Factors That Affect Life Insurance Premiums

March 30, 2021

Life insurance isn’t required, but it can certainly be helpful for your loved ones upon your passing. Just how much are you worth and what does it cost to get that coverage? The answer is that it depends. No two people will pay the same premium for their insurance even with the same coverage. It’s all dependent on your lifestyle factors. Insurance companies look at many things, but the following are the top 8 factors they consider.

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What’s your Age?

You might not even consider life insurance when you are in your 30s, but you may reconsider once you see the price difference as you age. Life insurance companies pay out premiums when a person dies. Chances are that the younger you are, the less likely it is that the insurance company will have to pay out on your policy. They reward you for this lower risk with a lower premium. As you age, however, your riskiness increases and so does your premium.

It’s not unusual to see premium differences in the thousands between a 30-year old and a 60-year old, for example. Life insurance isn’t very costly when you are still young. It often makes sense to invest at a young age, so that you keep those premiums down. You can get a term life insurance policy that lasts 30 years. That covers you until you are around 60-years old. Your older self will likely be more financially secure and may not even need as much coverage then.

What’s Your Gender?

Unfortunately, your gender controls your life insurance premiums as well. There’s nothing you can do about this one. Men often pay more than women because they have a shorter life expectancy. Women live an average of 2 years longer than men. This is an extra 2 years that insurance companies don’t have to pay out on a policy. This gives women a slightly lower premium than men, assuming the health of both the man and woman are equal.

What’s Your Health?

Not all insurance policies require a medical exam, but if they don’t, expect to pay higher premiums. The insurers want to know if you have risky medical conditions, such as high cholesterol or blood pressure. Both of these issues put you at higher risk for heart disease, stroke, and heart attack. This, of course, is a risk for the insurance company.

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If you have to undergo a medical exam for your life insurance, try getting your health in control first. Get a physical exam and determine where you stand. If your blood pressure or cholesterol is high, consider a safe diet and exercise program before attempting to secure life insurance. Even if your cholesterol and blood pressure are under control, if you are overweight, you could pay a higher premium. Anything that puts your health at risk means higher cost for you.

What’s Your Family’s Health?

Even if you are in perfectly good health, your family might not be. If you have a family history of life-threatening diseases, especially heart disease, your rates may increase. It will depend on who in your family has such a history in combination with your own health. It’s not an automatic increase, but it definitely could play a role.

Do you Smoke?

Smoking puts your health at risk, which means higher premiums. Smokers can pay as much as twice the amount of a non-smoker. You can’t hide the fact that you smoke from your insurance company, either. They usually run a blood or urine test that can tell if you have nicotine in your system.

What if you just quit smoking, are you a non-smoker? Unfortunately, no. It varies by insurance company, but you usually have to be nicotine free for at least 12 months before you can get the non-smoker rate. Of course, shop around with different companies to see how the policies differ. But, the key is that you quit and you are on your way to get lower rates in the future.

What’s your Profession?

Believe it or not, what you do for a living can affect your life insurance rates. For example, a person that works behind a desk all day is a much lower risk than someone working in a factory breathing in toxic chemicals. Not many professions increase your life insurance rates, but it’s a question you must answer on your application. If you do anything high risk for a living, consider it a factor in your premium.

What are Your Hobbies?

Now it might seem like your life insurance agent is getting too personal. He’s going to ask about your hobbies. We’re not talking knitting or reading books either. If you have a penchant for risk, you might want to shop around for different life insurance rates. Some insurance companies view people that sky dive, drive racecars, or boat for fun as high risk. Others don’t care one way or the other. If you know you are being penalized because of what you do in your free time, consider shopping around.

 What’s Your Driving Record?

Finally, some insurance companies might consider your driving record. You might wonder what your driving habits have to do with life insurance, but again, they determine your fate. If you receive a lot of citations or you have a series of accidents, you are high risk. There’s no way to predict when your next poor driving choice will end your life. This is a risk the life insurance company takes and one they will make you pay for if you increase that risk with poor driving habits.

As you can see, your lifestyle plays an important role in the life insurance premium you pay each month. You are somewhat in control as you can control your habits. You can even control your health if you exercise and eat right. Visiting the doctor regularly and making sure you optimize your health can help lower your life insurance bill in the long run.

The best way to get the lowest rates, however, is to shop around for life insurance and do it while you are still young. This way you get the best rates in the area and save on the age premium that you would otherwise pay more for in the end.

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