There are several important factors that will determine the cost of your term life policy. These include:
Age
The older you are, the closer you are to passing away. An 85-year-old has a greater chance of passing away than a 30-year-old (considering age only). So the older you are, the more expensive your life insurance policy would be because there is a greater likelihood of you passing away and a benefit needing to be paid out by the insurance carrier.
Term Length
The longer the time duration that your policy will be in force (active), the greater the chance of your policy benefit being paid out. The insurance carrier is more likely to pay out a death claim on a 30-year policy for a 35-year-old than a 10-year policy. Why? Because there is a longer duration of time for a possible death of the insured to occur. On top of that, the insured will have aged to 65 years old with a 30-year policy instead of 45 years old with a 10-year policy. This factors back to age with mortality rates and the likelihood of death occurring. A 65-year-old has a greater mortality rate than that of a 45-year-old when just looking at age. So, the longer the term duration of a policy, the higher the rates will be.
Family History
Insurance carriers will also consider the health and lifespan of your immediate family members (father, mother, brother, or sister) to evaluate the rate class you may qualify for. This is done to assess genetic predispositions regarding serious illnesses, such as major invasive cancer and heart disease that could impact your life expectancy. Most carriers examine family deaths (health-related) and serious illnesses before age 65 to determine the appropriate rate class for you. Family history will not prevent you from qualifying for coverage but will influence the rate class you are eligible for, affecting the cost of your policy.
Gender
Statistically, women have a longer life expectancy than men. Life expectancy is a factor that influences your life insurance rates, so gender will also play a role in determining your term life rates. A 40-year-old woman will pay less than a 40-year-old man, even if every other factor is the same.
Hobbies
Any hobby that could significantly increase your chance of death and shorten your life expectancy will affect the rates you qualify for or could even make you uninsurable. Scuba diving and mountain climbing are activities that insurance carriers would consider dangerous and could lead to higher rates. Other high-risk hobbies, such as skydiving and flying as a non-commercial pilot for recreational purposes, especially if done often, might make it difficult for you to find coverage.
Lifestyle
Your health isn’t just impacted by things that can be measured on a medical exam, such as your weight and blood pressure. Life insurance carriers will also look at your lifestyle. This includes things like drinking, smoking, and any drug use.
Driving Record
Reckless driving can lead to a serious accident and increase your risk of an early death. So, if you have a history of multiple driving infractions, a DWI/DUI, or a suspended driver’s license, your life insurance rates will be higher, or you could even be declined for coverage. Having a good driving record doesn’t just help with keeping your auto-insurance rates low, but also affects your term life insurance rates.
Criminal Record
A recent criminal charge could make it difficult to get coverage, especially if you’ve been charged with a felony or recently been incarcerated. Most insurance carriers will decline or postpone life insurance for any applicant who is serving jail time, currently on probation, or has committed several major felonies in the last 15-20 years.
Life Insurance Score
Your life insurance score can be viewed as something similar to that of a credit score. It’s influenced by some of the factors already mentioned, such as your driving record, but it also looks at your financial history. Applicants who have declared certain types of bankruptcy in the last 5 years, taken out extremely large loans compared to their annual income, and/or have a bad credit history will have a low “insurance score”. This can cause your rates to be higher with many carriers or may even cause you to be declined for coverage.
The Insurance Carrier
Different insurance carriers will have different rates for the same exact person. While some carriers are closer in price than others, some are a lot higher compared to the rest. On top of that, not all insurance carriers have the exact same underwriting guidelines and health classifications for certain health conditions and lifestyles. For instance, the carrier you are applying for coverage with will underwrite your application to assess your overall risk and will qualify you for a health classification that will be tied to your term life insurance rates. Let’s say you use chewing tobacco. One carrier might approve you with tobacco rates, while another carrier might approve you with a “partial” tobacco rate, and another might approve you with non-tobacco rates (which will be the cheapest health class rate of these classifications). That’s why it’s always best to shop around since not every insurance carrier is the same.
At Angel Wings, our experienced licensed insurance advisors can help you navigate through all the carriers by discussing your specific situation to determine your eligibility and which carriers and plans will give you the most favorable rates. So, whether you’re interested in saving as much money as possible or just have some questions regarding your specific situation, we’re here for you.
Here are ways you can reach us:
Phone: 866-353-9228
Email: info@angelwingslife.com
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