Life insurance rates are based on a variety of different factors that when combined go into determining the premium you’ll pay. Originally, this list was a top 10, but thanks to a reader of InsuranceHotline.com, we realized we missed one! So without further ado, we’ve detailed 11 of the most common factors that go into determining your life insurance rate.
- Related Read: Life Insurance Tips—Reasons to Buy Right Now
1. Your Age.
All things being equal, the younger you are the lower your rate will be which is why insurance experts often recommend buying a policy young.
- Related Read: Why You’re Never Too Old to Consider Life Insurance
2. Your Health History.
If you have a history of any kind of chronic disease or other ongoing health issues, it could result in higher rates.
3. Your Current Health.
You will generally have to go through a medical exam to look for things like high blood pressure or other health concerns that might be a sign of future problems. People who are currently in good health will typically see lower rates.
4. Your Weight.
If you are overweight or obese based on a height to weight ratio scale, you may pay more for your life insurance coverage as there is a greater chance for future health problems.
- Related Read: VIDEO—Five Life Insurance Questions Answered
5. Your Occupation.
If you happen to be a race car driver, insurance companies have good reason to see your job as a bit risky. Certain dangerous occupations may result in an increase in rates or even denial of coverage because they carry such a heavy risk of accidental death.
Smokers pay more for life insurance simply because of the many health risks inherent in the habit. If you quit smoking, you can qualify for lower rates within a year—just one of the good reasons to quit.
Heavy alcohol consumption can also take a major toll on your health. That is why insurance companies ask about your drinking habits as well as smoking habits. Those who drink more are likely to pay more for their insurance rates.
8. Your Hobbies.
High-risk recreational activities, like skydiving, hang gliding, rock climbing, and scuba diving may increase your adrenaline, but it could also increase your life insurance rates. However, each insurer is different; where one life insurer may consider your hobby high risk, another may not.
9. Your Family History.
Those with a major family history of serious illnesses such as heart disease and cancer, may find they pay more for life insurance.
10. Your Gender.
Women live longer than men as a general rule, which means they will pay generally lower rates for life insurance.
11. The Policy Itself.
The longer the term of the policy and the larger the amount of the death benefit the more you will pay for it. Simply put, this is because the risk that you will die during the policy term is higher for a Term 30 policy (a policy that covers you for 30 years) than a policy that covers you for 10 years (a Term 10 policy.) In addition, the more the death benefit (i.e. the amount that will be paid out to your beneficiaries), the more you will be charged for coverage. Long term policies are more expensive than short term policies, and whole, or permanent life insurance is generally more expensive than term life insurance.
How much impact each of these factors has on your life insurance rates depends on how the insurance company rates each factor and also on the combined effect of multiple factors. Each insurance policy is rated on a case-by-case basis, and no two life insurers will be the same. It’s for this reason that it’s prudent that you compare life insurance quotes and shop around.