Here you can get an overview of how your life insurance rate is determined and how general health can affect your policy.
Factors that affect rates
Why do life insurance rates vary so much?
Life insurance rates vary because of the specific metrics used by each company to determine risk. This is true with every type of insurance.
Though every company uses different rating calculations, most look at the following factors to determine the cost of life insurance:
- Overall health
- Family health history
- Marital status
Do women get lower life insurance rates than men?
In general, yes. Since women have longer life expectancies than men, insurance companies deem them less risky to insure. And less risk equals lower premiums.
However, rates are determined on an individual basis, so it's still possible for a man to get a lower life insurance rate than his female counterpart.
Can my weight affect my life insurance rate?
Yes. Many factors go into calculating life insurance premiums, and weight is one of them. Most life insurance companies measure weight and obesity according to the guidelines set by the American Medical Association. People with high body mass indexes (BMI) tend to have more medical problems than those with low BMIs, which make them riskier to insure. And the more risk an insurance company assumes, the higher your insurance premiums.
I'm a smoker. Will this affect my life insurance rate?
Yes. Because smoking is linked to a number of health problems, smokers pay more for life insurance than non-smokers. However, most life insurance companies factor in the type of tobacco used (cigar, cigarette, and tobacco) as well as the regularity of use to determine premiums. So even if you smoke, you could still qualify for a preferred smoker rate on your premium.
Whatever you do, don't lie about your tobacco use. If an insurance company learns that you weren't completely honest on your application, they could deny coverage as well as payment of benefits.
Does my age affect my life insurance rate?
Yes, age is one of the most important factors. Generally, the younger and healthier you are when you buy life insurance, the lower your rate will be. And the older you are when you apply for life insurance, the more you can expect to pay.
Will my term life insurance rates increase as I get older?
The beauty of term life insurance is that you maintain one set rate (determined at the time of purchase) throughout your policy's term. On the flip side, if you decide to renew your policy at the end of your term, your life insurance rate will increase because age is a determining factor. So if you're considering term life insurance, the younger you are when you start your term, the more you save over time.
Does my job affect my life insurance rate?
Yes, your occupation does impact your life insurance rate. Some occupations are riskier than others, and more risk translates into higher premiums. Generally, insurers focus on occupational accident-related risk when calculating insurance premiums. So if you work with toxic substances or parachute for a living, for example, you can expect higher rates. Conversely, if you have a sedate office job, you can expect your premiums to be average.
Additionally, your off-the-clock hobbies can also affect rates. If you're a mild-mannered, glasses-wearing life insurance guy Monday through Friday, but a hang glider and BMXer on the weekends, you probably won't get the best rates.
Does my location affect my life insurance rate?
Yes. As with all insurance policies, your state affects your insurance rate. Life insurance isn't regulated federally, which means that each state has its own laws regarding how much insurance companies can charge. To learn more about life insurance in your state, visit the National Association of Insurance Commissioners.
The medical exam
Will I need a medical exam to buy life insurance?
Not necessarily. Those without any serious medical conditions (such as cancer, HIV, diabetes) can obtain term life insurance without undergoing a medical exam.
Though most life insurance companies require a complete medical exam before underwriting a policy, some online companies do offer non-med or no-exam policies. However, these policies generally tend to cost more and come with less coverage. If you decide to go with a no-exam policy, you'll be asked to fill out a form detailing your medical history.
However, if you're in great health and aren't in a huge rush, the underwritten product — which requires an exam — is the best value.
What happens at the medical exam?
A typical medical exam will take only about 30 minutes. The insurer will arrange for a medical professional to come to a location of your choice. During the exam, the medical professional will look at your medical history and measure/test your:
- Height and weight
- Blood pressure
- ECG/EKG (if necessary)
What should I do before my medical exam?
Get the most out of your medical exam by following these tips, courtesy of our partners at Efinancial.
- 24 hours before: Avoid excessive exercise.
- 12 hours before: Avoid alcoholic beverages, decongestants, and pain medication (aspirin, acetaminophen and ibuprofen), as well as high-cholesterol foods (eggs, red meat, shrimp, and fried foods).
- 8 hours before: Avoid caffeine (coffee, tea, and soda). If possible, fast for best results (not including water).
- 1 hour before: Drink plenty of water to assist with the urine sample.