Understanding Life Insurance Modal Factors

If you look through a term life brochure, you're likely to see the term modal factor. It's one of those life insurance terms that is perplexing and sounds like it comes from a science fiction movie. It's important to understand the term however since it can affect how much you pay for life insurance. Let's take a quick look at modal factors.

Depending on the life insurance company, you typically have various options on how you can pay your life insurance premium and we're not just talking about auto-deduction, credit card, or standard billing. You also have options on how often during a year you will pay your premium. When you run your term life insurance quote, the rates normally reflected there assume you are paying your premium on an annual basis. You may have options to pay the premium over shorter durations such as monthly, quarterly, bi-annually, etc. This is what dictates the modal factor.