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5 factors that affect life insurance rates

As you embark on the life insurance application process, it helps to be aware of the factors that influence costs. Getty Images/iStockphoto

Life insurance and the financial protection it provides is something most financial advisers consider worthy. 

Many adults should have basic life insurance in place and some should also have a supplemental policy. But it's worth noting that all life insurance policies are not equal - and some may cost more than others, depending on your personal circumstances.

If you don't currently have a life insurance policy, or simply want to enhance the coverage you already have, you can start now by easily getting a quote. This is a great first step in determining what you may have to pay.

As you embark on the application process, it helps to fully understand the factors that influence costs. 

5 factors that influence life insurance rates

If you're a working adult, spouse or parent, you'll likely benefit from having some type of life insurance policy. Though millions of Americans would benefit from having life insurance, that doesn't necessarily mean that they will have the same experience or pay the same price. That's because the cost of life insurance varies from person to person and is dependent on a wide range of factors such as:

  1. Age: This is an obvious one but should not go overlooked, even if you're older and healthy. An applicant who's younger is less likely to run into health issues than an older one. So, younger policyholders are a less risky bet, even if both groups are equally healthy. Accordingly, the younger you are, the less you'll have to pay. As you age, the rate will rise.
  2. Health: If you're sick, have a current medical condition or any pre-existing ones, you may pay more for life insurance than if you were fit with no issues. This is especially true for smokers as the health issues they are prone to are well known, making them problematic to insure at a reasonable cost.
  3. Gender: It may seem unfair for one sex to pay more but, statistically, women live longer than men. Since men often (but not always) die at an earlier age than women, they can expect to pay more for their life insurance coverage.
  4. Policy type: Not all policies are created equal. Some offer cash-out options. Some do not. Some insure you for a select time frame while others cover you throughout your life. Different policies have different costs. Understand the difference between whole and term life insurance. The type you choose (and are eligible for) will influence your rate. 
  5. Family medical history: Your genetics play a role when getting life insurance. A history of cancer, heart disease or diabetes could be an indicator of your own health. If you have a family background with any major health issues, it could be a determining factor in what you pay for life insurance.

Not sure how these factors could affect what rates you're eligible for? You can easily view rates from multiple sources right now to see what you would pay. 

Other life insurance rate considerations

While the above five factors are some of the most important ones when trying to determine how much you'll pay for life insurance, they aren't the only considerations a company will account for. Factors such as your occupation, driving record and personal lifestyle may also come into play. Anything that's considered risky will likely lead to a higher rate. 

Conversely, if these factors are insignificant, don't expect them to have a material effect on the cost.

As mentioned above, life insurance is something many adults should have but the costs they pay to have it will vary significantly. Know what to expect before applying. Speak to a life insurance professional today and get a free price estimate.

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