Determining your average life insurance cost can be helpful in deciding what type of life insurance to buy and how much, but this average may or may not be exactly what you’ll pay. Chances are that your cost will be different than someone else’s even if they are similar to you. Identical twins could even be paying different life insurance premium amounts.
You can run term life insurance quotes to see an estimate for your average life insurance cost, but until you complete an application it will be just that—an estimate.
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How Average Life Insurance Costs Are Calculated
Life insurance premiums are determined by your mortality risk—in other words—the chances of you dying. Your mortality risk will differ from that of another person.
Actuaries use statistical techniques and math, lots and lots of math, to calculate the probability of someone dying. To help you understand, consider this simplified example:
Actuaries will look at a group of 100,000 people with similar characteristics and note how many with liver disease will die in a given year. Therefore, using the law of large numbers, they are able to essentially predict the probability of death for another individual with liver disease with similar characteristics as the test group.
So, if you are 60 years old and have liver disease, your average life insurance cost will be that of another 60-year-old with liver disease; however, you and that other individual probably have other factors that differ from one another such as your