Life insurance is a simple concept to understand. You pay the premium; your loved ones get the benefit when you die. Like all types of insurance, life insurance premiums are calculated based on the risk that you will die prematurely. This is why young people pay less than someone in their 30s or 40s. The risk is small and their premium reflects that. But besides age, what else affects your premiums? That question is bit more complicated to answer.

At the most basic level, there are two types of risk factors that will determine your premium (Note: this is for term life insurance rates only). The two are “personal risk factors” and “size, term, & type of policy.” Personal risk factors tend to be things like age and gender. The other is self-explanatory – it depends on the size and term of the policy.

Let’s focus on personal risk factors. Personal risk factors usually break down into nine categories, all of which can affect the price you pay for insurance. Those nine factors are age, gender, smoker/non-smoker, personal health conditions, personal health history, family health history, occupation, hobbies & travel, and lifestyle. Some of these may affect you, most of them may not. Some states don’t use gender to determine rates, some do. It’s important to know which ones affect you before worrying about whether or not they will. Let’s break these down in groups of three.

First three up are age, gender, and smoker/non-smoker. The younger you are, the longer your potential life will be. The biggest difference between a 20-year-old and a 50-year-old is that one of those people is going make it another 40 years and it’s probably going to be the former. This is the reason that people urge young people to buy life insurance plans: you will save tons of money in the long run. The second factor, gender, plays a significant role in premium calculations and, in many cases, works in tandem with age. Women tend to live longer than men. That’s a fact. This matters because so long as you are alive, you are paying premiums. More premiums are a good thing for the insurance company. Women live longer and can pay premiums for a longer period of time. This means they get charged less. This makes a difference when you recognize that most men live to around 75, while most women live to around 80. That means a 25-year-old man and a 30-year-old woman will have about 50 years in them before they die. That’s a big deal when it comes to insurance rates. Finally, smoking status. This is, by far, one of the biggest risk factors and the one that is most in your control. A smoker will pay two to three times more than a non-smoker when it comes to premiums.  Also, quitting does not automatically put you into the non-smoker category. You have to be tobacco-free for a couple of years to be considered a lower risk factor.

The next group is health conditions, personal health history, and family health history. Health conditions refer to current health problems you are dealing with. Examples include high cholesterol, diabetes, obesity, or hypertension. Getting yourself into good health can help you avoid the costs that are incurred. Personal health history refers to problems you have had, but no longer deal with. This could be cancer, stroke, heart disease, or depression. These conditions tend to resurface, so the chance that they may return puts you at greater risk of dying sooner. The last one is family history. If one of your parents died of a health condition before the age of 60, you can expect to see your rate increase because of the chance that you may also develop the same condition.

The final group is occupation, hobbies & travel, and lifestyle. Occupation usually will not be a concern for most people. However, the occupational hazard difference between a logger and a blogger is significant. If you work a particularly dangerous job, your premiums will be higher. Up next is hobbies & travel. In most case, your hobbies will not affect you. If your hobbies include things that tend to result in accidental death, then you’re asking for someone to see you as a risk. The same goes for travel. Traveling to Italy to indulge in fine food and drink is a lot different than going to the Middle East to be a translator for the Army.

When it comes to the size and term of the policy, the larger or longer it is, the more you will pay. That’s pretty simple. The longer the policy is around, the greater chance the company will have to pay you out. That could cost them a lot of money depending on how long the policy lasts. In any case, all these factors should be taken into consideration when shopping for a policy. If you’re looking for an affordable policy from someone who can guide you through the process, look no further than Spencer Insurance Agency for all your life insurance needs.  You can give us a call at (215) 885-2200 or visit us online at https://spencerinsurance.com/ and we will be happy to assist you. Go here to get an immediate term insurance quote.