less money. We always take this into consideration when we are working with our clients. This is one of the many ways and advantages an independent insurance agent can help you secure the best policy for the lowest premium.
Your three main options to consider will be:
- Term life insurance – learn more
- Universal life insurance – learn more
- No Medical Exam Life Insurance – learn more
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.
To cut through all the smoke related to the different types of life insurance. You will find that affordable term life insurance will be the most cost effective with no close second.
Keep in mind that Whole Life insurance is no longer cost effective on 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 very affordable premiums.
Most consumers go on the internet and bounce from one website to another looking at premium quotes. The one very important concept you need to keep in mind is 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 term life insurance 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 life insurance all together.
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 us 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 later. Many agents will not take the time to pre-screen potential applicants and the end result can be an unwanted surprise.
Our quoting system will display over 40 of the highest rated life insurance companies in less than a minute. You will need help choosing the right company but an independent insurance agent can make quick work of that.
The most important 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. Choosing the right carrier is critical when shopping for the best life insurance rates.
All companies underwrite applications differently so choosing the correct company to fit your specific profile is very important.
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 at no cost or obligation. Take a moment to set up a time to discuss how simple it is to apply for life insurance and get the best rates possible.