There are a lot of important reasons to have life insurance. Perhaps the most important is that it provides financial security for your loved ones in the event of your death. If something happens to you and you don’t have life insurance, your family may have to bear the burden of your death financially. Life insurance can help to ease that burden with a death benefit and allow your loved ones to continue to live comfortably.
When choosing life insurance, the type of policy you select will dictate the premiums that you pay. Term life insurance is a type of life insurance that provides coverage for a specific period of time or term. Term life insurance is typically less expensive than permanent life insurance, but it does not provide coverage after the policy expires. Additionally, term life policies don’t offer any other benefits, such as a cash value component.
Permanent life insurance, on the other hand, provides coverage for the policyholder’s entire life. Permanent life insurance policies, like universal life or whole life, typically have a higher premium than term life policies. However, they also offer a savings component that can be used to provide an additional safety net or to help pay for the policyholder’s retirement.
No matter which type of policy you choose, however, there are a few key factors that insurance companies take into account when determining your life insurance costs. These include your age, health, lifestyle, and gender. Keep reading to learn more about how these factors affect your life insurance rates.
Age
One of the most influential factors when considering insurance premiums is your age. As you age, you become more likely to develop a medical issue. This increased risk means life insurance companies must charge more for coverage since they are guaranteeing to pay out a benefit to your loved ones in the event of your death. The cost of life insurance premiums rises exponentially as you get older. For example, a healthy 30-year-old might pay $300 for $500,000 in coverage, while a healthy 50-year-old might pay over $900 a month for the same amount of coverage.
Gender
Gender is another determinant of life insurance premiums. Statistically, women live longer than men. This discrepancy is reflected in life insurance premiums, with men typically paying more for coverage. On average, a healthy 30-year-old male will pay around 19 percent more per year for a 20-year plan than a healthy 30-year-old woman will pay for the same policy. Many insurance companies weigh gender differently, so it is important to shop around as you may find that certain insurers don’t consider it as heavily as others.
Medical History
Aside from age and gender, one of the most important factors that influence life insurance premiums is a person’s medical history. This includes both past and present medical conditions, as well as any treatments or surgeries a person has undergone. Most life insurance companies require potential policyholders to disclose their medical history as well as take a medical exam. Both of these things will come into account when companies set rates, and people with a history of health problems or ongoing issues will likely pay more for coverage than those without a history of health issues.
Lifestyle
Another major factor that will influence your life insurance price is your lifestyle. Things like your occupation and hobbies will impact your life insurance premiums. If you participate in dangerous hobbies like skydiving or rock climbing, your premiums will be higher as there are more risks associated with these activities. Additionally, if you have a dangerous job, like working as a police officer or a firefighter, your premiums will be higher than if you have a safe job, like working as a teacher or a nurse. Your personal choices such as tobacco use and smoking could also increase your rates due to the associated health risks.
Life insurance is important to protect your loved ones financially if something happens to you. There are many factors that determine your life insurance cost. Some of these factors are your age, health, and lifestyle. The cost of life insurance can also vary depending on the company you choose to purchase coverage from. Shopping around and comparing rates is the best way to find an insurance product that fits your needs.