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10 things that can affect your life insurance rates

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Life insurance companies assess your risks when deciding whether to insure you and how much to charge. They use a wide range of factors to evaluate the risk -- especially for a term life insurance policy.

Prices for term policies have been particularly competitive over the past several years, especially for the healthiest people. Insurers tend to have several rate classes:

  • Super preferred
  • Preferred
  • Regular-plus
  • Standard or regular
  • Higher "table rates" for people with health conditions

You must meet stringent criteria to qualify for the preferred rates. The requirements aren’t just based on your health. Insurers explore other areas of your life that could increase your risk of dying early.

"In order to get rates that low, companies have worked hard to do better at figuring out mortality," says Robert Gleeson, medical consultant for the American Council of Life Insurers.

Term life insurance companies want to offer the best rate to get your business while balancing the risk that they'll have to pay a death benefit. The rates for the healthiest people are quite low. For example, a 40-year-old non-smoking man in excellent health can get a $500,000, 20-year term policy for under $350 per year.

The risk factors change over time. Medical conditions that once caused an automatic rejection aren't as much of a problem now.

"Medical histories that at one point would have not allowed a person to get insurance, now you have the potential of being covered," says Joel Jones, vice president and chief underwriter for Mutual Trust Life Insurance in Oak Brook, IL, and a Society of Actuaries volunteer.

For example, insurers would automatically decline your application if you had a heart attack.

"They weren't going to take a risk on you," says Gleeson. "But as we have learned more medical information, we've been able to stratify heart attacks."

During the underwriting process, the insurer will look at your medical records. "If the person had a heart attack and a stent put in, no heart damage, rigorous control of cholesterol and blood pressure and seeing their doctor regularly, the insurer will look at that very favorably," he says.

Life insurance companies don’t gauge risk the same. Gleeson says some insurers perform minimal underwriting and charge a higher price, while other companies are more diligent about underwriting.

Don't be surprised if the insurance company asks about the following:

Your age

Your gender

Smoking status

Medical history

Cholestoral and blood pressure

Height and weight

Family medical history

Motor vehicle record

Hobbies

Travel

Your age

Age makes the biggest difference in your premiums and often affects how many follow-up questions the insurer asks. The younger you are, the less likely you will die soon -- especially while you have a 20- or 30-year term policy.

Here are the average annual premiums for a $500,000, 20-year level term life policy for a nonsmoking man in excellent health:

  • 30 years old: $406
  • 40 years old: $622
  • 50 years old: $1,461
  • 60 years old: $3,997

The insurer may also ask fewer questions if you're younger and applying for a smaller policy.

"A 30-year-old applying for a $100,000 policy may be a simple nonmedical form with a few questions about height and weight, smoking history and no blood or urine and you're done," says Gleeson.

Your gender

Premiums are usually lower for women than they are for men because their average life expectancy is longer.

Let’s take a look at the same average annual premium for a $500,000, 20-year term life policy, but this time we’ll compare the costs for a nonsmoking woman in excellent health:

  • 30 years old: $341
  • 40 years old: $518
  • 50 years old: $1,114
  • 60 years old: $2,833

As you can see, a woman could pay hundreds or more less annually on average for a 20-year policy.

However, for group insurance, men and women usually pay the same rates, says Rob McGee, senior director of absence and disability management for Willis Towers Watson, a benefits consulting firm.

If your employer gives you the option to buy life insurance at group rates, compare the premiums to the cost of getting coverage on your own.

Smoking status

Smoking makes a big difference in your rates because of the impact on mortality. Smokers can pay twice or three times more than what it costs a nonsmoker.

"Smoking more than doubles your mortality, regardless of age," says Gleeson. "It's a pretty important factor."

Here are the average annual premiums for a $500,000, 20-year term life policy for a woman who is a smoker and deemed as regular or standard health:

  • 30 years old: $991
  • 40 years old: $1,811
  • 50 years old: $4,047
  • 60 years old: $9,025

As you can see, a smoker may pay on average more than three times what a nonsmoker pays.

On the other hand, some group policies don't charge more for smokers if they're approved for coverage, says McGee.

Medical history

Your medical history affects your rate, but the specifics vary drastically by insurer. The impact can change over time.

"As medical advances take place, life insurance companies change how favorably they view things," says Jones.

For example, insurers once declined anyone who had Hepatitis C.

"But now it's something that's insurable because of new treatments and new medications. It's not a stagnant industry, and what was true even a couple of years ago is not always true today because of medical advances,” says Jones.

Insurers previously often rejected people who had cancer or a heart attack. However, insurers now request more information about the specifics of their disease and treatment.

"It depends on the type of cancer, how recent it was, and what the pathology report is," he says.

Insurers can have different guidelines based on their experience and research, so it helps to shop around with multiple companies if you have a medical issue. One insurer may reject you while another may offer a competitive rate.

Cholesterol and blood pressure

Your cholesterol and blood pressure affect your rate, too.

The cut-offs can vary by company based on their own experience. According to MassMutual’s MyLifeScore calculator, insurers generally look for a:

  • Normal systolic blood pressure -- 100-129 mm/HG 
  • Diastolic blood pressure -- <80 mm/Hg
  • Normal cholesterol -- <200 mg/dL

Controlling your high blood pressure or cholesterol through medication can help get you approved and pay a lower rate, says Gleeson.

Height and weight

Height and weight are important because it determines your body mass index (BMI).

"Build is a significant factor, especially if you're talking about preferred and preferred-plus rates because your height and weight do have a potential effect on mortality," says Jones.

People with a high BMI can end up having other medical problems. However, Jones says insurers have relaxed their height/weight requirements over the past few years. Insurers are generally looking for a BMI of 20 to 25 for the preferred and super-preferred rates, says Gleeson.

Family medical history

Insurers generally want to know whether your parents or siblings died before age 60 from heart disease or certain types of cancers, such as colon cancer, breast cancer or prostate cancer, says Jones.

They aren't as concerned about whether your family members died of these conditions when they were older.

Motor vehicle record

Life insurers review your motor vehicle record, but in a very different way than car insurers. Jones says life insurance companies are looking at mortality risk when they review a driving record.

"If you see someone with a DUI, that's an indication of a higher mortality risk than someone who does not. Generally speaking, minor vehicle infractions aren't considered significant, but major traffic violations are generally taken into account,” Jones says.

Hobbies

Most hobbies won't make a difference, but risky hobbies can affect your rate.

"If you like hang-gliding, base-jumping or running with the bulls in Pamplona, there's a chance you'll face higher premiums than if you didn't engage in such dangerous activities," says Jack Dolan, vice president of public affairs for the American Council of Life Insurers. "That's because there's a clear relationship between these activities and deaths that would otherwise occur if you did not participate in them."

The insurer is likely to ask for more details if you mention a risky hobby on your application, such as mountain climbing.

"If they just go hiking in Vermont, that's not really going to factor into the underwriting decision," says Jones. "But if somebody is ice climbing and requires special gear or climbing Everest, those present a different type of risk and would be taken into account."

Travel

Travel only affects your rates if you travel to very risky areas.

"For example, a person who travels to a part of the world riddled with trouble and violence puts themselves at risk," says Dolan.

Earlier in the year, insurers temporarily pulled back on issuing policies to people who had traveled to high-risk COVID areas, before the virus was as prevalent in the United States. Otherwise, Jones says that foreign travel isn’t a big underwriting factor now as long as it isn’t deemed risky.

If you’re looking for a life insurance policy, give thought to these 10 areas and see if there are ways to improve your risks. Doing so may get you better life insurance rates. Also, make sure to shop around. One life insurance company may not deem you as risky and give you lower rates.