Top 18 Factors That Affect Life Insurance Premiums

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    Top 18 Factors That Affect Life Insurance Premiums: Life insurance rates are based on a variety of different factors that when combined go into determining the premium you’ll pay. These factors are aren’t always the same even when comparing the best life insurance companies.

    If you’re just starting to look for life insurance, you may be wondering just how much of your paycheck will be going toward this coverage.

    There are multiple factors that determine the rates that you’ll pay for your life insurance policy.

    Some you may never have even thought of.

    Top 18 Factors That Affect Life Insurance Premiums

    Before you start your search for life insurance coverage, you should get familiar with what life insurance companies will be looking into before they offer you a policy.  

    These factors may cause your rate to rise – or worse, result in a denial.

    What Do Life Insurance Companies Look For?

    So let’s dive right in.

    We’ve detailed the top 18 factors that affect life insurance premiums and determine your life insurance rate.

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    1. Age

    Age isn’t just a number. It could be the single most important factor when you look at how much you’re going to pay for life insurance. When looking at statistics, younger people are much less likely to die compared to older individuals. The means that when you’re younger, you’re going to pay a lower life insurance rate. When comparing 2 individuals that are exactly the same with all other underwriting criteria, the younger person will always pay less.  It is always recommended to buy life insurance as early as possible, because it is never cheaper as you age.

    Related Post: Life Insurance Rates by Age

    2. Weight

    Life insurance companies use something called a “Build Chart” as part of the underwriting process. Your Height and Weight ratio puts you in a specific health class rating. If you are obese or even overweight, you can expect to pay more depending on your Height and Weight ratio. The reason is that when underwriters analyze health statistics, overweight people typically have more health problems. These health problems can become serious which makes you a higher risk of an earlier death. Whenever there is a higher risk, you’re going to pay more.

    Related Post: How Weight Affects Your Life Insurance Rates

    3. Current Health

    Most life insurance policies have a medical exam as part of the process. The paramedical exam will analyze your cholesterol, blood pressure, and other health issues. The results of the exam will tell the underwriter if there is a problem now or potential future problem. If you are healthy, you’re probably going to pay less for your life insurance premium. If the exam reveals a risky health condition, you’re going to typically pay more.

    4. Health History

    What about your past health? Have you had a high risk health condition? It may have affect your rate depending on the health condition, when it was diagnosed, the post treatment, and if it’s resolved. The timeline on all of these issue are very important. The life insurance underwriter can order attending physician statements (APS) and medical records in order to determine if your past health is a risk. You may pay higher rates depending on the details of your health history.

    5. Gender

    If you’re a woman, you can expect to pay less than a man. Women typically live longer than men when looking at gender mortality statistics. This means that will usually have a lower life insurance rate.

    6. Occupation

    There is a group of dangerous occupations that life insurance underwriters see as very risky. These occupations can result in a higher life insurance rate. In some cases it can end in a denial of coverage because of their severe risk of death.

    If you happen to be a skydiving instructor, SCUBA diver or race cars for a living, a life insurance company is going to look at you as a higher risk compared to a teacher or CPA. If your occupation has you performing dangerous activities that put you at risk of death, you’re going to pay higher life insurance rates. This also goes for occupations that can have a long term effect on your health. For example, do you work with toxic chemicals? If so, you may pay more.

    7. Marital Status

    If you and your spouse are applying for life insurance together, you may actually save money. You won’t get a lower rate just because you’re married, however there are savings potential with a dual application.

    8. Smoking

    Smoking tobacco use has been shown to have several health related risks that may lead to fatal diseases as well as cancer. If you smoke marijuana or cigarettes, you can expect to pay more for life insurance. This is once again due to all the health risks involved with smoking. Smoker rates are approximately double the premium of non smokers. The good news is that you may qualify for a lower rate once you’ve quit for 1 year. Also, if you smoke cigars or vape, you may qualify for non smoker rates with a few companies. Chewing tobacco may also increase your rates depending on the company you apply with.

    9. Drinking

    If you are a heavy drinker, you will probably pay a higher rate. Life insurance underwriters know that heavy alcohol consumption may lead to health problems down the road. This is why life insurance companies want to know how much you drink weekly or monthly. If you drink more, you’re going to pay more.

    10. Family Medical History

    Your personal health is not the only health history that the life insurance underwriters gather details on. If you have family members with a history of significant health risks such as cancer, diabetes, stroke and heart disease – you’re looking at possibly paying a higher premium. Your family medical history can determine your rate. This is especially true for hereditary health issues.

    11. Lifestyle and Hobbies

    Do you enjoy risky activities such as hang gliding, SCUBA diving, skydiving or rock climbing? These types of activities can cause your life insurance premium to increase. These are just a few examples of activities that are considered high risk. Each life insurance company will look at each risk differently, but most will see them as a potential risk – and you’re going to pay more.

    12. Driving Record

    How is your driving record? If you have some parking tickets, that won’t be a big deal. Trying to get life insurance with a DUI? That can be an issue. Your driving habits will not only affect your auto insurance, it may raise your life insurance premium. People with multiple driving violation will be seen as a high risk to the life insurance underwriters. You can expect to pay higher life insurance rates or even be declined.

    13. Foreign Travel

    Are you going to be traveling? If so when and where? The answers to these questions will want to be known by the life insurance companies. Your rate and eligibility will be determined by how long you’ll be gone, the destination, and the frequency of your travel. Traveling to the Bahamas? No problem. Visiting Iraq? That’s going to be an issue. That’s because certain travel destinations are going to seen as more dangerous than others. For those that are spending time traveling to dangerous high risk destinations – expect to pay higher life insurance premiums.

    14. Criminal Record

    Are you currently on probation? There are many life insurance carriers that won’t even want to insure you if you are currently on probation. However, if you’re off probation – the longer you’re off the better. The longer the time has passed since the conviction and parole – the better chance there is at affordable coverage.

    15. Medications

    The medications you currently take as well as have taken in the past may increase your life insurance rate. The medications you take can affect your health now or in the future. Do you take medication for a health condition? Perhaps you take medication for pain management. Your life insurance premium may increase your risk of death which will raise your rate.

    16. Benefit Payout

    You will have to choose how much of a death benefit you want your beneficiary to receive. This amount will affect how much you’re going to pay for your life insurance policy. A $2,000,000 life policy for 30 Year term will have higher rates than a $1 Million dollar term life policy. A $5 million policy will cost more than a $2 million.

    17. Policy Length

    Simply put, the longer the life insurance policy, the more expensive it will be. Why? It is because you’re more at risk of dying during a longer term (30 year term) versus a shorter term 10 year term. Whenever there is a risk, you’re going to pay more. Short term policies are less expensive than long term policies. In other words, a 15-year term life policy will cost less than a 20-year policy if the same benefit amount is chosen.

    18. Policy Type

    Permanent life insurance policies such as Whole Life and Guaranteed Universal Life are usually more expensive than a term life insurance policy. A cheap term life policy is the most cost effective when you’re comparing benefit amounts.

    What factors determine your life insurance premium?

    The big question is this: What is the significance of each of the above factors on your life insurance rate?

    It will ultimately depend on two things.

    1. The severity and details of those factors.
    2. The underwriting guidelines of each life insurance company.

    Every life insurance carrier is evaluated on a case by case basis by the company’s underwriters. No two life insurance companies are the same. Make sure you compare quotes and work with a life insurance expert that has access to multiple companies.

    Life Insurance Blog has access to over 60 top rate life insurance companies. Whether you’re looking for No Medical Exam life insurance options or a policy with an exam – we have you covered.

    Thank you for reading our post, Top 18 Factors That Affect Life Insurance Premiums. To learn more about life insurance, make sure to visit our page Life Insurance 101 or find out how much you may end up paying for coverage on our Life Insurance Payout Amounts page.

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    Our Infographic below reviews some of the top factors affecting your life insurance rates. It also shows you how to improve and lower your life insurance rate as well as how the life insurance application process works.

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    Michael Quinn

    Michael is a licensed life insurance agent, expert & owner of Life Insurance Blog. LIB has helped thousands of shoppers understand life insurance and secure affordable coverage.

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