Understanding life insurance pricing: why cheaper isn’t always better. | New York Life

Premiums are determined by each company’s underwriters, who look at several factors including your age, your current health, and family medical history to formulate their risk. The methodologies each company uses are similar, but can vary, thus affecting the amount a company is willing to cover you for and, ultimately, the price you are going to pay for that coverage. The simple truth is, usually the younger and healthier you are, the lower your premiums will be. But that’s just part of the story.

You don’t walk into a fast food restaurant expecting the same kind of service or quality you’d get at a 5-star restaurant. On the flip side, you don’t go to a 5-star restaurant looking for an extra-value meal. The same thing holds true when selecting a life insurance company. While it may seem strange to consider value-added features when thinking about something as seemingly generic as life insurance, they’re exactly why some companies can and do charge more and people are willing to pay more. The level of service, the company’s financial strength, flexibility of products, and other attributes may increase the price, but ultimately increase the value of your policy and make it a smart purchase.

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Understanding life insurance pricing: why cheaper isn’t always better..