Factors Affecting Life Insurance Rates

Factors Affecting Life Insurance Rates

Among the types of insurance experts suggest that everyone should have is life insurance. Others include health insurance, auto insurance and long-term disability insurance. Life insurance is arguably the most popular and oft-spoken about. Virtually everyone has something to say about life insurance. 

Life insurance will indeed ensure that your family’s needs are catered to in your absence and won’t have to suffer the brunt of losing the breadwinner of a family. 

While these are amazing benefits of buying a life insurance policy, that’s merely scratching the surface. There lots more benefits or advantages of buying life insurance. 

Let take a look.

What are the benefits of life insurance?

As we mentioned earlier, life insurance provides a financial cushion for the family of the deceased. But that is generic and one out of the many benefits of life insurance. With the right life insurance coverage, other ways in which your family can enjoy the benefits of life insurance include:

  • It makes up for the years of lost salary
  • It comes in handy for paying the home mortgage
  • It helps in settling debts including car loans, student loans and offsetting credit cards
  • Funds from life insurance can be used to finance your kid’s education 
  • It can also be used to caters to other living expenses like supporting aging parents.

Having mentioned that, you should bear in mind that different kinds of life insurance offer distinct benefits. As you may already know, life insurance is classified into two types — the term and whole life policy.

You may also recall that the major distinction between both kinds of life insurance is their duration.

What are the benefits of different kinds of life insurance?

With the term life policy, you will pay an agreed amount of premium for a predetermined period (say 10 years). This time is jointly agreed upon by yourself and the life insurance company. 

If anything happens and you lose your life during the course of the agreed time, your family or named beneficiaries will be paid death benefits. However, to keep the insurance active, you have to renew your coverage at the end of every term. 

On the other hand, a whole life coverage means you will continue to pay a premium throughout your life. It is meant to last your entire life. 

What are the benefits of term life insurance?

  • On top of the list is that this kind of life insurance offers low cost.
  • It’s simple to understand and follow-through 
  • You have the option of converting to whole life insurance if you want
  • You can easily back out of the plan without too much stress. However, whatever premiums you have already paid will not be refunded or repaid.

What are the benefits of whole life insurance?

The benefits of whole life insurance are that:

  • It is permanent 
  • Offers cash value you can either take out or borrow from

How to get value and more benefits from life insurance 

Like virtually other aspects of life in different facets of human endeavors, we are always looking for cost-effective means of getting things done while maximizing the value we derive from it.

This is no different when you set out to purchase a life insurance policy. The best time to buy life insurance is when you are younger and at your healthiest. If you are familiar with how insurance companies operate, they tend to offer lower rates to younger customers and it’s easy to understand why.

  • Younger customers have a longer life expectancy 
  • They have higher chances of not being diagnosed with any serious ailment or diseases 
  • They have a longer time (number of years) to pay premiums — and that’s a plus for the insurance companies.

However, you will be wrong to think that life insurance only benefits the younger customers. There are amazing offers for older adults and the elderly. All you have to do is make inquiries leverage the counsel and advice of a financial expert. 

One aspect of life insurance that has pricked much interest is how life insurance companies come up with their rates. 

Factors that affect life insurance rates

While life insurance companies differ in the way they calculate their rates, they all share common denominators in their parameters. The common factor that life insurance companies use to calculate their rates includes, but not limited to age, gender, health, lifestyle and the type of life insurance policy an individual opts for. 

Let’s a look at a couple of them

  • Age 

The younger you are, the lower the rates you will get. It’s all mathematics. statistically, younger people tend to have a high life expectancy and that means they can pay less premiums over a long time. On the other hand, old folks will have to pay higher rates over a short period.

  • Gender 

According to the National Centre for health statistics, women have a life expectancy that is at least five times that of males. Based on that, women will naturally pay less rates compared to men.

  • Health 

Your health also affects your life insurance rates. If you have underlying health issues or risk factors such as risky behaviors (smoking, drug use and drinking) and family medical history (hereditary conditions like heart diseases and cancer), you will most likely have to pay high rates. 


Life insurance companies often consider how long they have until payout when determining life insurance rates. They need you to be young and healthy so you can pay premiums continuously for a long time.

While searching for life insurance coverage and the best rates, it’s always best to seek expert guidance and talk to insurance professionals before making your decision.

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