When shopping for life insurance, it's safe to say we're all choosing the best value. You want to get the most coverage for that lowest price.
While comparing life insurance coverage quotes across insurers is among the how to secure affordable pricing, there are many additional factors at play. Some of these factors have been in your control, yet others aren't.
If you are in the marketplace for medically underwritten term life insurance (normally the best bang for your buck), the premium prices are personalized to you. This means an underwriting platform (or person) looks to you and only you to definitely provide you with the most cost effective rate available based on your way of life and health history.
With the aid of some actuary all-stars on we here at Haven Life, we've identified key areas besides coverage amount and term length that impact term life insurance pricing throughout the industry.
Your age
Age is among the most substantial underwriting considerations. It not only dictates the price of your policy but also impacts just how much coverage you can buy.
Younger people get the best insurance costs because they present a lower risk to insurers. You can't control your age, of course, however, you can control whenever you buy a policy. (Assuming you're only purchasing life insurance coverage when it's needed.)
For example, a 35-year-old man in excellent health can purchase a 20-year, $500,000 policy starting at $21 per month. If that same applicant waited until he turned 40, coverage would start at $30 per month. That extra $9 per month might not seem substantial, but over Two decades, it would add $2,160 towards the price of coverage.
Proactivity is key. As time passes, the more likely you are to develop a disease or condition that would allow it to be tougher for you to get coverage at a good rate. Be sure that your insurability by looking into making moves sooner rather than later.
Gender
In just about all states, premium rates are higher for men compared to women. (Fun fact: Montana may be the only state to require unisex rates.) The rationale for why is really simple. Statistically, men have a shorter life span than women. And also, since insurers base pricing on mortality risk, this means pricing is adjusted for male applicants.
While underwriting by age and gender can be a hot-button issue for some, it's also important to know what kind of factors life insurance companies cannot legally use in their underwriting decision. For instance, how race and ethnicity affect life expectancy cannot be considered.
Tobacco use
It's no secret, but tobacco is terrible to improve your health. And it is not just about lung cancer. According to the Centers for Disease Control, tobacco harms just about every organ within your body and can result in premature death. Because of this, insurance companies face a significantly higher risk with tobacco users.
There’s no way around it. Insurance companies face a much and the higher chances with tobacco users. But, how does this risk translate into premiums? A 37-year-old woman in excellent health who does not smoke could buy a 30-year, $500,000 policy for about $36 per month. If she were a smoker, she would pay around $128 per month. Over 3 decades, that policy would cost you a tobacco user $33,120 more.
If you're a tobacco user and you are considering quitting and applying for term life insurance, you need to realize that most insurance companies require that you be tobacco-free a certain amount of time before they will provide you with a non-smoking rate. For instance, Haven Life requires you to definitely be tobacco-free for a year.
Personal health history
Not surprisingly, to purchase a medically underwritten term life insurance policy, you will be asked about your physical and mental health history.
The healthier you are, the cheaper your policy. So, should you be looking for a little push to get rid of a few pounds and enhance your cholesterol, you could use “affordable life insurance rates” for additional motivation.
Another factor in your individual health history will be any persistent medical conditions. You shouldn't fear any adverse health questionnaire and health check for those who have a chronic condition. Medically underwritten coverage can nonetheless be a much better value than a simplified issue or group policy, which doesn’t look at your full health background but charge you more for that unknown risk insurers are taking on.
Because all applicants are evaluated on a case-by-case basis, eligibility and pricing is determined by the type of illness or condition, when it occurred, plan for treatment, and if there was a recent surgical procedures or hospitalization — simply to name a few factors.
Prescription history
Along with your medical history, underwriting will also consider your prescriptions, both past, and current. By taking a look at your prescription history, underwriters can easily see it matches what you've already said excitedly and become confident that you are an honest applicant. If you omit something from your Rx history, an underwriter might logically think that you might have made other omissions. This could lead to one more investigation and lengthen time it requires to get your policy.
Being open and honest in the application permits the underwriter to feel comfortable that no critical information is missing or inaccurate. This, in turn, enables them to give you the best rate feasible for your situation.
So, much like your parents, grandparents and teachers always said, honestly is really the very best policy.
Family health history
To get a truth of the health, insurers should also examine your immediate family's health. Insurers will ask regarding your family's good reputation for illnesses like diabetes, cardiovascular disease, and cancer with an understanding of your subsequent risk over time.
Many diseases have a hereditary component. In some cases, having a genealogy of illness increases the chance that an individual will develop a condition later in life. Underwriters consider the severity, age of onset and whether or not this caused a loved one's death in making their ultimate decision.
It's also worth noting that some life insurance coverage companies have started using dna testing information. Exposing more data to an underwriter could have both an optimistic or adverse impact on your premium, however it will give you the opportunity to demonstrate that they do not carry the same genetic marker like a member of the family that had a specific disease. In that case, using a family history of something like cancer might not impact your underwriting class whatsoever.
Driving or criminal records
Accidental death is one thing that underwriters need to consider when creating their ultimate decision. One way they can determine your risk is by taking a look at your driving records. For example, in case your driving history includes multiple, at-fault collisions over the past couple of years or significant speeding infractions, it may cause a rate increase. Whether it's been a lot more than three years since your last accident, your driving record is not as likely to have an impact on your premium amount.
Additionally, a criminal record may impact eligibility for several reasons. It may indicate an inclination toward riskier behavior (would you see a trend here?) and incarceration may cause illness and premature death.
Credit attributes
While your credit rating is not something the life span insurance industry would look into underwriting, your credit attributes might be.
Credit attributes indicate your track record to make sound financial decisions and speak generally for your risky or responsible behavior. You might be interested to understand that lots of industry studies show a strong correlation between certain credit factors and mortality.
An example of a credit attribute that life insurance coverage companies would look at is whether or not you have filed bankruptcy. While for many people, bankruptcy could be a result of unfortunate events that occurred beyond their control, for many it can indicate poor decision-making or even be a red flag for medical conditions because many bankruptcies would be the consequence of hospital bills. Additionally, the life insurance industry carefully monitors fraudulent policy activity, so an undesirable credit history happens to be an indication that an applicant intends to buy a insurance policy for illegal purposes.
The impact of credit information is still evolving within the insurance industry. While some underwriters uses it as being a triage approach to decide if you should order information from an application, many agencies (including Haven Life) do not directly use credit data to make an underwriting decision.
How you're employed and play
Your job is considered within the underwriting process because, let's be honest, some people have risky occupations. For instance, active military personnel, police officers, firefighters, and even helicopter pilots (although not major airline pilots) and construction workers have the ability to careers that take their lives in a and the higher chances than those with desk jobs. Generally, this could not prevent you from having the ability to secure coverage, but it can improve your premium rates.
(Full disclosure: active military isn't currently entitled to our Haven Term policy.)
Additionally, life insurers will even seek to determine whether you're an adrenaline junkie. In case your hobbies include rock climbing or skydiving, you present a greater risk to insurers, and your eligibility and premiums is going to be affected. Climax still possible to get coverage, how often you participate in risky activities can make a positive change. Skydiving once is less dangerous than skydiving on a weekly basis, and insurance underwriters recognize frequency.
The advantages of being honest and open
Providing personal information feels, well, personal, but the term life insurance underwriting process is important to assessing risk and offering you as affordable a premium as possible. In group policies, in which you answer fewer (or no) questions, that uncertainty is priced to your premium.
Since there are many companies available selling cheaper policies to individuals who share information, insurers think that people who opt to not are riskier and for that reason charge them more. Consequently, if you're indeed a proper individual, you will sometimes need to pay a significant premium if you don't buy a personalized medically underwritten policy.
As with all things in your application, it's vital that you are truthful and honest. If your claim were ever made in your policy, the insurer would do some routine investigating before paying the death benefit. So, whether it turned out that you were deceitful, your beneficiaries (maybe your lover or children) may not get the payout.
Getting life insurance coverage provides you with peace of mind that the loved ones are financially protected. But simply because this is this kind of important product, doesn't mean it needs to be complicated to buy. By having a good grasp on industry underwriting practices and key factors that contribute to determining premiums, you'll be more confident regarding your purchase and selecting an insurance policy you heard right for your loved ones.
