How do Life Insurance companies determine the price (1)

1. Age

The primary factor affecting the cost of life insurance premiums is the your age. Life insurance policies are less expensive for younger people, who have longer life expectancies and are less likely to get ill. In some cases, you may not even qualify for life insurance if you are over a certain age.1

2. Gender

Gender is also a significant factor in the price of life insurance. Insurance carriers use statistical models to approximate how long someone with a specific profile will be around. Women, on average, live nearly five years longer than men, so they have lower rates as a result.

3. Smoking

Smoking puts you at a higher risk for many health problems. So, life insurance companies charge more to insure smokers. In fact, smokers may pay more than twice as much as non-smokers for comparable coverage.

4. Health

The underwriting process for most carriers includes a medical exam in which the company records your height, weight, blood pressure, cholesterol, and other vital metrics. In some cases, it may also require an electrocardiogram (ECG or EKG) to check your heart.

5. Lifestyle

If you lead a risky lifestyle with hobbies such as racing cars, scuba diving, or rock climbing, you'll probably have to pay substantially more for insurance. Some companies also charge more if you have a relatively dangerous profession such as a police officer or a miner

7. Driving Record

Many life insurance companies will look at your driving record during the underwriting process. Whether or not they ask about violations on the application, they can access your Department of Motor Vehicles records to find out if you have any concerning violations.

What Is the Age Limit for Life Insurance?

Each life insurance company and policy will have its own age limit for you to qualify for life insurance. Generally, the older you are, the more difficult it will be to get life insurance. Many life insurance companies do not offer life insurance policies after you reach a certain age, like 85.

How Does Gender Affect Life Insurance Premiums?

Men generally pay more for life insurance than women because they have a shorter life expectancy. However, gender is not the only factor that determines the prices of premiums. Other factors like lifestyle and age can make one policy more expensive than another.

What's the Best Age To Get Life Insurance?

The younger you can purchase a life insurance policy, the more affordable it will be. When you buy life insurance, you'll also want to consider your income and coverage needs.

The Bottom Line

Life insurance is a common financial tool that can provide security for your loved ones who depend on you. This can give you peace of mind that if you die, your beneficiaries won't face financial hardships. However, life insurance can also be a significant expense and it's not necessarily ideal for everyone.

Familiarize yourself with different types of life insurance, such as term, whole, and variable life insurance. Then, consider consulting with a financial professional to determine which life insurance may be right for your situation and goals, and how you can reduce your premium costs.