MoneyGeek: “Life Insurance Calculator: Estimate Your Costs”

MoneyGeek, March 30, 2024Marguerita Cheng, CFP® Pro, is featured in today’s MoneyGeek article by Licensed Insurance Agent Mandy Sleight. The article shares information about how to use MoneyGeek’s simple life insurance calculator to estimate your premium. It tailors estimates to your age, gender, health profile, and coverage amount.

Sleight explains: “Life insurance rate calculation depends on several personal details, including age, height and weight. The estimate you’ll get from MoneyGeek’s life insurance quote calculator can guide you in shopping for life insurance, helping you make informed decisions to find the best life insurance companies for your budget and coverage needs.”

Marguerita Chengs’s Expert Advice About Life Insurance Costs

MoneyGeek: What’s the best way to estimate my life insurance costs?

Marguerita: The amount of life insurance an individual needs depends on their unique personal and financial circumstances. I tell my clients to consider the following factors when determining how much coverage to purchase:
  • Liquidity: Adequate resources for final expenses. You don’t want your loved ones to experience emotional and financial distress upon your passing.
  • Loved ones: What amount of your income would you like to replace to ensure your family can maintain their standard of living and meet their financial goals?
  • Loans: What liabilities would you like to have paid off — mortgage, car, business equipment, etc.?
  • Legacy: Upon your passing, do you want to give a financial gift to causes and organizations that are important to you?

Marguerita Cheng, CFP®, RICP®, CEO Blue Ocean Wealth

MoneyGeek: How do companies calculate life insurance?

Marguerita: Companies determine the pricing of your contract based on the following factors:

  • Your type of policy: If you have term insurance, the premium may be less expensive because you only have coverage for a specific term (10 years, 15 years, 20 years or 30 years).
  • Your age: Generally speaking, the older you are, the more expensive the insurance costs. Indeed, you cannot control your age.
  • Your health: This is something that you can control. If you have a chronic health condition, you may want to consider a policy without medical underwriting with the understanding that the premium can be more expensive. Just because you have a chronic condition doesn’t mean you cannot obtain coverage at affordable rates. For example, I was diagnosed with asthma at age 15 as a result of childhood complications from pneumonia. I do need to disclose this condition, but despite this, I did qualify for non-nicotine super-preferred rates. I probably would not run in 90-degree weather with car exhaust. You don’t have to include this paragraph, but making things personal makes things more relatable.
  • Your occupation: Certain occupations, such as law enforcement, military personnel, and firefighters, are at higher risk. You may be able to obtain coverage but at a higher rate.
  • Your hobbies: Like occupations, certain hobbies, such as motorcycle racing, skydiving, and private aviation, are riskier. You may have to sign an exclusion rider agreement and/or pay a higher premium.
  • Your lifestyle: Tobacco use, alcohol, or drug use are also associated with higher risk and higher cost.

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