These Are the 2 Main Factors That Dictate What Term Life Insurance Will Cost You

If you have people in your life who depend on you financially, or who might get hurt financially if you were to pass away unexpectedly, then life insurance is a purchase you should prioritize.

Within the realm of life insurance, you have choices. You could spend a lot of money on whole life insurance, which will cover you on a permanent basis and accumulate a cash value. Or, you could spend a lot less money on term life insurance, which will only cover you for a predetermined period of time and will not accrue a cash value.

Many financial experts will tell you that of the two, getting a term life insurance policy makes the most sense. That's because whole life insurance can be so expensive that you could risk falling behind on payments for it and having your policy lapse.

But while term life insurance may be less expensive than whole life insurance, it's certainly far from free. So it's important to understand what goes into calculating your premium rates.

Financial guru Dave Ramsey says that the two main factors that dictate what term life insurance will cost you are age and health. So it's best to consider those when timing your application.

Don't wait too long to get life insurance

You might assume that if you're in your 20s or 30s, you don't need life insurance, and there's no sense in paying for it at such a young age. But actually, the younger you are when you get life insurance, the lower your premium costs might be. And also, if you're in your 20s or 30s but have dependents, the reality is that it doesn't matter that you're young -- you still need a policy in place.

Ramsey says that a non-smoker looking for a $1 million term life insurance policy might pay $54 a month for a 20-year term if they apply at age 30. Wait 10 years, and that same policy could cost $84 a month.

Work on improving your health

The more health issues you present with, the more life insurance is likely to cost you. So if you can work on improving your health before applying for a policy, it might result in lower costs.

Let's say you're 15 pounds overweight. That could result in higher life insurance premiums. But if you can shed those pounds, you might spend less.

Similarly, let's say you're a smoker but have been thinking of quitting. If you manage to kick the habit before you apply, life insurance might end up being far more affordable. In fact, Ramsey says that life insurance rates can be double for people who smoke compared to non-smokers.

Putting life insurance in place is one of the most important things you might do for your family. If you apply at a relatively young age, and at a time when you're in good health, you may find that your premiums fit into your budget fairly seamlessly, and that you're able to manage them without too much financial stress.