What is a Term Life Insurance Quote?

UPDATED: Mar 26, 2020

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Term life insurance websites tend to throw the words ‘term life insurance quote’ around pretty loosely. Yes – including us. Even we sometimes fall into the trap of assuming everyone knows what a quote is. We should all remember what our mother taught us about assuming.

But isn’t a quote a relatively simple thing to understand? After all, it’s just an estimated price for something. How confusing can that be? Well, actually, it can be quite confusing when it’s a quote for term life insurance. There are a whole bunch of factors that come into play. Let’s take a look at them.

Demographic Information

Your quote starts with some basic information.

  • Gender – Female rates are lower than male rates. Women have lower mortality rates than men, although the gap appears to be closing.
  • Date of Birth – Your age is one of the biggest determinants of your policy cost. Rates start to steadily rise around your late-20’s to mid-30’s for both females and males. Rates increase more rapidly as you enter your 50’s and 60’s.

Rating Classes

You’ll usually see the term ‘rating class’ next to your online term life quotes. A rating class is a category of risk that life insurance companies assign to each policy. Each rating class has it’s own ‘rate factor’ used to calculate your quote. The better rating classes are reserved for people who are better risks, e.g. they are in better health, don’t smoke, etc. The rate factor for these better classes is lower.

So a Super Preferred rating class is better than a Preferred rating class and will cost you less. The difference between rating classes can range from 20 to 30 percent! Here are some examples of rating classes and what they mean.

Rating Class What it Means
Super Preferred Excellent health w/no major medical conditions
Preferred Very good health w/some minor medical conditions
Standard Plus Good health w/some moderate medical conditions
Standard Average health w/some medical conditions
Substandard Poor health w/some major medical conditions

To determine your possible rating class, we collect as much of the following information from you as possible.

Health & Lifestyle Information

This information can change your quote dramatically.

  • Height/Weight – Your build plays a significant role in your quote. Each life insurance company has its own build table, or thresholds for the weigh they will allow for each rating class. And they are usually very strict in applying these thresholds. Just a couple of pounds over can put you into the next rating class and have you paying more for your policy.

Here is an example of a build table.

  Super Preferred Preferred Standard Plus Standard
Height Weight Weight Weight Weight
5’6″ 174 187 202 226
6’0″ 204 221 240 271
6’4″ 230 246 267 302
  • Tobacco/Nicotine Use – Using tobacco and/or nicotine products will result in a tobacco rating class and a significantly higher policy cost. If you’ve recently quit, each company has guidelines for improving your rating class based on how long it’s been since your last puff, pinch or patch. Also, most companies will allow celebratory or occasional cigar use. The standard is one per month, and you must disclose this on your application!
  • Current Medical Conditions – Your current medical situation will impact your quote. You can expect a higher quote if you have conditions such as high cholesterol, high blood pressure, asthma, depression, diabetes or others. Take a look at this chart for a more detailed list and possible rating classes.
  • Medical History – Like your current medical conditions, your history will also play a role in your quote. Some conditions such as cancer and cardiovascular disease may affect your rating class long after treatment as stopped, even if you are now free of the condition.
  • Hazardous Activities – Do you crave an adrenaline rush from hang gliding, car racing or rock climbing? Life insurance companies may view your hobbies as hazardous activities, which will mean a higher policy cost. In extreme cases, you could even be declined if your activities are numerous or just too dangerous.
  • Driving Record – Slow down, Mario. Moving violations such as multiple speeding tickets (like more than three over a two-year period), reckless driving or driving under the influence of drugs or alcohol will absolutely result in a higher quote.
  • Occupation – It shouldn’t come as much surprise that commercial fisherman will pay more for their term life insurance policy than accountants. All else being equal (build, medical history, etc.) they simply have a more dangerous occupation. Dangerous as it relates to death, anyway. If you have a dangerous occupation like logging, steel/iron work or police officer, your term life quote will be higher.
  • Family History – It hardly seems fair, but if your parents or siblings had a history or cancer or cardiovascular disease at a young age (usually below age 60) you could pay more for your policy. How much more depends on the condition, age and whether they died as a result.

Amount of Coverage

Term life insurance is priced as a unit rate per thousand dollars of coverage. So for example, if your rate is $0.50 per thousand based on your age, gender and other factors, you could expect to pay $250 for a $500,000 policy (plus an annual policy fee that’s part of the premium).

500 units ($500,000/1,000) X $0.50 per unit = $250.00 (plus the policy fee)


Length of Coverage

Term life insurance policies generally come in term lengths of 10, 15, 20, 25 and 30 years. Some companies like American General Life even have odd lengths such as 12, 17 and 22 years for example. The length of coverage you choose will also affect your quote. Shorter durations are less expensive than longer ones, as the likelihood of you dying increases the longer the policy is in force.

Payment Mode

Many people do not realize this, but if you pay for your policy annually, you will pay less! There is a built in ‘discount’ for paying once per year. Think about it:  lower admin costs for the life insurance company and they get your money all at once (which they invest and earn interest on). If you pay semi-annually, quarterly or monthly, your quote will be higher.

Here is an example of the difference you would pay for a policy with a $1,000 annual premium.

Payment Mode Modal Factor Premium Total Annual Cost
Annual 1.00 $1,000 $1,000
Semi-Annual .51 $510 $1,020
Quarterly .26 $260 $1,040
Monthly .087 $87 $1,044

What a Quote is Not

Finally, it would be remiss of me not to mention what a term life insurance quote is not. It’s an important distinction to make, as people sometimes get confused over this.

A quote is not a guarantee of coverage nor a guarantee of price. It is simply an estimate of both. Despite the best efforts of online quote systems and life insurance agents to collect information and give you an accurate quote, your qualification and subsequent policy price is ultimately determined by the life insurance company through underwriting. The company has access to information that a quoting system or agent does not, such as your Medical Information Bureau (MIB) Report, Motor Vehicle Report (MVR), medical records from your physicians, results of your paramed exam to name a few items. These will all play a role in determining your final rating class and policy price. 

Tim Bain

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.

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