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Life Insurance Premiums

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.

What is a Life Insurance Premium?

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

How to Calculate Life Insurance Premiums

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.

Type of Policy

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

Age

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

Health

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.

Coverage

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

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Are Life Insurance Premiums Tax-Deductible?

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

Get Affordable Life Insurance from Aflac

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.

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