How Life Insurance Rates Are Derived

Primarily, several major factors affect the rates one will required to pay in order to receive sufficient life insurance coverage. They are as follows:

Age: The most important factor affecting one's premium.

Gender: To a large degree, sex determines how long a person will live. Historically females have always lived longer than males on average. On an average, women outlive men by 6%.

Health: The physical conducted by a certified medical professional is integral to the insurance company's rendering a decision as to one's health status. Factors taken into consideration are height, weight, blood pressure, cholesterol levels, and any other pre-existing conditions.

Smoking: Regular tobacco users have a lower life expectancy and pay extra premiums.

High risk occupation and hobbies: High risk professions such as some construction trades, pilots, fire fighters and police officers and hobbies such as parachuting, skydiving, race car driving increase premiums.

Income and Education: Insurance companies know that people with higher incomes and higher education have a lower mortality rate. Exactly why this is true is uncertain, though it assumed that with greater income and education come with better health care and less physically demanding jobs.