What Affects Life Insurance Rates?

There are many factors that life insurance companies use to determine their insurance rates. One consideration is if you are taking out a whole life policy or a term life policy. Whole life not only gives you life insurance coverage, but also gives you an investment component. For example after a set number of years you can cash in your whole life policy to pay for your child’s college expenses or other expenses. Term life insurance is straight life insurance. There is no investment or savings component. When you die the insurance company pays your beneficiaries a predetermined amount. Whole life policies are generally more expensive than term policies and there is much debate about which type of policy is the best. Many in the industry feel that term life is your best option, but it is up to you to decide which type of policy is right for you.



Other factors that affect life insurance rates include the following:

• Age

• Your health

• Weight

• Gender

• Coverage amount

• Term period

• If you smoke

• Any medication you take

• The state you live in



Most life insurance companies will ask you to go through a physical examination with one of their doctors before they will issue you a policy. This may include blood work to determine your cholesterol and triglyceride levels, an EKG and a complete physical. The companies use the information obtained from these tests and physical exam to determine if you are healthy enough to meet their requirements. Having a physical disability or condition such as high blood pressure or diabetes may not disqualify you from coverage, but they will make your rates higher than a person who has no disabilities or underlying health concerns. Some medications may also raise your life insurance rates. Depression medications, high blood pressure medications and other medications can make your life insurance rates higher. All of these factors are used by insurance companies to determine your life span and how long you will be paying into your policy.



The state you live in is important because the insurance industry is regulated on a state wide basis. No federal entity exists to regulate insurance companies and laws vary from state to state. You may have the same circumstances as a friend in another state, but your insurance rates may be different because of the laws in each state. Different states also have different laws about who can be covered and who cannot. Consult with your insurance agent concerning the laws in your particular state and which companies offer life insurance policies where you live.

Another one of the major factors in determining your life insurance rates is the term period you have for your policy. This is important for term life policies. The longer you pay on your policy the lower your rates may be. This is because the cost your policy is spread out over a longer period of time. You may be able to get more coverage if you choose to have a longer term for a very good life insurance rate. Consult with an experienced agent to find the best life insurance rates for the amount of coverage you need.