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Term Life Insurance Calculator Helps Speed Up The Buying Process

By Mike Heuer

Buying a good term life policy can take a great deal of time if going through the phone book and calling each insurer or insurance agency one at a time hoping to find a great rate. But using a term life insurance calculator reduces the time needed to only a few minutes while awaiting the influx of rate quotes from quality insurers licensed and approved by respective state insurance officials and departments.

A good term life plan can provide a great deal of coverage at a fraction of the cost for whole life plans with the same death benefit offered. The primary differences between term life and whole life insurance is the fact term life plans do not grow cash value over time, as whole life plans do, and term life plans expire once the term is over for which coverage is provided.

About 70 percent of all life insurance plans sold in the United States are of the whole life variety, which means many people are paying more than they really need to get a high level of protection for financial obligations while potentially wasting a great opportunity to grow retirement income. A whole life insurance plan requires higher premiums in order to grow its cash value over the years until the policy matures, which occurs when its cash value is equal to the death benefit. And that death benefit usually represents an about 2.5 percent rate of growth over the life of the insurance contract, which some investment advisors say is not a large enough return to justify the high cost.

But a term life plan can provide the same level of coverage for a fraction of the cost that is needed for comparable whole life plans. A term life policy can provide a $250,000 death benefit for as little as $15 per month, depending on the life insurer underwriting the plan. But a whole life policy with the same death benefit could cost $175 or more per month. And during the first three years such a whole life plan is in force, every premium paid is used to pay commissions for the insurance producer as well as fees and other costs, making whole life policies cost a great deal more than term life plans.

Premiums for term life insurance policies are based on the age of the person whose life is insured, his or her general health and whether or not tobacco products are used and mortality tables. Life insurers and especially term life insurers use mortality tables to calculate the odds of someone dying while a term life plan is in effect. Because term life companies can accurately assess the likelihood someone might die during the period for which his or her life is insured, it is much easier to use a term life insurance calculator to provide an accurate quote on term life rates. And that makes it easier to use the Internet and get accurate estimates on term life coverage.