Life Insurance Costs and Pricing Explained

Some insurance companies charge more based on the level of service they provide, the company’s financial strength, and the flexibility of its products. These attributes may increase the average cost of their life insurance policies, but they also improve the value of their policies. It’s important to look at all factors when evaluating the overall value of a policy.

5 things to consider when buying life insurance.

1. Company strength

The policy you buy is only as good as the company that guarantees it. A company with a good track record and solid scores from ratings services such as Standard & Poor’s, Moody’s, A.M. Best, and Fitch can charge more because the company has the financial resources to weather extreme events, like wars, financial crises, or natural disasters.

Another factor to consider is corporate governance. Publicly traded companies traditionally make decisions based on their shareholders’ best interests, namely maximizing profits and investor returns. Mutual companies like New York Life have no shareholders, so they don’t have to cater to their short-term concerns. They answer only to you, the policyholder. This perspective can make quite a difference, especially when you are purchasing a product (like life insurance) that may not be “used” for 30 years or more.

2. Agent relationship

How much do the company’s agents know about the products they sell? Are they on top of changes in the industry? Will they stay in touch after they sell you the policy? Will they review your needs periodically to make sure you’ve got the coverage you need as your life changes? Buying directly from a website may cost less, but you most likely won’t get the same level of service. (See what we mentioned about value above.)

3. Customization

Are you being offered a policy based on your specific needs or on the needs of the issuer? The availability of additional riders and tailor-made payment plans can make a company’s policies truly customizable, offering the flexibility you want to protect those you care about most.

4. Cash value growth potential

Term life insurance can be a smart solution that allows you to lock in your premiums for a set time period at a premium that may better fit your current budget. A whole life policy gives you the ability to grow accessible cash value as you pay premiums and if non-guaranteed dividends are paid on the policy. The cash value grows over time.

If whole life insurance is not an option for you right now, some companies have a conversion privilege that lets you convert some or all your term life insurance to whole life during a time period spelled out in your policy. You may even want to consider purchasing a combination of term and whole life insurance.

5. Range of products

Bundling your policies may qualify you for a discount. Purchasing additional financial products that the insurance company may offer is convenient, and it can save you time and money.

¹ The premium quoted is for a 35-year-old male, rated select-preferred, paying monthly recurring premiums on a Whole Life (AD 117) policy with a $250,000 face amount and no riders. Other rate classes are available. Your premiums may differ. Premiums are guaranteed for the life of the policy.

New York Life Insurance Company is the issuer of New York Life Whole Life. In Oregon, the Whole Life policy form number is ICC18217-50P (4/18) SMRU 1700123