Life Insurance Cost Calculator

Many Americans overlook the importance of maintaining adequate life insurance coverage. It is common that people believe their premium amounts are much higher than they actually are. This is shown in a 2018 study by Insurance Barometer involving consumers in the United States.

Responders estimated that a term life policy for a 30-year-old valued at $250,000 was three times higher than the true cost. Data shows that Arizona residents are now recognizing the importance of life insurance with currently $520 billion in coverage statewide. The decision to purchase life insurance is an important choice, particularly among those who are financially responsible for loved ones.

Life Insurance Cost

According to the 2015 Insurance Barometer study by Life Happens and LIMRA, one of the most common misconceptions regarding life insurance is that it is too expensive to afford. In fact, despite the majority of the participants stating that they had a good understanding of life insurance, 80% overestimated the cost, with 1 in 4 believing the cost of life insurance to be upwards of a $1,000 per year or more.

The reality is, the peace of mind and financial stability that life insurance provides in a time of need is priceless. The best part is that it is totally affordable too!

For example, if you are a healthy 35 year old, your 20-year term life insurance plan worth $250,000 is only going to cost you approximately $23.90 per month. If you do the math, that means the amount you would put in over 20 years is $5,736. This is only 4% of the amount available in case the unthinkable happens! If that is not a good investment I do not know what is.

What’s even better is that there are a wide variety of life insurance plans available to choose from. This means that if need be, you can find an even more moderate plan for as low $13 per month. Who cares if it’s “not as nice”, any life insurance plan is still countless times better than no plan.

If you still don’t think you can afford life insurance or if you are unsure what the right plan is for you,  an our experienced life insurance agent can help you find the best option possible.

What is Life Insurance?

The Arizona Department of Insurance provides oversight within the life insurance market. The state statute defines life insurance as “insurance on human lives.” It involves the provision of benefits in the case of death, dismemberment or disability of an insured party. This form of insurance is part of a broader group of financial products and services called annuities. The insured pays regular premiums to the insurance company in exchange for a predefined death benefit if the insured dies.

Assessing the Need

Some questions that you should ask yourself to assess your need for life insurance include the following:

  • Would others experience financial hardship if I were to die suddenly?
  • Do I have a home mortgage or other large debt?
  • Are there concerns about paying for my child’s education?
  • What percentage of the family income do I provide?
  • Does my family have the money available to pay for my funeral and burial expenses?

Types of Life Insurance Policies

Term vs. Cash Value

A term life insurance policy offers coverage for a certain period of time. They tend to cost less and most do not build up future cash value. A term policy only pays a death benefit if death occurs during the term. Cash value policies typically span a lifetime and may increase in value tax-deferred. A permanent (cash value) policy may be “cashed in” for income while you are alive.

Renewable vs. Non-Renewable

Generally, term policies are “renewed” after the duration of the specified time period. The new policy may have a higher premium as you age. Non-renewable policies require the buyer to apply for a new policy after expiration.

Whole vs. Universal Life

Whole life and universal life insurance are both classified as cash value policies. Whole life policy premiums usually have a predetermined set payment schedule. Universal life policies have greater flexibility in the frequency of premium payments. Buyers must pay the minimum requirements to maintain either type of policy.

Variable Life vs. Non-Variable Life

Variable life policies invest premium funds in stocks and bonds and may accrue or lose cash value accordingly. Non-variable policies reduce the risks associated with market fluctuations by guaranteeing minimums. Non-variable policies typically do not benefit from rises in the investment market to increase value.

Employer-Based Plans

According to the National Business Group on Health, approximately 90% of large company employers offer some variety of accidental death coverage. Many employers simply provide a set amount of life insurance to all employees at no cost. A standard employer-provided life policy is likely to pay a death benefit that is insufficient in most cases. These policies generally do not require medical underwriting or exams and will typically terminate if you are no longer employed at that company.

Calculating Coverage Amounts

How much life insurance coverage is needed? This is a common question and the answer is dependent on the buyer’s unique circumstances. Craig Simms is a senior vice president with Vantis Life Insurance. He recommends that those with children obtain sufficient coverage to pay off their mortgage and children’s college education. There truly are many potential considerations such as current debt level, spousal income and medical costs. One common expense to consider following an individual’s death is the cost of a funeral. The National Funeral Directors Association recently provided costs associated with this:

Median Costs (U.S.)[1] 2014 2017
Funeral with Viewing & Cremation $6,078 $6,260
Funeral with Viewing & Burial $7,181 $7,360

Buying a Policy

Purchasing life insurance through an experienced agent is recommended. Some policies require the buyer to complete a questionnaire of medical questions or in some cases, have a medical examination. You will need to name a beneficiary when beginning a policy and will need their Social Security or tax identification number. As your circumstances in life change, you should reevaluate your policy with an insurance professional.

Life Insurance Agency in Casa Grande

No one wants to dwell on the idea of dying prematurely. Purchasing life insurance is a process that may be critical to secure the financial future of your family. The insurance professionals at the Gebhardt Insurance Group can assist you in choosing a policy that offers sufficient coverage and affordability. Contact our office today at (520) 836-3244 to receive a life insurance quote.

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Steve Gebhardt

Gebhardt Insurance Group was honored by AAA Insurance for being the top New Policy Agency in Arizona for 2013 and achieving the "Emerald Achievement Award."

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