Life insurance is a product used as part of a financial plan to help protect your loved one’s financial future if you happen to pass away. 

The way it works is, that a life insurance policy enables the beneficiaries named in the policy, including a spouse or any dependent children, to be given benefits of the policy, usually in the form of a monetary payout, if you, the policyholder, pass away. 

As long as the policy is still active, with policy premiums being paid by the policy owner, then at the time of death, the beneficiaries will be entitled to the benefits of the policy. A good life insurance plan should be part of everyone’s retirement plans because it’s another financial instrument, in addition to traditional retirement plans like a 401k or an IRA, to provide financial protection for your family or those you care about. 

There is no such thing as an average person when it comes to life insurance because there is no one size fits all approach when it comes to how much you can expect to pay. 

However, there are typically affordable rates for the insurance premium you can expect to pay, and there are different options when it comes to the types of premium or costs you can expect to pay. 

Some costs can be fixed premiums and some can be variable premiums.  The following are important factors that are used to help determine how much you will pay for life insurance.

Your age – The younger you are, the less costly life insurance will be since you will typically be paying for the life insurance policy longer than if you got it later in life.  And, as you get older the probability that the insurer will have to pay will increase, leading to higher policy costs.

Your gender – Females typically have a longer life expectancy than males and will therefore have lower policy costs.

Height and weight – If your height and weight are within what are considered to be acceptable proportions or limits to one another, then you will typically receive better rates.  Put another way, if you’re overweight or underweight, then it will impact your rates.

Overall health – If you have pre-existing conditions such as heart disease or cancer, then your life expectancy will be deemed to be less than those who don’t have such conditions, and therefore you’re a higher risk, which will lead to higher costs.

Family health history – If your parents or siblings have or have had a serious illness or there’s something hereditary in your bloodline, then you may have to pay for more for life insurance.

Smoking or Alcohol – Since smokers or those who use marijuana have a higher risk of developing a respiratory disease or cancer, they will be quoted higher rates for life insurance.   The same goes for substance abuse including drinking alcohol excessively.

Driving history – If you have a history of driving under the influence of alcohol or speeding and/ or causing accidents, then your rates will tend to be higher.

Criminal record – If you have a criminal background, then you might still be able to get a policy but your rates will tend to be higher than the average life insurance policy.

Credit history – Credit is also a common risk factor that insurers look at and use to factor into a quote. 

The best age to get life insurance is when you’re younger. We recommend that you should get life insurance in your 20s because you’re typically healthier when you’re younger, and therefore your risk of needing the life insurance benefits will be a lot lower. 

So, your policy premium will be lower. The older you get, the higher your risk profile, and the higher the costs. 

Both term and whole life are good types of life insurance policies. However, term life insurance is better if you’re looking for good coverage for a fixed period of time and are budget conscious.  

Whole life insurance can cost five to ten, or even fifteen times more than a term policy but it will cover you for your whole life so you don’t have to guess how long you need life insurance coverage for. 

Different types of life coverages exist depending on the type of life insurance policy you have.  Term life coverage will only be for a specified period, such as 10, 20, or 30 years.  Whole life coverage doesn’t have a specific term; rather it will last for as long as you’re alive. 

Life insurance will expire when either you stop paying your monthly or yearly premium or if it’s a term policy and the term itself has expired. 

So, for example, if you have a term life insurance policy for 20 years and that time period is up, then your life insurance coverage has expired. 

If you want to continue coverage beyond the 20 year term, then you’ll need to see if you can get the policy extended or get a new policy. But, you’ll need to do this before your life insurance expires if you want to have continued coverage. 

Regardless of this, if you fail to make a policy premium payment when it’s due then the life insurance policy will have lapsed, and so you won’t be covered. Don’t forget to make your payments when they’re due. 

If you commit insurance fraud on your insurance application then the insurance company may refuse to pay any death benefits if your beneficiary makes a claim. As an example, if the policy holder lies about medical conditions or a family health history like if a parent has had a heart attack, then the insurance company may decide to not pay any benefits. 

The following area some of the top reasons where your life insurance will not pay benefits:

1. Suicide – Most life insurance policies have a suicide clause whereby if the policy holder commits suicide while coverage is in place, then the insurer may refuse benefits payment.   Many people commit suicide because they think it will help their families financially, which is why insurance companies include the clause in the policy.
2. Risky behavior – If you are a daredevil and jump out of a plane, or rock climb Mt. Everest then if you have an accident and die while doing those activities, then the insurance company might not pay benefits. You should disclose this on your application, and you’ll likely pay more for your policy, but if you die from the activity then depending on the details of the clause in your policy, your life insurance might not pay.  
3. Lying or withholding information – If a claim is made on the policy, then the insurance company will investigate to understand the cause of death. If through this investigation they find out that you didn’t disclose material information like a pre-existing health condition or that you have had a prior history of criminal activity, then they could deny claims payment. 
4. Breaking the law – If you die while doing something illegal like robbing a bank or the local convenience store then chances are your life insurance policy claim will be denied when the beneficiary tries to make it.  Insurance companies don’t want you engaging in illegal activities since it increases their risk that you’ll die. Plus, it’s just not a good idea.
5. Acts of war – Some life insurance policies have acts of war exclusion.  These are typically in place to deny claims for civilians who are killed in wars or acts of war. A good example of this is with the current Ukraine war, where regular civilians are hopping planes to help fight.  If they die as a result of engaging in war activities, then their life insurance policies might be provide any benefits since they’re actively engaging in war as a civilian.