How would your loved ones fare if they lost a pillar of the family? Aflac’s life insurance is meant to help protect their financial future with coverage tailored to your personal needs and affordable premiums.
The fundamental parts of a life insurance policy are premiums, the death benefit, and in some cases, the cash value. Understanding how each component works can help you decide if life insurance is the right choice for you. Read on to discover what life insurance premiums are, how they are calculated, and whether they are tax-deductible.
A life insurance premium is a payment made to the insurance company that keeps the policy active. Without this payment, the policy will lapse, and the coverage will come to an end.1 Paying life insurance premiums helps allow your beneficiary to receive the death benefit later. Without these payments, the death benefit is not guaranteed, and you may have to surrender the policy.
Life insurance premium costs vary, so it is important to understand the frequency and cost of these payments. In some cases, premiums are required monthly, semi-annually, or annually.2 Usually, premium payments will stay constant throughout the life of your policy, but this depends on your specific plan. Level-premium payments, or premiums that stay consistent, are more common in term life insurance plans.3
There are a few factors that can help you understand how to calculate a life insurance premium. Average life insurance premium rates vary depending on the type of life insurance policy, your age, your medical history, and the coverage amount.
Your life insurance premiums may be impacted by the type of policy you choose. At Aflac, we offer Aflac® Life Solutions – Whole Life and Term Life.
Our whole life insurance plans cover your entire life cycle and function as a type of permanent life insurance. Aflac’s term life insurance plans offer coverage for a set period, like 10, 20, or 30 years. Depending on the plan and the term length you choose, premiums will fluctuate.
Typically, whole life insurance plans can come with more expensive premiums because they utilize a cash value component and provide coverage for the entire life of the policyholder. Term life insurance tends to be a more affordable route when it comes to premium payments.4
Your age can also influence what your premium payments look like. Typically, premiums can become more expensive as you age.5 If you are a senior, you might have a completely different set of coverage options available compared to a young adult.
Premiums are usually less expensive the younger you are, so getting a life insurance policy early in life can help keep costs down.6
In some cases, your medical history may affect what your life insurance premium looks like. Smoking and common family illnesses may impact the premium cost. However, if you are concerned about your medical history, there may be an option to secure a policy without a medical exam. Chat with an agent to see if this option is available for you.
Lastly, the amount of coverage you are looking for will change the premium payments. If you are not sure how to navigate finding the right amount of coverage, you can try our life insurance calculator and get a life insurance quote. Usually, the more coverage you want, the higher your premium payments will be, and vice versa.7
Don’t wait until it’s too late. Help cover yourself and your family with coverage from Aflac.
It is not uncommon to question whether life insurance premiums are tax-deductible. While premiums are typically not tax-deductible, there are a handful of life insurance tax benefits worth exploring.8 For example, if the policy is planned out correctly, most death benefits are paid to the beneficiary without being taxed.9 Tax-deferred cash value growth in our whole life insurance plans is also a major perk.
Choosing the right beneficiary or naming the beneficiary as a trust may also yield certain tax advantages. For instance, naming your beneficiary as an irrevocable life insurance trust can allow you to distribute your death benefit to multiple people and can keep the cash value from being lumped into your estate value, which has a greater chance of being taxed.10
At Aflac, we will work with you to find a life insurance policy that works with your needs. Chatting with an agent can help clarify your financial goals and the future you want to leave behind for your family. Our plans are affordable, portable, and tailored to your unique lifestyle.
Explore your life insurance options.
1-2 Investopedia. Insurance Premium Definition. Updated: March 3, 2022. Accessed: November 3, 2022. https://www.investopedia.com/terms/i/insurance-premium.asp.
3 Investopedia. Level-Premium Insurance Definition. Updated: June 2, 2022. Accessed: November 3, 2022. https://www.investopedia.com/terms/l/levelpremiumlife.asp.
4 & 7 Investopedia. Term vs. Whole Life Insurance/ What’s the Difference? Updated: May 23, 2022. Accessed: November 3, 2022. https://www.investopedia.com/term-life-vs-whole-life-5075430.
5 Investopedia. The 7 Best Life Insurance for Seniors in 2021. Updated: November 3, 2022. Accessed: November 3, 2022. https://www.investopedia.com/best-life-insurance-for-seniors-4845439.
6 Investopedia. Getting Life Insurance in Your 20s Pays Off. Updated: July 4, 2022. Accessed: November 3, 2022. https://www.investopedia.com/articles/personal-finance/100615/getting-life-insurance-your-20s-pays.asp.
8 & 9 Investopedia. 7 Insurance-Based Tax Deductions You May Be Missing. Updated: December 2, 2021. Accessed: November 3, 2022. https://www.investopedia.com/articles/tax/09/personal-business-tax-tips.asp.
10 Investopedia. 7 Reasons for an Irrevocable Life Insurance Trust (ILIT). Updated: July 17, 2022. Accessed: November 3, 2022. https://www.investopedia.com/articles/personal-finance/092315/7-reasons-own-life-insurance-irrevocable-trust.asp.
Aflac coverage is underwritten by Aflac. In New York, Aflac coverage is underwritten by Aflac New York.
This is a brief product overview only. Coverage may not be available in all states, including New York. Benefits/premium rates may vary based on plan selected. Optional riders are available at an additional cost. The policy has limitations and exclusions that may affect benefits payable. Refer to the policy for complete details, limitations, and exclusions. For costs and complete details of the coverage, please contact your local Aflac agent. The content herein is provided for general informational purposes and is not provided as tax, legal, health or financial advice for any person or for any specific situation. Employers, employees and other individuals should consult their own advisers about their situations.
In Arkansas, Idaho, Oklahoma and Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400 and Riders: ICC1368050, ICC1368051, ICC1368052, ICC1368053, ICC1368054, ICC1368055. In Idaho, Oklahoma, and Virginia, Policies ICC64100–ICC64300 and ICC64500. In Arkansas, Policies A64100AR-A64300AR and A64500AR and Policy Q60100CAR. In Idaho, Policy Q60100CID. In Oklahoma, Policy Q60100COK. In Arkansas, Idaho, and Oklahoma, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C.
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In New York, coverage is underwritten by Aflac New York. 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211.