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Life insurance rates can
be so misunderstood at times. Just how do the various life insurers
determine what my rates are?
There are many different factors that go into determining each
individual's life insurance premiums. These factors include, your age,
gender, current health condition, whether you smoke or not, and any
hazardous occupations or hobbies you are involved in. In addition, the
life insurance company also adds in a profit margin. Let's take a quick
look at some of these different categories.
Your Health Condition
Most every insurance company has 3-4 main
health categories they use: |
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Your Health Condition
Most every insurance company has 3-4 main health categories they use:
Preferred Best, Preferred, Standard and Tobacco.
Obviously, the preferred best category is the at the top, and used for
individuals in excellent health. The proposed insured will not have any
adverse medical conditions or a past history of medical problems, and
they are not on any kind of medication. In addition to that, your family
history will usually need to have no incidents of cancer, heart disease,
diabetes, or a host of other long term, life threatening diseases that
may be considered hereditary.
Why? It's more likely for these people to live a long healthy life, so
the life insurance company will charge them the lowest possible premium.
Next is the preferred category which is somewhat like the preferred
best, but it allows for the proposed insured person to be in slightly
less than perfect health. The category that most everyone falls in to is
the standard group. If you have minor health issues, or are currently on
medication, or perhaps have a family history of diseases, etc., then
you'll most likely be assigned to this category. Keep in mind, if you
happen to be extremely overweight, or have a number of health issues,
the company will generally charge more in premiums.
The last category is for smokers. People in this category are considered
high risk and will pay much higher premiums for life insurance than
those who do not smoke.
Your Age and Gender
All life insurance companies use life mortality tables to calculate
their premiums. These life mortality tables use statistics that show the
life expectancy for every age. So, for example, a female aged 28 can be
expect to live much longer than a female aged 67. By using mortality
tables, the insurance companies can produce rate tables that show the
various premium contributions for every age.
Statistically speaking, women can generally expect to live 3-6 years
longer than men, so many insurance companies use the male rate less 4
years when calculating the life insurance premium for a female prospect.
Finally, an insurance company will look at your current occupation, as
well as any hobbies you pursue in determining whether or not to rate up
your life policy, or even offer you coverage at all. For example, if you
spend your weekends parachuting out of airplanes you can expect to have
a hard time even getting life insurance, or you'll pay substantially
higher rates for it.
Remember, always be up front and honest when applying for any type of
life insurance coverage. If you are given a policy and later it is
discovered that you were not truthful, the life insurance company has no
legal obligation to pay the death benefit to your beneficiary in the
event you were to die. That's the last thing you want happening, as the
reason for taking out a life insurance policy is to provide a benefit to
the ones you love.
by Terry Edwards |
