Life Insurance 101

Factors That Affect The Cost of Insurance

Factors That Affect The Cost of Insurance

The insurance company is assuming a risk when issuing a policy.  In order to assess this risk, the company uses a number of factors to determine the likelihood of your demise.  These issues are taken into consideration when determining the premium to be paid. 

The more common data they use is:

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Age

The older you are, the more likely you will pass away.  The premiums for someone 65 will be higher than someone 25.

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Health

The insured’s health plays a primary factor.  The company will ask for information about current health issues as well as those that may have occurred in the past.  Some of the things researched will include heart disease, cancer, or hereditary conditions.  They will also inquire about lifestyle like smoking.

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Occupation

Some jobs carry a higher risk than others.  If you work in a safe environment, your rates will be lower.

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Family History

They will inquire about the ages of any family members who may have predeceased you and the causes. 

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Type of Policy

The type of policy carries its own premium rates.  For example, short-term life policies will generally carry a lower premium rate than whole life.