Life Insurance Blog

Long-term life insurance often appears more expensive than annual life insurance, although this is generally an illusion. As well, long-term life insurance can be far better for some people’s situations.
The reason long-term life insurance appears more expensive than annual life insurance is because of the way the premiums are calculated and charged. Premiums on long-term life insurance are usually charged at the same rate throughout the term of the loan. This means the premium takes account of not only the policy holder’s life expectancy at the term’s beginning but also at its end. As life expectancy declines as a person gets older, the premiums for a longer term life insurance policy will generally be higher than those for an annual policy, which covers only the year ahead.

Long-term life insurance actually tends to be cheaper than shorter term policies as there are fewer administration and marketing costs to account for. This is reflected if the purchaser looks at the cost of the entire policy, totalling the premiums charged throughout the insurance term.

Another advantage of long-term life insurance is that the premium remains the same even if the policy holder develops a health problem that would otherwise adversely affect the premiums. A person with annually renewed life insurance can find that their premium will increase dramatically after they have been diagnosed with a disease, which could force them to cut back on their life insurance cover at the time when it could be most useful. In this way, long-term life insurance can be insurance in itself against the rise in premiums caused by the diagnosis of a serious disease.

The term of the life insurance should really be worked out as the term of the dependency. For example, if the life insurance is designed to cover the partner in a relationship who earns less money, the term may cover the working life of the partner who earns more. Similarly for parents, it could cover the expected time the children will remain in education.