10 May 4 MINS READ
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Many people still think life insurance is financially out of reach, just because they don't understand how life insurance companies set their rates. Contrary to popular opinion, life insurance is one of the most cost-effective parts of a strong financial plan. When you apply for life insurance, you will be subjected to a screening procedure called underwriting. There are usually certain factors that underwriters look out for when reviewing your application. Let's help you understand these factors so you don't hold back on buying life insurance.

In this article, we'll take you through 8 factors that determine your life insurance rates.


1. Age

One of the most important factors that will determine your life insurance premiums is your age. The cost of insurance coverage rises with your age. Simply put, the older you get, the more your life insurance premiums will be. This is especially true with term life insurance, which lasts for a set amount of time, say 25 years. Younger applicants tend to obtain the greatest deal because they are a lower risk for insurers since they are more likely than older applicants to outlive their term life insurance or make additional payments on a permanent policy before dying.

Your life insurance company determines your rates mostly based on your expected life expectancy, and will normally set lower payments to account for the lower chance of death.

2. Gender

Yes, gender equality should be the norm but most insurance businesses don't think so.

In the United States, women live an average of five years longer than men. Life insurance companies may take this into account when calculating premiums, as well as health issues that are more common in one gender than the other. Due to the typical difference in life expectancy between men and women, males pay more for comparable policies than women.

That being said, several states are moving toward unisex law, that prohibits insurance companies from basing rates on gender. Montana is one state that requires insurers to offer gender-neutral life insurance rates.

3. Occupation

Expect higher premiums if you work in a high-risk job, simple and plain! Construction workers, active military members, natural resource workers (mining, lumber, fishing, marine, and oil and gas industries), aviation employees, and first responders (paid and volunteer firemen, EMTs, and law enforcement) are all examples of high-risk occupations. People in these jobs put their lives on the line every day. As a result, they are required to pay a higher premium than those who work in a relatively safe office environment.

4. Hobbies

Apart from work, your hobbies also matter. Do you like to spend your weekends doing things like skydiving, racing cars, scuba diving, or mountain climbing? If you indulge in these activities on a regular basis, notify your life insurance provider. It could affect how much you spend for coverage and whether you qualify for certain life insurance policies.

5. Policy Details

The cost of your policy is affected by the type of policy you choose (term or whole life) and the level of coverage it provides. Term insurance is less expensive, but they only cover you for a set length of time. These policies may be most beneficial for those who only require coverage for a specific period of time, such as while their children are young and their dependent needs are greatest. Because term life insurance only lasts a specific number of years, it is less expensive for insurers to cover you than whole life insurance, which covers you for the rest of your life. Whole life insurance also accumulates cash value over time, which influences what you'll pay for coverage.

Of course, the size of any potential payout plays a major role in setting your premiums. The more coverage you want, the more money you'll have to pay.

6. Health History

Life insurance quotes are heavily influenced by your health. Healthier people are less likely to die while their life insurance policy is active, so they are usually approved for cheaper life insurance rates. Conversely, applicants with specific health issues are considered riskier to cover because they are more likely to get a life insurance claim sooner.

Many life insurance applications may ask you questions about your current health and any previous medical issues you may have had. A physical exam (paid for by the insurance provider) is sometimes required and includes certain tests and lab work. You also give the insurance company access to check your medical records. Any chronic condition  you have, such as high blood pressure, high cholesterol, or respiratory issues, will be considered by your insurer.

Overall, the healthier you are, the lower your insurance premium. It is therefore recommended to buy life insurance when you are at your healthiest.

7. Family History

Insurance companies pay attention to your family health history since it can provide insight into your own health in the future. If you have a family history of certain hereditary disorders like diabetes, kidney, liver, heart disease, stroke, and certain cancers, your life insurance premiums may be affected. Your insurer uses this information to determine your eligibility and set your rates. Insurers would often look at your immediate families(parents and siblings) and how many of them have been affected when deciding whether you should pay higher premiums.

8. Lifestyle Factors

Apart from your occupation and hobbies, when you apply for a life insurance policy, you are asked a series of questions about your lifestyle, including questions about factors that could affect your health and safety. These could include how much exercise you get, whether you smoke, and how much alcohol you consume in a typical week. Your insurers will also check your driving records, criminal history, international trip history, and financial history. If you have a history of risky behavior, it may affect your ability to obtain life insurance and the rates. Life insurance rates are typically raised to compensate for the risk of a harmful lifestyle.


You won't know your exact premium until the company's underwriters have taken these factors into consideration. The insurance company rates the impact of each factor on your life insurance rates. As such, you should shop around before choosing a life insurance policy. Get quotes from numerous companies and compare to get the best life insurance deal.  

Now that's where we come in. Get insured through Black Insure and get matched with top insurers based on your needs.