Basic things that life insurance companies look at to determine your final rates

There many things that insurance companies look at in determining your insurability and final rates. Here are the basic ones:

Your age and gender

That one is probably the most obvious. As you get older rates for life insurance only go up. Some companies use to use brackets (20-25, 26-30…) but I have not seen those in a long while. Also, as you may know, male, for most policies pay more than females. The age difference is about 7 years. In other words, a 57 year old female, will pay about the same rates as a 50 year old male. There still re some insurance companies that will use unisex rates which may or may not be beneficial to you. In the case of unisex rates, male may come out ahead but female may not. Since there is nothing you can really do about your gender (although some have tried), I suggest you take care of your life insurance needs when you are younger.

Your health

Your past or present health is, by far, the most important factor in determining your final life insurance rate and your insurability. As a matter of fact, I have heard of policies being rescinded because of fraud due to health questions but never due to an age or gender error (in cases of age or gender errors the insurance company, usually, just adjust the death benefit pay out).  If you have perfect health, then you should be able to qualify for the lowest possible rates. If your health is not the best then anything can happen. You could still get preferred rates or get standard rates, be rated or be declined. By the way, a rated policy is just a standard policy with a rate increase. If your health does improve after you have accepted a policy, you can always ask for a rerate (usually after, at last, one year of having an in force policy). The insurance company may or may not approve a rerate but it is worth asking.

Your occupation

It seems that most people are not aware of this reason for paying more on life insurance. Insurance companies can charge you more or even decline an application if your occupation is considered too risky (be explosive handler, pilots, certain law enforcement individuals…) or even if you are involved in risky recreational activities (scuba diving, cave exploration, parachuting…)

Your location and your race

I just thought I would throw those two in since it has been a question I have received. And the answer is no. Your location (within the US) and race are not factors insurance companies consider when underwriting your life insurance application. As a matter of fact, race is never a question on a life insurance application!

The above, are just the basic criteria insurance companies use when underwriting cases. Others may include your MIB records, pharmacy report, driving records, character, legal records… I hope this has been helpful to you. Please do not hesitate to ask questions. As we say in all of our articles, be sure to read your approved insurance policy as soon as you receive it. Be well.