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How are life insurance rates calculated?

The primary unit for figuring out a life insurance rate is the rate per thousand (cost per $1000 of insurance), which can vary depending on which factors influence it (age, gender, etc).

For example, if the rate is $0.2 per $1,000 and an enrollee elects $15,000 in coverage, the monthly premium will be $3. ($0.2 x 15 = $3).

Factors that affect the rate per thousand

Rates can vary depending on the group's risk. With group policies, such as the ones provided through employers, the carrier has already taken into consideration the risks associated with the group and calculated a rate for that group.

Some common risk factors include:

  • Age
  • Gender
  • Occupation
  • Location

Once the rate is established for the group, it can either be one rate for all enrolled or there can be age-bracketed rates. Age-bracketed rates establish different rates for coverage based on age, even though the enrollees are in the same group - for example, an enrollee over 65 might have a higher rater than an enrollee under 65, despite being enrolled in the same plan.

Rates for AD&D Plans

Rates for AD&D plans are determined by the amount of coverage and the type of individual, regardless of age or gender and can be separate or tiered. In most cases, rates for both Life and AD&D are bundled together in Zenefits.

Separate: different rates for Employee, Spouse, and Child
Tiered: rates are combined (Employee + Spouse, Employee + Spouse + Child)

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