Insurance is designed to serve as a protection against financial losses and burdens as a result of unexpected life events. The majority of people understand the importance of insurance, and most invest in health insurance and auto insurance coverage. Many experts agree that these two types of policies are among some of the most important coverages to purchase. Aside from this, however, many financial advisors strongly urge families to invest in life insurance as well. Unfortunately, it is estimated that as many as one in three Americans don’t have adequate life insurance coverage.
A recent study found that most people without life insurance believe that it is out of reach financially. This is often because they don’t understand the factors impacting insurance rates. Aside from that, when you use an insurance comparison service, you can get a life insurance quote from several insurers to find the best policy and rate for your needs. In many cases, life insurance is one of the more affordable insurance products on the market today. Let’s take a look at some of the factors that influence your life insurance rate.
Age
One of the biggest factors that influence life insurance premiums is your age. When insurance companies issue policies and set rates, they evaluate your specific risks as a policyholder. Age is seen as an indicator of your longevity and vitality. In general, younger people pay less for life insurance because it is assumed that they will live for a while. In most cases, younger adults will outlive a term life insurance policy that is only valid for 25 or 30 years. A person purchasing a $250,000 20-year term life plan in their 30s will pay hundreds of dollars less than a person buying the same policy in their 40s. The same pattern also holds true for purchasing whole life or universal life policies. If you want to score the lowest life insurance rates, it is best to purchase a policy when you are younger.
Gender
Gender is another factor determining life insurance premiums as insurance companies look at gender and longevity statistics. In general, women will pay less than men for insurance because women have a longer life expectancy. Statistically, women live slightly longer than men, and they are viewed as less of a risk than men. On average, a healthy 30-year-old woman will pay $336 for a 20-year plan, and a 30-year-old man will pay around $405 for the same policy.
Medical History
Aside from your age and gender, your medical history is an important variable that will determine your potential risk as a policyholder. Similar to age, the healthier you are, the less expensive your life insurance will be. When you apply for life insurance, you will be required to answer some questions about your health history and medical conditions. Many insurance companies will also require you to take a medical exam to determine your current condition. Any chronic illness or other conditions such as high blood pressure or cholesterol will factor into your premium rates.
Lifestyle
While it might not seem like a big deal, your occupation and hobbies will also impact your life insurance premiums. Insurance companies consider certain jobs such as fishermen, miners, and firefighters as higher-risk occupations where you are more likely to be injured or killed. Similarly, hobbies such as scuba diving and mountain climbing are also seen as higher-risk activities. You will probably pay more for life insurance if you have a high-risk job or hobby. Additionally, personal choices such as tobacco use and smoking could increase rates by as much as 300 percent due to the associated health risks.
Whether you’re shopping for term life insurance or a permanent life insurance policy, there are several factors to keep in mind that will impact your rates. Comparison shopping for life insurance is the best way to find a policy and rates that will fit your needs.