Life Insurance Prices

Things that impact life insurance prices

There are several things that factor into life insurance prices. Of course, they type of policy that you buy makes a big difference. Term insurance, for example, has a much lower cost in the short term, which means that you can buy more insurance for less money if you choose a term insurance policy. On the other hand, a whole life insurance policy is much less expensive in the long run, so if you are buying insurance for your “whole life” you should probably by whole life insurance.

Once you understand how the type of policy affects your rates, you can look at the other factors that contribute to life insurance pricing. The three most important factors to consider are your age, your health and the health history of your immediate family (i.e., mother, father, brothers, sisters).

Your age and your life insurance rates

Your age, or more specifically the number of years you are from your estimated life expectancy is a huge factor in determining life insurance costs. A 20 year old can buy a large amount of life insurance for just a few dollars per month because the likelihood of a 20 year old dying is very low. On the other hand, a 79 year old will pay almost as much in premium each year as the death benefit of the policy that they are buying. This is because as we approach life expectancy, the risk of having to actually pay a claim increases dramatically.

How is your health?

Most life insurance companies will ask you to submit to a paramedical examination as part of the life insurance application process. This exam might include blood work to determine your cholesterol and triglyceride levels, an EKG and/or a complete physical. Insurance companies use the information from this exam to determine your health status and rate classification. Having a condition like diabetes or high blood pressure may not prevent you from getting coverage, but they could make your rates higher than someone who has no health issues.

What does my family have to do with this?

Plenty, actually. Your family’s health history can impact the rates that you are able to get with some carriers. Some companies have determined that there is a correlation between a family history of some diseases (such as cancer and heart disease) and life expectancy. Other companies do not factor this information into their rates, or only factor it in for certain family health issues.

Smokers and other Tobacco Users

This one is a biggie! Smokers will pay nearly twice as much for their life insurance as their non-tobacco-using counterparts. The same holds true for users of most other forms of tobacco. Of course there are exceptions and some life insurance companies do not consider occasional cigar smokers to be tobacco users for rating purposes.

Want to know more about how life insurance prices are determined for your policy? Make sure to consult with an experienced agent (like me!) to make sure you get the absolutely best rates from the best company for your specific situation. Feel free to contact me by email or give me a call if I can help. You can reach me at (877) 883-3561.

About The Author

Richard Eddy

Founder of and Cona Financial Group Richard Eddy has been assisting clients with their life insurance needs since 2005. He is an expert helping people find the right policy to fit their specific situation. In addition to insurance planning, he is also experienced in a wide range of financial planning topics including investment and portfolio analysis, tax planning, retirement planning and estate preservation strategies. You can call Richard toll-free at (877) 883-3561.