Life Insurance

Do Life Insurance Rates Fluctuate with the Economy?

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Are you in the market for online life insurance but wonder if changing economic conditions could affect your premiums? That's a valid question, considering today's economic uncertainty. Fortunately, an economic downturn doesn't automatically mean you'll pay more for coverage.

Learn more about the economic impact on the insurance industry and how it can affect fluctuations in both term and whole life insurance policies below. You'll also discover how to find affordable coverage that suits your needs and budget quickly. 

How life insurance premiums get calculated

Insurance providers don't use a one-size-fits-all approach when assigning premiums. Instead, the amount you'll pay is based on various factors, including your:

  • Policy type: Premiums for term life insurance are typically more affordable than premiums for whole life coverage because policies are for a set period and don't accumulate a cash value.
  • Coverage amount: A higher death benefit equates to more costly premiums.
  • Policy term: Term life policies with higher death benefits or longer coverage periods typically have higher premiums.
  • Health status: If you're in good health, you can expect to pay lower premiums.
  • Age: Younger non-smokers in good health are considered less risky to insurers and will receive lower rates.

In short, based on your individual profile, you could end up paying higher or lower premiums than someone else for the same type of policy and coverage amount.

Term life insurance and the economy

Term life insurance protects you for a set amount of time. If you pass away while the policy is active, your beneficiaries will receive the total amount of the death benefit. But if you outlive the coverage period, you'll need to renew your policy or purchase a new one.

The rates for term life insurance policies aren't impacted by economic expansion and contraction. The reason for this is that insurance providers incur minimal risks with these policies since they're only active for a specific number of years. Plus, these policies don't accumulate a cash value, and there's no guarantee that a death benefit will be paid out.

Whole life insurance and the economy

Unlike term life coverage, whole or permanent life policies accumulate a cash value that you can withdraw or borrow against. This type of policy also provides coverage for your entire life, assuming you keep up with your premium payments.

You might experience higher premiums on a new policy with a guaranteed cash value during a period of economic instability. Insurance companies assess life insurance interest rates annually based on the prior year's performance to hedge against market fluctuations. So, a recession or downturn accompanied by lower interest rates could result in higher premiums to offset losses.

If you have an indexed universal life policy, the stock market index determines the rate of return. Indexed universal life policies have a guaranteed floor, so a downturn doesn't mean you'll lose the entire cash value of your policy. However, your earnings may be minimized. 

Explore our policy options

Are you torn between a whole life or term life policy? Take time to learn more about online life insurance. That will help you make an informed decision when you're ready to purchase coverage. Term life insurance could be a great option if you want to buy a policy but worry you can't afford the premiums.

Ethos offers affordable term and whole life policies. Here's a quick snapshot of each:

  • Term life: You could qualify for a 10, 15, 20, or 30-year term life policy with Ethos. Coverage amounts range from $20,000 up to $2 million. The application process is streamlined to make it easier to get the coverage you need. Even better, Ethos offers a 30-day money-back guarantee if you purchase a term policy and decide it's not right for you.
  • Whole life: Get coverage from $1,000 to $30,000 with a policy that builds a cash value over time and has no waiting period. Whole life premiums are slightly higher than term life rates. If you're age 66 to 85, approval is guaranteed, and you won't be on the hook for payments once you reach the age of 100.

Get a quote in minutes with Ethos. No medical exam is required—simply answer a few health-related questions online and explore your options.

Ready to take that next step? Apply online now.

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