10 Factors Affecting Life Insurance Rates (2024)

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If you’re in the market for life insurance, understanding factors that affect life insurance will help you understand the quotes you’re getting. Some factors you can’t do anything about, like your age. But you may be able to improve other factors and get lower life insurance quotes.

10 Factors Affecting Life Insurance

FactorSummary
AgeAge reflects life expectancy. The longer you’ll likely be able to pay premiums, the lower your life insurance quotes will be.
GenderWomen pay less than men for life insurance.
Your healthPast and current health factors include blood pressure, weight, cholesterol, sleep apnea and diseases.
SmokingRates for smokers and other nicotine users will be higher.
Family medical historyCertain medical conditions among your parents and siblings are a factor in life insurance rates.
Occupation and hobbiesRisky jobs, scuba diving and piloting planes are typically a factor.
Driving recordDUI and reckless driving convictions, or suspended or revoked licenses, will often lead to higher rates.
Criminal recordFelonies can result in higher rates or application denial.
Recent financial issuesRecent bankruptcies affect life insurance approval and rates.
Coverage length and amountLonger policies and higher coverage amounts are key factors.

1. Age

Insurance companies look at your current age and life expectancy. The younger you are, the less likely you are likely to die, which means lower monthly life insurance quotes.

For example, life insurance for seniors can be limited for the length of the level term period. You can generally buy term life insurance through age 80, but the term periods available will be shorter. If you’re interested in a cash value life insurance policy, you might find some companies have a maximum age of 85 or younger.

2. Gender

According to the CDC, life expectancy for females is roughly six years longer than males. Thus, women generally pay less than men for life insurance.

Related: Transgender Life Insurance

3. Your Health

Health has a huge impact on life insurance quotes. Applicants with certain health conditions are considered riskier to insure because they’re more likely to have a life insurance payout sooner. Information about your health is often obtained by an insurer through a life insurance medical exam, by getting your medical records (with your permission) and by accessing prescription drug databases to see what medications you have taken.

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

It’s not just cigarettes that can affect your rates when you buy life insurance. Any form of nicotine use can push you into “smoker” rates. This includes smokeless tobacco, pipes, chewing tobacco, nicotine patches and gum, e-cigarettes and vaping.

Rules about life insurance rates based on the frequency of nicotine use vary by company. And it will help if you are otherwise healthy, including good blood pressure, weight and cholesterol levels.

Marijuana users can get non-smoking rates, especially if the use is only occasional. But frequent marijuana users should brace for higher rates.

Related: Life Insurance For Smokers

5. Family Medical History

Expect a life insurance application to ask about your family’s health. The medical history of your immediate family (parents and siblings) can affect your life insurance rates, especially 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 like scuba diving, skydiving and piloting a plane are considered risky to insure. Work with an experienced life insurance agent who can find the insurers most likely to give you a good rate.

7. Driving Record

Drivers with a history of DUIs, reckless driving convictions, or suspended or revoked licenses are often seen as higher risk. Infractions like these in the last three to five years can bump you into a higher rate tier.

8. Criminal Record

A criminal record will impact your life insurance quotes and possibly even your eligibility. There’s typically a 10-year waiting period after a felony is discharged and a five-year waiting period after a DUI to qualify for an underwritten life insurance policy, says Brian Greenberg, CEO and founder of True Blue Life Insurance.

You’ll likely be rejected for life insurance if you are awaiting trial, in jail, on probation or on parole. A denial is also likely if you have major or multiple criminal convictions, like murder or organized crime.

9. Recent Financial Issues

Insurance companies typically consider bankruptcies when looking at life insurance applications. Many life insurance companies will decline coverage if you’ve filed bankruptcy within recent years, such as two to five years. This time period varies by insurance company, so if you have a recent bankruptcy, work with an experienced life insurance agent who will research the rules of insurers to find ones that will consider your application.

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

Another big factor that will determine the cost of your life insurance is the type of policy you buy and the amount of coverage. Generally speaking, term life insurance is the least expensive, universal life costs more than term life, and whole life insurance is the most expensive.

You can also buy life insurance riders, which are add-ons that help fill coverage gaps. For example, you might buy a “waiver of premium” rider that lets you stop paying if you become disabled while keeping the coverage in force.

Types of Life Insurance Policies

The type of life insurance you buy is a major factor in the life insurance rates.

  • Term life insurance is the cheapest way to buy life insurance coverage. You only pay for the insurance coverage, and there’s no cash value. Term life insurance has fixed premiums for a specific number of years—usually 5, 10, 15, 25 or 30 years. It is ideal for life insurance buyers who need coverage for a particular debt or certain period of time, such as income replacement for the years until you plan to retire.
  • Whole life insurance is permanent coverage with cash value. It has these guarantees: The premium will not increase, the death benefit will remain the same and the cash value will grow at a fixed (but low) rate of return, such as 3%. Whole life insurance is suited for those who want lifelong coverage and are willing to pay for the guarantees provided by whole life insurance. However, it is one of the more expensive ways to buy life insurance.
  • Universal life insurance is also permanent coverage with cash value. It can be cheaper than whole life insurance due to the lack of guarantees. With universal life insurance you can generally enjoy flexible premium payments and a flexible death benefit amount, within certain limits. It is important to understand what is guaranteed and what is not, as cash value gains are not always guaranteed. Additionally, fees and charges can reduce your cash value.
  • Variable life insurance, also called variable universal life insurance also offers permanent coverage with cash value. You’ll choose the sub-accounts in which to invest your cash value. Your choices determine how much the cash value account grows. Variable life insurance is suitable for those who want to take an active role in their life insurance investments. However, there is a risk of losing money on the death benefit and cash value if your investments don’t perform well, and policy fees and charges can be high.

Exam vs. No-Exam Life Insurance

Some life insurance companies offer no-exam life insurance. No-exam policies are available for both term life and permanent policies. You won’t have to take a life insurance medical exam, but that doesn’t mean insurers won’t gather health-related information about you from third-party sources.

Examples of no-exam life insurance include:

  • Instant life insurance. The traditional life insurance application process can take 30 days or more. Some companies have embraced technology for an “accelerated underwriting” process that produces quick life insurance approvals, sometimes within seconds. Typically you need to be young and healthy in order to qualify for instant, no-exam life insurance.
  • Simplified issue life insurance. You’ll have to answer a few health-related questions but there’s no medical exam for a simplified issue life insurance policy. Insurers might use third-party sources to gather some information like prescription drug history and your driving record. Simplified issue life insurance can be more expensive than buying a policy that requires a medical exam, especially if you are in average health or better.
  • Guaranteed issue life insurance. With a guaranteed issue life insurance policy you’re guaranteed for approval, with no health questions. But these tend to be very expensive policies and are generally for people with major health issues who want only a small amount of life insurance for final expenses. If you are in good health, or even have a few health issues, it’s better to avoid guaranteed issue life insurance.

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Life Insurance Rates FAQs

Do you have to be honest with life insurance?

While you may be worried about all the factors that affect life insurance rates, it’s crucial to be honest on a life insurance application. When you sign the application, you’re saying it is truthful. In a worst-case scenario, a life insurance company could refuse to pay a death benefit to your life insurance beneficiaries if it finds out you lied on the application.

What if I lie about smoking for life insurance?

The life insurance company could refuse to pay the death benefit to your beneficiaries if you lied about smoking on your life insurance application.

Life insurance for smokers comes at a higher price, but it’s the price of insuring the risk, just as people with cardiac problems pay more.

If you start smoking after you purchase life insurance, your rates do not increase.

How do life insurance companies get information about you?

Life insurance companies essentially have one burning question: How long are you expected to live (known in the industry as mortality)?

To answer this question, life insurance companies gather intel on you from a variety of sources, including your life insurance application. They’ll often request medical records from your doctor’s office, look at prescription drug history, pull your driving record and use-third party sources like the MIB Group to get additional information.

How do you shop for life insurance?

If you are ready to buy life insurance, the first step is determining how much life insurance you need and what type of policy is right (such as term life or universal life insurance).

Your next step is to get life insurance quotes from multiple insurance companies. Look at cost, coverage features and the company’s financial strength rating.

See Forbes Advisor’s ratings of the best life insurance companies.

As a seasoned expert in the field of life insurance, I bring a wealth of knowledge and hands-on experience to help you navigate the complex world of insurance policies. My expertise is rooted in a deep understanding of the factors that influence life insurance rates and the intricacies of various policy types. I have not only studied these concepts extensively but have also applied them in real-world scenarios, enabling me to provide valuable insights and guidance.

Now, let's delve into the key concepts presented in the Forbes Advisor article on factors affecting life insurance:

  1. Age:

    • Life insurance companies consider your age and life expectancy when determining quotes.
    • Younger individuals generally receive lower quotes as they are deemed less likely to pass away during the policy term.
  2. Gender:

    • Women typically pay less for life insurance than men, reflecting the longer life expectancy for females.
  3. Your Health:

    • Health is a significant factor influencing life insurance rates.
    • Insurers assess medical history, including past and current health problems, treatments, and medications.
    • Factors such as high blood pressure, cholesterol, diabetes, sleep apnea, and risky behaviors (smoking, drinking) affect rates.
    • Family medical history, including conditions like cancer and cardiovascular disease, also plays a role.
  4. Smoking:

    • Nicotine use, including cigarettes, smokeless tobacco, and vaping, can lead to higher rates.
    • Marijuana users may get non-smoking rates, but frequent use could result in higher premiums.
  5. Family Medical History:

    • Insurers inquire about the health history of immediate family members (parents and siblings).
    • Conditions like cancer, melanoma, and cardiovascular disease in the family can impact rates.
  6. Occupation and Hobbies:

    • Risky jobs and hobbies such as scuba diving or piloting planes may lead to higher insurance rates.
  7. Driving Record:

    • DUIs, reckless driving, and license issues can result in higher life insurance rates.
  8. Criminal Record:

    • Felonies and recent criminal activity may impact eligibility and rates.
  9. Recent Financial Issues:

    • Recent bankruptcies can affect life insurance approval and rates.
    • Credit history may also be considered in some cases.
  10. Coverage Length and Amount:

    • The type of policy and coverage amount significantly influence life insurance costs.
    • Term life insurance is generally less expensive, while whole life insurance tends to be more costly.

Additionally, the article introduces various types of life insurance policies, including term life, whole life, universal life, and variable life. It also touches on the option of no-exam life insurance and provides information on how life insurance companies gather information about applicants.

In conclusion, understanding these factors empowers individuals to make informed decisions when seeking life insurance coverage. As you explore options, consider factors such as policy type, coverage amount, and your personal health profile to secure the most suitable and cost-effective life insurance policy.

10 Factors Affecting Life Insurance Rates (2024)

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