There are many factors that go into the pricing of a life insurance policy. Some are known at the time of quote and some factors are unknown and will not be known until the medical records, exam, and reports are completed.
The Known Information
If you know these 6 parameters you can generate life insurance quotes from any carrier.
The known factors/parameters will include your:
- Tobacco Use
- Life Insurance Company
- Policy Type (the type of policy such as term or permanent).
- Death Benefit (the coverage amount being purchased)
With these 6 parameters, you can get an average life insurance cost. However, you still have to calculate the unknown factors below.
The unknown factors are things that we do not know when running a quote which can affect your average life insurance rates. The underwriter will want to know this data below before approving a rate class for your insurance policy.
- Medical History – your past medical history and any doctor/hospital visits can drastically affect the average cost.
- Medical Exam Results – the final cost of life insurance will not be determined until the result of your exam results have been reviewed and the carrier knows your health status.
- MVR – Your driving record over the last 5 years. Just like auto insurance.
- Prescription History – The history of any medications you have taken.
- MIB Report – What hits are on the medical information bureau report.
- Rate Class – Preferred plus, preferred, standard plus or standard rate assigned after an offer is made by the carrier.
- Credit Score – believe it or not, your credit can impact your life insurance policy.
- Height and Weight – Your height and weight will determine if you can qualify for a certain rate class. See carrier height and weight charts here.
The final cost of life insurance is never known until the underwriter evaluates these things above. Certainly, health will also play a key role in the premiums that are charged for a policy.
For example, those who are considered to be in “average” good health will usually pay a standard rate. If you have certain health conditions, you will likely pay more when buying life insurance. Alternatively, if you are in excellent health, then you could qualify for a lower or preferred premium.
Other factors that are considered.
- Occupation – Those who work in a more “risky” occupation, such as firefighting, will usually pay more than an insured who works in a safer line of work.
- Risky Activities – If you engage in risky hobbies or activities such as skydiving, scuba diving, or rock climbing, you are apt to pay more for life insurance, as these may put you at a higher risk of a claim.
- Insurance Company – Just like with many other products and services, the price that is charged for life insurance can vary from one life insurance company to another – even for the same type and death benefit. With that in mind, it can be beneficial to shop around and get premium quotes from several insurers before you make a long-term commitment to one plan.
Given the number of determinants, it can at times be difficult to come up with an average life insurance cost. In fact, it’s easy to see how life insurance prices may vary over a period of time – sometimes significantly – from one person to another, based on their situation and needs.
However, knowing the price of life insurance for your particular needs can be beneficial. That’s because you will be more easily able to budget for it.
One way that you can narrow down your potential cost of life insurance is to use our quote engine, where you can quickly shop prices from over 30 of the top life insurance companies.