Life Insurance Rate Bands Can Save You Money

You can end up saving money by selecting coverage within certain life insurance rate bands. You may see these number ranges often in examples provided by insurance companies, and now we'll cover how to understand them better.

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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.

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Written by Tim Bain
Founder & Life Insurance Agent Tim Bain

Benjamin Carr was a licensed insurance agent in Georgia and has two years' experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

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Reviewed by Benji Carr
Former Licensed Life Insurance Agent Benji Carr

UPDATED: Jun 13, 2022

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Quick Facts

  • Life insurance companies use rate bands to calculate premiums for coverage
  • Understanding how rate bands work can help you save money on your life insurance policy
  • Shopping online and comparing quotes for life insurance coverage can also help you save money 

Life insurance companies use rate bands to determine how much a policyholder will pay for coverage. Rate bands, or rate tiers, help companies group individuals into different categories for how much they’ll pay per thousand dollars of coverage.

Insurance companies offering life insurance policies typically have three or four rate bands. If you purchase coverage in the lowest rate band — often anywhere under $100,000 — you may pay a higher rate per thousand dollars of coverage than if you bought $120,000 in coverage. Insurance for different bands of money will vary in this way. How much is a band of money? We’ll cover that a little further below. 

One of the best ways to get the best coverage for your money is to get whole or term life insurance quotes from different companies at different coverage levels to see how much you would pay in each scenario.

How can life insurance rate bands save me money?

When considering life insurance, one of the first things you need to determine is how much coverage you want and need. For example, there are a few different types of term life insurance available, so it’s important to understand which type would be most beneficial for your specific situation. 

The death benefit or face amount of an insurance policy is significant. You need to choose an amount that covers your beneficiaries when you pass away, but not an amount high enough to where you can’t afford the premiums.

Understanding rate bands for life insurance is essential when choosing the death benefit of your life insurance policy. The band for life insurance that you choose may be different than someone else in your family, because of a number of different factors including age, as mentioned above. In most cases, band rates for life insurance are as follows:

  • $1,000 to $99,999
  • $100,000 to $249,999
  • $250,000 to $999,999
  • $1 million and up

Using rate bands to understand insurance premiums may sound confusing, but the concept makes sense when you think about actual examples of coverage.

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How do rate bands work?

In many cases, choosing a lower coverage amount can cost you more in monthly or annual rates than choosing a death benefit that’s several thousands of dollars higher.

For example, if a 30-year-old male wanted to purchase a 20-year term life insurance policy, the average rate for a $200,000 face amount would be around $195 annually. However, the same individual could get a $250,000 death benefit for about $198.50 per year. So he would essentially pay $3.50 more per year for $50,000 more in coverage.

This same thing happens at each rate band. So, choosing a $100,000 policy over an $80,000 policy would likely benefit you. The same is true when it comes to choosing a $250,000 policy over a $200,000 policy, and so on. Age can affect which band rating you choose. 

Do agents help with rate bands?

If you purchase a life insurance policy through an agent, they will likely help you understand the amount you’d pay for different coverage levels. In addition, most agents want their clients to know the benefits of various policies.

Now more than ever, more people are doing their homework and purchasing policies without the help of an agent. So if you plan to buy a policy through a company without speaking to an agent, compare plenty of quotes at different coverage levels to know how much you’d pay for your life insurance coverage.

How much is life insurance in different rate bands?

Rate bands aren’t the only thing life insurance companies use to set premiums. Several factors will impact your life insurance rates, including:

  • Age
  • Gender
  • Health history
  • Family health history
  • Tobacco use
  • Hobbies
  • Occupation
  • Type of insurance coverage
  • Coverage amount

The table below shows the average rates for a 20-year term life insurance policy based on a person’s age, gender, and coverage amount.

Average Monthly 20-Year Term Life Insurance Rates by Age and Gender
Term Life Insurance Policyholder Age$100,000: Male Average Term Life Monthly Rates$100,000: Female Average Term Life Monthly Rates$250,000: Male Average Term Life Monthly Rates$250,000: Female Average Term Life Monthly Rates$500,000: Male Average Term Life Monthly Rates$500,000: Female Average Term Life Monthly Rates
25$14.53$12.70$23.27$18.72$34.79$27.39
30$14.96$13.22$24.59$20.44$37.39$29.59
35$17.57$15.40$26.09$22.19$40.04$32.19
40$21.40$18.62$33.72$28.49$54.79$45.69
45$26.54$22.97$45.47$37.42$79.19$66.14
50$36.02$29.32$69.59$54.59$126.14$96.99
55$50.98$38.11$105.72$78.97$203.14$143.99
60$84.91$60.20$183.79$131.17$355.39$248.84
65$144.51$97.44$323.42$220.99$625.09$432.84
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Above, you can see how insurance rate bands impact a person’s monthly rates. For example, a 25-year-old female would pay around $12.70 per month for a $100,000 policy and $27.39 per month for a $500,000 policy. The $500,000 policy amounts to less than $15 more per month or $180 more per year for $400,000 more in life insurance coverage.

Similarly, the following table shows the average monthly rates for a whole-life policy based on age, gender, and coverage amount.

Average Monthly Whole Life Insurance Rates by Age & Gender
Policyholder Age$100,000: Male Average Monthly Rates$100,000: Female Average Monthly Rates$250,000: Male Average Monthly Rates$250,000: Female Average Monthly Rates$500,000: Male Average Monthly Rates$500,000: Female Average Monthly Rates
25$93.70$84.91$225.12$203.14$444.14$400.19
30$107.71$97.35$260.14$234.24$514.19$462.39
35$128.24$112.93$311.47$273.19$616.84$540.29
40$153.90$132.15$375.62$321.24$745.14$636.39
45$190.79$156.17$467.84$381.29$929.59$756.49
50$234.90$191.66$578.12$470.02$1,150.14$933.94
55$294.84$243.17$727.97$598.79$1,449.84$1,191.49
60$399.24$311.63$988.97$769.94$1,971.84$1,533.79
65$528$421.69$1,310.87$1,045.09$2,615.64$2,084.09
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If you know you want a term or whole life policy and have some flexibility in your budget for how much you can spend, it’s good to shop around and compare quotes. Comparing quotes for different coverage amounts ensures you get the best coverage for your money.

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How can I save money on life insurance?

Understanding rate bands is one of the best ways to get the most out of your money by purchasing a life insurance policy. However, the best way to ensure you’re getting the coverage you want at the best price is to compare quotes from multiple companies.

When comparing quotes from different companies at different coverage levels, you can see who offers the coverage you need at the most reasonable price and examine how rate bands affect your rates.

Don’t rush to purchase a policy, and if you have questions, it may be worth it to consult a professional to help you during your decision-making process.

Life Insurance Rate Bands: The Bottom Line

By understanding how rate bands work, you can make your money work for you when you invest in a life insurance policy.

Shop around and compare rates at different coverage levels to see how much your premium changes. If you can afford a few extra dollars monthly or annually to get $50,000 or more in coverage, you should seriously consider it.

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