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Death benefit insurance calculation statistics

Taking out term life insurance is one of the best decisions you can make when thinking about both your own future and that of your loved ones. With this type of insurance, you give your loved ones a start in financial matters. After all, they will receive a predetermined amount of money after your death.

The main purpose of this amount of money is to supplement the loss of your income for your family or relatives. This greatly reduces the likelihood of financial problems. Calculating the premium for term life insurance is essential if you want clear visibility into the future. How exactly is the premium for this insurance calculated and what factors does it depend on? You can find all the answers here!

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Why should you calculate your term life insurance?

Why should you calculate your death benefit insurance premium precisely? The answer is obvious: to measure is to know. In other words, the sooner you have a picture of the amount of the monthly premium based on various factors, the better you know where you stand financially, what you can get out of the insurance and what you need to invest in it.

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What factors affect your term life insurance premium?

1. Your own age

The age of the policyholder is probably the most important factor that determines the amount of the premium for term life insurance. Younger individuals pay a lot less each month than seniors, which makes sense. The probability of death for someone 18 years old is a lot lower than for a senior 65 years old.

2. Your state of health

Your health status and the presence of any (chronic) conditions will also have a major impact on the amount of the premium. For example, do you suffer from type 2 diabetes? Then you are more likely to die sooner than someone who does not have this condition.

By the way, this is also one of the reasons why the elderly almost always pay more for their term life insurance. After all, they generally have more health problems.

3. The insured amount

Then there is the insured amount, in other words the total amount you want to see paid out later to your dependents. It goes without saying that you will pay a higher monthly premium for insurance of 200,000 euros than for an insured amount of 100,000 euros.

4. The number of insured persons

With insurers, it is usually possible to have more than one person insured. Based on that, the monthly premium will be higher or lower. Note that in such a situation, the insured amount is paid out as soon as one of those two people dies.

5. The term of your insurance.

The longer your term life insurance policy runs, the higher the monthly cost of the premium. Why is that? In fact, your insurer runs more financial risk with long-term term life insurance than with shorter term insurance. That extra risk is contained in the premium, which is therefore higher.

6. The form of insurance

Lastly, the form of insurance also plays a big role in calculating term life insurance. There are three options:

  • An equal-premium term life insurance policy, where the monthly premium always remains stable.
  • Linearly declining term life insurance, for which you pay less premium each year, but then also receive less payout.
  • Annuitizing term life insurance, in which the premium decreases by a certain percentage each year, so you end up paying out a little less.

In short, calculating your term life insurance policy requires some research and answers to some important questions. The result, however, is that you'll know what to expect from the premium and that your dependents won't have any unpleasant surprises.