If you have spent time searching for affordable term life insurance online, you have probably discovered that different companies provide different rate quotes depending on where you go. You probably find yourself wondering how providers determine life insurance rates. Efinancial has created a short guide to help you understand how companies arrive at the rates they quote to you.
Life Insurance Rate Factors
Life insurance rates are based on the probability of you surviving through the end of your term. The more likely you are to survive, the lower the rate and more likely you are to be approved. If you have health issues that put you at a higher likelihood of death, you are seen as a greater insurance risk. This will often result in higher rates or more difficulty in gaining approval for life insurance.
There are several factors that are considered when a life insurance company evaluates an individual for coverage. Most people believe they are in perfect health and will live forever. The fact is that no one knows exactly when they will die. With this in mind the job of the insurance underwriter is to look at obvious factors such as your current health status but also to look at less obvious factors such as your family health history, any past medical issues, driving records, and criminal history.
Other factors that will affect rates and approval include:
- Tobacco use
- Drug use
- Alcohol consumption
- Involvement in high-risk leisure activities
- A high-risk career
Any activity or piece of your history that can be seen to put your health at risk, can affect your life insurance rate and general insurability. That is why a healthy individual with a low-risk lifestyle will be the most insurable and find the most affordable term life insurance if approved.
The life insurance underwriter will look at the information from your medical exam (required for most life insurance policies), your application, and also look at information that has been posted on the Medical Information Bureau. Your past medical visits will appear at the Medical Information Bureau so the underwriter will be able to see what you have gone to your Physician for in the past. The underwriter may find something on the Medical Information Bureau of interest and would order an Attending Physician Statement from your Physician to find out details of a specific visit that you had. The underwriter will also consider the health history of your parents and siblings. Major driving or felony convictions are also considered.
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