Life Insurance Rate Bands Can Save You Money

Ready to compare quick life insurance quotes?

Your life insurance quotes are always free.

 Secured with SHA-256 Encryption

Tim is a licensed life insurance agent with 23 years of experience helping people protect their families and businesses with term life insurance. He writes and creates stuff for QuickQuote and other insurance and financial websites. You can find him on Twitter.

Full Bio →

Written by

UPDATED: Aug 6, 2020

Advertiser Disclosure

It’s all about you. We want to help you make the right life insurance coverage choices.

Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We partner with top life insurance providers. This doesn’t influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.

Life insurance companies use a series of rate bands to help calculate premiums for term life insurance policies. Companies typically use three or four bands. Each band represents a coverage amount range, and within each band, the price per thousand dollars of coverage is found.

For example, the first rate band is usually the most expensive and in most cases, is used for coverage amounts from $100,000 to $249,999. The second rate band is slightly less expensive and is used for amounts of $250,000 to $999,999. The third rate band is commonly used for coverage amounts of $1 million and above. This band usually offers the lowest cost. There may be slight variations in the number of rate bands and their amounts from company to company.

Think of it like buying in bulk. If you buy a six-pack of toilet paper, you will likely be paying more for each roll than if you bought a 12 pack. The savings would likely be even greater if you bought a 24 or 36 pack. Life insurance works in a similar way with rate bands.

Let’s look at a case study of a healthy, 40-year old male named John. At today’s current rate, John would pay $139.25 annually for a 10-year term life insurance policy with a coverage amount of $175,000 from a top rated insurance company. Oddly enough, John can increase his coverage amount to $200,000 with the same company, and his premium would decrease to $130.00 annually!

In another example, the same thing happens near the end of the second-rate band. If John buys a 10-year term life insurance policy with $900,000 coverage, he will pay $371.00 annually. However, if he increases the coverage amount $1 million, the premium decreases to $365.00 annually. This is the power of rate bands and knowing how to use them to your advantage.

The lesson here is to run multiple quotes at different coverage amounts to ensure you get the most for your money. You can run as many quotes as you’d like with our Term Life Insurance Quoting System.

Please also note our system automatically provides two additional free quotes for different coverage amounts with every quote you request. This allows you to quickly compare the premium quote you requested with quotes for other amounts of coverage.

Ready to compare quick life insurance quotes?

Your life insurance quotes are always free.

 Secured with SHA-256 Encryption

QuickQuote is a BBB Accredited Business. QuickQuote Financial, Inc. BBB Business Review