5 Key Factors Influencing Life Insurance Costs

9 Factors that influence your life insurance rates | LowestRates.ca

After we had a baby, my husband and I decided it was time to get life insurance.

Life insurance is essential for ensuring your loved ones are financially secure after your passing.

When we decided to secure life insurance, we researched the factors that affect its cost. Here’s what we discovered to help you plan effectively.

1.The Amount of Life Insurance

Choosing the right amount of life insurance can be challenging. You’ll need enough coverage to handle funeral expenses, outstanding debts (like a mortgage or car loans), children’s college tuition, and possibly a year or more of living expenses to allow your family time to grieve without financial stress.

A $500K policy will be cheaper than a $1M policy. However, keep in mind that $500K today will be worth less in the future due to inflation.

2. The Length of the Policy

Many people opt for term life insurance, which can last 20, 25, or 30 years. Term life insurance means that if you outlive the term, you receive no payout.

Choosing a 30-year term policy is more expensive than a 20-year term policy because the additional 10 years increase the likelihood of a payout, which the insurance company offsets by charging higher premiums.

3. The State of Your Health

A healthy individual will have an easier time securing life insurance at a lower cost. If you have a family history of cancer or other serious illnesses, you may still get insurance, but it will likely be more expensive compared to someone without such a history.

4. Your Weight

Many insurance companies charge higher premiums for individuals who are overweight. If you’ve been planning to lose weight, it might be beneficial to do so before applying for life insurance.

Insurance companies have specific weight benchmarks for height. For instance, a 6’1″ male weighing over 250 lbs is considered higher risk compared to one weighing 210 lbs.

5. Your Age

The ideal age for a male to get life insurance is in his early 30s. Males in their 20s are considered higher risk due to their tendency to take more risks. By their early 30s, many men settle down and start families, making them lower risk from an insurance perspective.

As men age, they again become higher risk for developing life-threatening conditions. If you’re between 25-35 years old, research and ask the insurance company about the age that offers the lowest premiums. Choosing the optimal time to buy can save you hundreds over the life of the policy.

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