UPDATED: Mar 26, 2020
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Life insurance companies work with actuaries and underwriters to calculate the risk of insuring your life. There are several factors they consider that influence the rates they charge for your term life insurance policy. You may find that you can make positive changes to some of these items. To get better rates, all you have to do is work on those factors you can control.
Mortality rates are tools that underwriters use to determine the risk of insuring your life. For this reason, those who are young usually get the best term life insurance rates. The older you are, the more likely you are to have health concerns. A 20-something-year old will probably pay a lower rate than a 60-something-year-old. This is why it is wise to buy term life insurance when you are young and get the lowest rates possible for a longer period.
Health is another important factor that determines your rates. Most life insurance companies require you to undergo a paramedical examination. Being slightly overweight or being a smoker can increase your premium. Other factors considered are family history, high cholesterol, high blood pressure, diabetes, any medication and physical and mental health. A balanced diet, regular exercise, and doctor follow ups can do nothing but help you in this area.
Life insurance companies check out the kind of job you do and your workplace environment. If your job exposes you to dangerous health risks, requires extensive travel, or is considered a high-stress job, be prepared for higher premium rates. A safer job would attract low-cost life insurance rates.
The type of hobbies you engage in may make you appear to be a risk taker. Some of these hobbies include skiing, bungee jumping, rock climbing, scuba diving, car racing, or any other such extreme sports. Engaging in one or more of these activities on a regular basis may cause your term life insurance premium to climb.
The way you handle your motor vehicle may give life insurance companies a little more insight on your personality traits. If you are reckless with your driving, in theory, you may also be reckless with your health. This can negatively affect your premium as well.
All of these factors are calculated to assess your risk of dying prematurely. If your risk is extremely high, a life insurance company may you any coverage. It is important to note that just because one life insurance company gives you standard rates, does not mean that all companies will do the same. Another company may very well grant you preferred rates, which will save you money.
While life insurance companies use the same criteria to determine life insurance rates, they may also specialize in some areas to give them a competitive edge over other companies. This is where it becomes helpful to talk to a licensed life insurance professional. They are knowledgeable about life insurance company guidelines and can help find the best company for you.