Age and health are probably the most important factors
Buying life insurance usually isn’t required by anyone, unlike auto or home insurance. However, it’s just as important or even arguably more important if you have loved ones depending on your income.
There are many factors that determine how much you’ll pay for life insurance. Each one could play a significant role in increasing or decreasing your premium, but when all of them are fairly equal, it’s your age and your overall health that can play the decisive role in your life insurance rates.
The younger you are, the cheaper your life insurance policy will be, regardless of anything else. Life insurance companies typically have a 5 year range for rate increases, so the sooner you can buy a policy, the lower it will be. Even if you’re in your 50s or 60s, it will still be cheaper now than it will be in your 70s.
Your current health is also a big factor in your rates. Insurance companies will start with your height and weight to determine if you have a healthy body mass. If you need to have a medical exam for your policy, they will also take standard measurements such as your blood pressure and ask you if you have any current health problems.
While the number of tobacco users in the US may be decreasing, if you are a smoker or tobacco user then you can expect to pay significantly more for your life insurance than a non-smoker or somebody who hasn’t used tobacco in the last 3-5 years.
Term policies are the cheapest type of life insurance you can get. Permanent policies, such as whole life or universal life, are much more expensive. This is partly because they are guaranteed to stay in force for your entire life – and guaranteed to pay a death benefit once you pass away. It’s also partly because they contain a cash value component which grows your own money that you can use in your lifetime.
Larger death benefit amounts are more expensive than smaller amounts. This is an important factor but the difference isn’t quite as much as the difference between a term policy or a whole life policy.
Similar to adding coverage to your car or home insurance, if you add increased features to your life insurance policy, you’ll pay more. This is especially true if the features involve a lot of extra money, like a return of premium policy or adding a disability insurance rider.
Driving and criminal history
While minor accidents or violations usually don’t affect your life insurance rates, if you’ve had a DUI or any type of criminal charge, you may have difficulty finding an insurance company who will take your application.
Family health history
Your own health history is usually more important than your family’s health history, but having siblings or parents who have had cancer or other serious medical conditions could result in a rate increase.
Occupation and lifestyle
Life insurance rates are largely based on the likelihood that the insurance company will pay a claim. Certain occupations and hobbies, such as roofing contractors who skydive, bring more risk of a fatal accident than others and result in a higher rate.
Females tend to live longer than males, so females tend to receive a slightly lower premium than males, though the difference usually isn’t very much if all other factors are the same.
Life insurance companies use many factors to determine your rate for a policy, but one thing that will always be true is that it’s more expensive to buy the older you get. Even if you’re currently unhealthy, buying a policy now could save you money in the long run rather than waiting a few years.