Blog Critical Factors Determining Your Life Insurance Rate

Critical Factors Determining Your Life Insurance Rate

October 9, 2018 · Life Insurance

Like all insurance policies, your life insurance rate depends on risks. Those who have higher risks of sudden deaths almost always pay more for their coverage. A lot of different factors might impact that risk and your costs. What are some of these? Can you control any of these factors?

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The Policy You Choose Determines Your Rates

No life insurance policy is the same. You’ll want yours to meet your survivors’ needs after your death, after all. Based on the policy you select, your premium prices will likely change.

  • Life insurance policies generally come as either term policies or whole life policies. Term policies last only a certain number of years. Whole life policies last indefinitely, as long as you keep paying for them. The indefinite nature of whole life policies generally make them the more expensive.
  • The payout limit of your policy will impact your rates. If you choose more coverage, after all, you’ll have to pay more. For example, some people might find a $100,000 settlement more to their liking. Others will need upwards of $500,000.

At times, certain qualifications might limit you to only certain policies. Your insurance agent can help you determine the appropriate policy for you.

Other Factors Influencing Your Rates

Life insurers will use other factors to more specifically determine your rates. It will help them better determine their own investment in you as a customer.

  • Age: Because age links to the risk of death, your insurer will consider it. Older individuals almost always pay more for their coverage. To lower this risk, consider getting life insurance while you still are young.
  • Medical history: Those with complicated health often have relatively higher death risks. Thus, they might not be able to buy some policies. They might also pay more for coverage. However, health is not always a limiting factor in your qualifications. Talk to your agent about your needs.
  • In some cases, your family medical history might also become a determining factor.
  • Smoking history: Smoking and tobacco use create significant health risks. You will likely pay more for coverage if you have this habit.
  • Lifestyle: Some insurers will ask about risks in your personal life. These might include hazards arising through your hobbies, or from your work. For example, someone who works on an oil rig might face higher safety risks and higher insurance costs.
  • Gender: Men and women face different lifestyle risks. Therefore, most life insurers will consider your gender when setting rates.

Remember, your life insurance risks will differ from almost anyone else’s. Therefore, the way these factors influence your rates will differ also. Let you agent guide you professionally through the process of selecting a plan, call today 888-513-8784.