$100,000 Whole Life Insurance Policy Rates
How Does A Whole Life Insurance Policy Work?
Whole life insurance is a type of permanent coverage that lasts forever. Regardless of age, the policy will remain in force indefinitely if you reliably make all your payments.
Also, the policy premiums cannot increase, and the coverage cannot decrease. There’s also a cash value component that accrues over time. You can withdraw the cash value and spend it any way you want.
As with any life insurance, the policy will ultimately pay your loved ones a tax-free cash payment of $100,000 (or however much coverage you buy). There’s never any tax due on a life insurance payout, nor are there restrictions on how the money is spent.
Factors That Influence The Cost
It’s helpful to remember that every life insurance company has different underwriting and pricing. That said, insurers use specific variables to determine each applicant’s net cost.
- Gender: Females always pay about 30% less for life insurance products because they live longer than men. So, if you’re male, expect to pay higher rates than females. The one exception to this rule is for the state of Montana. They have a law prohibiting life insurers from pricing males and females differently. Sadly, life insurance companies in Montana simply charge females whatever they charge men. So, in effect, all the Montana state law did was raise prices for women.
- Age: The older you are, the higher your rates will be. That’s why buying funeral life insurance or any other type is always a good idea when you’re younger. For example, one of the main reasons people buy children’s life insurance is to lock in super low rates.
- Health: In short, specific health issues that are high risk might increase the cost (not always), but many do not. For example, minor issues such as high blood pressure or cholesterol are relatively benign. Insurers rarely charge higher premiums for those types of conditions. However, if you have insulin diabetes, COPD, or kidney disease, you’ll likely pay a higher rate because those are higher-risk conditions. Also, every life insurance company will accept and reject different health conditions. One of the keys to finding the best rate is to identify which company is most accepting of all your health conditions. You should work with a broker who can compare multiple insurance companies on your behalf. That way, they can determine which insurer is most friendly to your health conditions.
- Tobacco usage: On average, people who consume tobacco products (cigarettes, chew, cigars, snuff) don’t live as long as those who don’t. For that reason, expect higher premiums (about 40%-60% higher) if you’re a tobacco user. Also, if you stop using tobacco, you’ll have to wait until it has been at least 12 months before you’re eligible for non-tobacco pricing.
- Coverage amount: The more coverage you buy, the higher your premium will be. Also, prices for life insurance are proportional. For example, a $25,000 whole life policy is 1/4th the cost of a $100,000 whole life policy. A $75,000 whole life policy is 75% of the cost of $100K. A $50,000 whole life plan is ½ the cost, and $10,000 would be 1/10th the price of $100K.
Application Underwriting Options
There are three underwriting options for a $100,000 whole life insurance policy. Which method you choose will determine how long it takes for your application to be approved. The application method also influences the cost.
No-exam
A no medical exam policy is often called “simplified issue” or “non-med.” As the name implies, you don’t have to meet with a nurse to give a blood and urine sample. The application only requires that you answer questions about your health history.
The insurance company will also electronically review your driving record and medication history. These types of applications generally render an approval or decline within 15 minutes to a few business days.
Fully underwritten
Unlike senior burial insurance, a fully underwritten application requires you to complete a medical exam.
You’ll meet with a nurse who will collect a blood and urine sample. They will also measure your height, weight, and blood pressure. Additionally, the insurer will order copies of all your medical records (from all physicians you’ve seen).
Once they have all this data, they will determine if you’re approved and the final price. On average, fully underwritten applications will take six to eight weeks to be approved or declined.
Yes, fully underwritten applications can take a long time to complete, but the wait can be worth it because it usually results in a lower price.
No health questions (guaranteed issue)
A guaranteed issue life insurance policy does not require you to answer health questions or take an exam. Simply put, they guarantee your approval.
While guaranteed approval may sound wonderful, there are drawbacks to consider.
Primarily, the waiting period is the biggest downfall to be aware of. Life policies with no health questions all have a two-year waiting period.
If you die during the waiting period, the insurer will only refund your premiums plus a small amount of interest.
Other than the waiting period, the other downside to these policies is the cost.
Since the insurer knows nothing about your health, they carry a high amount of risk. Because of the higher risk, the insurance is much more expensive.
Lastly, guaranteed issue policies typically have a maximum coverage amount of $25,000.
If you want $100,000 in total guaranteed acceptance coverage, you would have to buy four $25K guaranteed issue plans from four different insurance companies.
Limited Pay Whole Life Options
One of the unique features of whole life insurance is the ability to buy a policy that becomes “paid-up” after a specific period.
After you’ve made the payments for the required period, the policy lasts forever and no longer requires any additional premiums.
The typical paid-up options are:
- 7 Pay
- 10 Pay
- 20 Pay
- Paid up at age 65
- Paid up at age 80
Your age will heavily influence what paid-up options are available to you (if any at all).
For example, if you’re 80 or older, you can get whole life insurance. However, no insurer will offer a paid-up policy because you’re too old.
It’s worth noting, too, that not all insurers offer paid-up whole life policies.
The most important thing to understand about paid-up plans is the higher cost. Because the insurer only collects premiums for a specified period, they have to charge a higher rate.
Choice Mutual often cites third-party websites to provide context and verification for specific claims made in our work. We only link to authoritative websites that provide accurate information. You can learn more about our editorial standards, which guide our mission of delivering factual and impartial content.
- live longer. https://www.cdc.gov/nchs/products/databriefs/db328.htm
- a law prohibiting. https://www.upi.com/Archives/1985/10/01/Unisex-insurance-law-begins/7442496987200/
- don't live as long. https://archive.cdc.gov/#/details?q=https://www.cdc.gov/tobacco/data_statistics/fact_sheets/health_effects/tobacco_related_mortality/index.htm&start=0&rows=10&url=https://www.cdc.gov/tobacco/data_statistics/fact_sheets/health_effects/tobacco_related_mortality/index.htm
