Term policy price differences

Although administrative costs play a role (remember profit is an administrative cost), it more than likely has to do with who you are a risk to the insurance company and who their risk pools are made up of. Let me explain...

Some companies have large risk pools (insureds) of young males, others older smokers, others young children, etc. As the insurance carriers risk pools change, so does their appetite for certain types of risk.

If one carrier has a large number of young, healthy males, they may begin offering better pricing on older, less healthy males. The reverse is also true. When a risk pool gets "dirty" with older, unhealthier people, the carrier will lower rates for healthy, younger people to offset their risk.

Remember, don't just buy on price, but also consider...

- the financial strength of the company (see AM Best)
- convertability options
- waiver of premium in the event of disability
- future buy up provisions
- return of premium option (this one usually isn't a great deal)
- etc.

"I agree with Brandon. More important than the price is the company. I would recommend that you compare quotes from various insurance companies as rates vary considerably from company to company. This is because life insurance is competitive business. The more you shop the more likely you are to find the best policy at the most affordable rates. Online life insurance providers have the advantage of representing hundreds of life insurance companies. They can easily run your specific information through their databases and come up with the best policies for your individual situation.

The more reliable and reputable your insurance company is, the odds are that you are getting the best rates applicable. While the Internet has made choosing and processing a life insurance policy easy, the financial reputation of the insurance company is of prime concern. You do not want to choose a company that might not be around after you have passed away. Luckily, information on the credit worthiness of insurance companies online is pretty transparent. You can either call the company in question to ask about its ratings or you can request for a report. These reports are free or available at minimal cost over the Internet. As a rule, choose a company that is rated A or higher (the highest being AAA). Also ensure that your reports are current and that the ratings on the service providers have been updated as well.