Understanding the variables that affect life insurance may help you comprehend the quotations you are receiving if you’re in the market for life insurance. You have no control over some aspects, such as your age. However, you might be able to enhance other aspects and obtain cheaper life insurance quotes.
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10 Factors Affecting Life Insurance Rates
1. Age
Insurance companies take into account your current age and expected lifespan. Your chances of dying are reduced as you are younger, which results in lower monthly life insurance quotations.
Seniors’ access to life insurance, for instance, may be restricted for the duration of the level term period. Though the term lengths available will be shorter, you can typically purchase term life insurance up until the age of 80. If you’re looking into cash value life insurance, you may find that some firms have an age limit of 85 or less.
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2. Gender
According to the CDC, females typically have a six-year advantage in terms of life expectancy over males. As a result, women typically pay less for life insurance than men do.
3. Your Health
Life insurance quotes are significantly influenced by health. Because they are more likely to get a life insurance claim earlier, applicants with specific health issues are viewed as being riskier to cover. An insurer will frequently learn details about your health through a life insurance medical examination, by requesting your medical records with your consent, and by searching databases for prescription drugs to find out which prescriptions you have used.
Any health issue can affect life insurance rates. Common health factors include:
- High blood pressure and hypertension
- High cholesterol
- Diabetes
- Sleep apnea
- Any disease
- Anxiety or depression
Insurance companies will look at health factors, such as:
- Your medical history. This includes past and current health problems, including past and current treatments and prescription medications
- Height and weight. This typically includes your body mass index (BMI), which is a measure of body fat.
- Risky behaviors. This includes smoking, drinking and drug use
- Family medical history. This includes heart disease and cancer among your parents and siblings.
4. Smoking
When you get life insurance, your rates may be impacted by more than simply smoking. Nicotine use in any form can cause you to have “smoker” rates. This covers e-cigarettes, vaping, nicotine gum and patches, chewing tobacco, smokeless tobacco, pipes, and smokeless tobacco.
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Companies have different policies regarding life insurance prices dependent on how frequently a person uses nicotine. Additionally, it will be beneficial if you are generally healthy, with normal blood pressure, weight, and cholesterol levels.
Users of marijuana may qualify for non-smoking rates, particularly if their use is only sporadic. But regular marijuana users have to prepare themselves for increased rates.
5. Family Medical History
Expect questions about your family’s health on a life insurance application. Your life insurance rates may be impacted by the medical history of your immediate family (parents and siblings), particularly if there is a history of:
- Cancer (breast, colon, prostate, pancreatic and others)
- Melanoma
- Cardiovascular disease (especially if you’re a smoker)
- Congenital heart disease
6. Occupation and Hobbies
A typical life insurance application will ask some questions about your lifestyle, such as:
- Dangerous occupations. If your job includes hazardous duties, you could pay higher rates.
- Dangerous hobbies. Activities that are deemed risky to insure include skydiving, scuba diving, and flying a plane. Consult a seasoned life insurance agent who can identify the companies most likely to offer you a competitive premium.
7. Driving Record
High-risk drivers are frequently those who have a history of DUI convictions, reckless driving convictions, or licence suspensions or revocations. You may move into a higher rate category if you have committed violations similar to these within the last three to five years.
8. Criminal Record
Your life insurance prices and potentially even your eligibility will be impacted by a criminal history. According to Brian Greenberg, CEO and creator of True Blue Life Insurance, there is normally a 10-year waiting time after a felony is expunged and a five-year waiting period following a DUI.
If you are incarcerated, on probation, parole, or on trial, your application for life insurance will probably be denied. If you have significant or numerous criminal convictions, such as those for murder or organised crime, a denial is also likely.
9. Recent Financial Issues
Bankruptcies are frequently taken into account by insurance firms when reviewing life insurance applications. If you’ve recently filed for bankruptcy, say within the last two to five years, many life insurance companies will refuse to insure you. If you have just filed for bankruptcy, work with a seasoned life insurance agent who will investigate the policies of insurers to identify ones that will take your application into consideration. This time period varies by insurance company.
In addition, credit is a part of some risk scores that life insurers use as a factor in life insurance rates.
10. Coverage Length and Amount
The type of policy you purchase and the level of coverage are two other important factors that will affect the price of your life insurance. In general, whole life insurance is the most expensive, followed by universal life, which is more expensive than term life insurance.
Additionally, you can get life insurance riders, which are extras that assist close gaps in coverage. The “waiver of premium” rider, for instance, enables you to cease paying if you become disabled while keeping the coverage in effect.
Types of Life Insurance Policies
The type of life insurance you buy is a major factor in the life insurance rates.
- The least expensive type of life insurance to purchase is term. There is no cash value; you are only charged for the insurance coverage.Term life insurance premiums are set for a predetermined period of time, typically 5, 10, 15, 25, or 30 years. It is perfect for life insurance customers who require protection for a certain debt or a specific time period, such as income replacement till retirement.
- Whole life insurance offers long-term protection and a monetary value. It has the following guarantees: the premium won’t go up, the death benefit won’t change, and the cash value will increase at a set (but modest) rate of return, like 3%.Whole life insurance is best for people who desire lifetime protection and are prepared to pay a premium for the guarantees it offers. It is, nevertheless, one of the more expensive methods of purchasing life insurance.
- Permanent protection with a cash value is also provided by universal life insurance. Because there are no guarantees, it may be less expensive than whole life insurance. Within specific parameters, universal life insurance often offers adjustable premium payments and a customizable death benefit amount. Given that monetary value gains are not always guaranteed, it is crucial to understand what is and is not guaranteed. Fees and levies can also lower your cash value.
- Permanent coverage with cash value is also available with variable life insurance, often known as variable universal life insurance. The subaccounts in which you invest your cash worth are up to you. The growth of the cash value account depends on your decisions.For people who want to actively participate in their life insurance investments, variable life insurance is a good option. However, if your assets underperform, you run the risk of losing money on the death benefit and cash value, and policy fees and charges can be expensive.
- Exam vs. No-Exam Life Insurance
- No-exam life insurance is provided by several life insurance providers. Both term life and permanent policies come with no-exam options. Even though you won’t need to undergo a life insurance medical exam, insurers may still collect health-related data about you from outside sources.
- Examples of no-exam life insurance include:
- Live insurance immediately.The typical application procedure for life insurance might take up to 30 days. Some businesses have embraced technology for a “accelerated underwriting” procedure that results in prompt approvals for life insurance, often in only a few seconds. Typically, in order to be eligible for fast, no-exam life insurance, you must be young and healthy.
- simplified life insurance issues.A simplified issue life insurance policy does not require a medical exam, but you will be asked a few health-related questions. Some information, including as your driving history and prescription drug history, may be gathered by insurers from unaffiliated sources. When compared to purchasing a policy that involves a medical exam, simplified issue life insurance may be more expensive, particularly if you are in average or excellent condition.
- life insurance with guaranteed issue. You are assured approval with a guaranteed issue life insurance policy, and there are no health requirements. These, however, are typically quite pricey policies and are frequently chosen by those with serious health conditions who only require a limited amount of life insurance for final expenses. Avoid guaranteed issue life insurance if your health is good or even if you have a few minor health conditions.