Learn about the various factors that influence life insurance rates, such as gender, age, lifestyle, health work, smoking, and occupation. This article also explains how to get the most favorable life insurance rates.
1. Age
Insurance companies consider your age and your life expectancy. The older you are, the less likely you are to pass away, resulting in lower monthly life insurance rates.
For instance, life insurance for older people is available for the term. It is possible to purchase term life insurance until the age of 80. However, the term durations are usually shorter. If you’re looking for an insurance policy that is a cash value policy, certain companies have an age limit of 85 or less.
2. Gender
Females live approximately six years longer than men, according to the CDC. So, women typically pay less on life insurance.
3. Your Health
Health can have a significant impact on the life insurance quote. Patients with certain health conditions are considered more risky to insure as they are more likely to receive the life insurance payout later. Insurers usually obtain health information by conducting a medical examination for life insurance, accessing medical documents (with your consent), and logging into databases for prescription drugs to find out what medicines you’ve used.
Any health condition can impact the life insurance rates. Common health factors include:
- Hypertension and high blood pressure.
- High cholesterol
- Diabetes
- Sleep Apnea
- Any illness
- Depression or anxiety
Insurance companies look at the health of their customers, for example:
- Your medical background. This includes past and current health issues, including current and previous treatment options and prescription medications.
- The weight and the height. This typically includes your body mass index (BMI), which measures body fat.
- Dangerous behaviors. This includes smoking alcohol, drinking or drugs.
- Family medical background. This includes heart cancer and other diseases among your siblings and parents.
4. Smoking
Many other factors affect rates when you purchase life insurance. Every form of nicotine usage can cause you to fall towards “smoker” rates. This includes pipes, smokeless tobacco, chewing tobacco and nicotine patches, cigarettes, gum, and e-cigarettes.
The rules regarding life insurance rates determined by the frequency of smoking cigarettes differ from company to company. It is also beneficial to be well-informed, with good blood cholesterol, weight, and pressure levels.
Marijuana users may qualify for smoking-free rates even if the marijuana use is just occasionally. However, those who regularly use marijuana must be prepared for higher rates.
5. Family Medical History
You can expect a life insurance application to inquire about your family’s health. The medical background within your immediate family (parents as well as siblings) may influence the rates you pay for life insurance, mainly if there is a history of:
- Cancer (breast, prostate, colon pancreatic, and other)
- Melanoma
- Cardiovascular disease (especially when you’re a smoker)
- Congenital heart disease
6. Occupation and Hobbies
An insurance company will typically have specific questions regarding your life, for example:
- Hazardous jobs. You may have to be charged more if your job involves hazardous work.
- Risky activities. Activities like scuba diving, skydiving, or piloting an aircraft are considered to be risky to cover. Get a knowledgeable life insurance agent to locate the most reliable insurers to provide a reasonable price.
7. Driving Record
Drivers with a history of DUIs or dangerous driving with suspended or revoked licenses are usually considered at a higher risk. Forfenders like these over the past 3 to 5 years may make you a part of an upper tier of insurance.
8. Criminal Record
A criminal record can affect the life insurance rates you receive and, in some cases, your eligibility. There’s usually a 10-year waiting period following a conviction that is dismissed and a waiting period of five years following the conviction of a DUI to be eligible for a life insurance underwritten policy, according to Brian Greenberg, CEO and the founder of True Blue Life Insurance.
You’ll likely be denied life insurance if you’re in the midst of trial, jail probation, or parole. The likelihood of being denied is higher in the event of major or multiple convictions for criminality, for example, murder or organized criminal activity.
9. Recent Financial Issues
Companies typically look at bankruptcy when they review applications for insurance coverage. Some life insurance companies refuse coverage if you’ve been in bankruptcy in the last few years, for example, between two and five years. The time frame varies for each insurance company. Therefore, if you’ve had a bankruptcy in the last couple of years, you should consult a knowledgeable life insurance professional who will investigate the insurers’ regulations to determine the ones that will consider your application.
Credit is also a component of specific risk scores that life insurance companies use to determine rates.
10. Coverage Length and Amount
Another significant aspect that determines the price of your life insurance policy is the type of policy you choose to purchase, along with the level of protection. In general, term life insurance will be the cheapest; however, universal life will cost more than term life insurance, and whole life insurance is the most costly.
There is also the option of purchasing life insurance riders. They are optional add-ons to cover coverage gaps. For instance, you can purchase the “waiver of premium” rider that allows you to pay no premium if you are disabled and keep the coverage in place.
Types of Life Insurance Policies
The kind of life insurance you purchase is essential in insurance cost.
- Life insurance for term is the most cost-effective method to purchase life insurance. You pay only for your insurance policy; there is nothing in cash. Term life insurance is a fixed price for a particular amount of time, usually 5, 10, or 15 years, but it can also be 10, 15, 25, or even 30 years. It’s ideal for insurance customers who require coverage for a specific credit or time frame, like income replacement for the period until you retire.
- Whole life insurance is a type of permanent insurance that has cash value. It offers the following security features: The insurance cost will not rise while your death payout will stay unchanged, and the cash value will grow at a set (but deficient) percentage of returns, like 3 percent. The whole life policy is ideal for those who require permanent coverage and are willing to cover the promises offered by life insurance. It is, however, one of the most expensive options to purchase life insurance.
- Universal Life Insurance can also provide permanent coverage that has cash values. It is often cheaper than whole-life insurance because of the absence of a guarantee. With universal life insurance, you typically have the option of flexible premiums, and the death benefit can be renegotiated subject to certain limitations. It is crucial to understand the terms of the guarantee and what isn’t because the cash value of gains is only sometimes assured. Furthermore, charges could reduce the value of your cash.
- Variable Life Insurance, Also known as universal life insurance, provides permanent coverage that includes cash. You’ll pick the sub-accounts on which you can place the cash value. The choices you make determine how the cash value account increases. The variable life insurance option is suitable for those who wish to participate actively in the life insurance investment. But, there is the risk of losing money from the death benefits and cash value if your investments fail to perform as expected, and policy charges can be very high.