Life Insurance Rates

How are Life Insurance Rates Determined?

There are many factors that are considered when your life insurance rates are determined. Each factor is used to determine how much of a risk the insurance company takes when they offer you a policy. If you are considered to be a high risk to die early, you will have problems getting a life insurance policy - or if you do find a company that will insure you, expect to pay higher premiums.

Underwriting is the process of screening a potential client and deciding what kind of a rate they will receive. Primarily rates are based on your age, health, gender, family medical history, and lifestyle.

How Does Age Affect Your Rates?

The older you are, the higher your premium will be. This is because logically, as you age, you have less time left to live and pay in premiums on life insurance that will be collected after your death. Before you are eligible for insurance, most insurance companies also require you to get a physical if you are over a certain age. The basic exam checks your weight, height, and blood pressure. You will sometimes be asked to give a sample of blood so that the company can check your cholesterol levels and indications of potential diseases.

How Does my Health Affect Your Rates?

When you are looking to purchase life insurance, the company will place you in a health category based on many things including your health history, your weight, your family’s health history and even your gender. These categories are usually called super preferred, preferred, regular, or standard, and the rates differ depending on which category you are placed in. Just because you have had a history of health problems does not necessarily mean that you won’t get insurance, but it does mean that you will pay higher premiums.

Some policies will require you to get a physical exam, and most policies will at the very least require you to take a mouth swab test that checks for things like AIDS, smoking, and or drug use.

How Does My Lifestyle Affect Your Rates?

Your lifestyle affects your insurance rates in many ways. If you participate in any dangerous hobbies such as racing cars, mountain climbing, or even riding a motorcycle, that can make your life insurance rates higher. Your job can even change what you pay for life insurance. For example, if you are in the military you might pay a higher premium, because your line of work takes you into life threatening situations. If you travel often outside of the country to places that are statistically dangerous, you might be charged more for your life insurance.

Do Rates Ever Go Down?

While rates can go up do to things like aging, they seldom go down. However, if you improve your health by losing weight or quitting smoking, and you can give evidence that this has improved your health, it is possible to negotiate a review of your rates and see your premium lowered.