Ai Ling Lee of Los Angeles covers 9 factors that may influence a life insurance policy
HACIENDA HEIGHTS, CALIFORNIA, UNITED STATES: This financial commitment is often misunderstood. In fact, the Life Insurance Marketing and Research Association (LIMRA) reports more than half of Americans overestimate the cost of insurance by nearly 300%. The industry-funded research firm cites this as a major reason more people aren't insured. This is a problem.
The solution is better education. Most Americans don't understand how insurance companies calculate their rates and premiums. Ai Ling Lee aka Linda Lee of Los Angeles looks to dispel these misconceptions. The independent insurance agent lists nine factors that impact life insurance rates the most.
Type of Policy
Coverage terms and payout structures impact pricing. Term life insurance, which includes coverage for only a set term, typically includes the least expensive premiums. Because of guaranteed death benefits, permanent life insurance policies are much more costly.
Age
As obvious as it sounds, the cost of life insurance increases with age. This is because younger individuals have longer life expectancies and more time to pay for premiums. Ai Ling Lee recommends purchasing policies early to lock in rates.
Gender
Men often pay more than women. The reason is simple. According to the World Health Organization, women live six to eight years longer on average. Again, this allows for more premiums to be paid and spread out over time.
Medical History
Insurance companies will review one's health before purchasing a policy. This is called underwriting. During this examination, any existing conditions could increase one's rates. If someone has life-threatening diseases, like cancer or heart conditions, coverage could be denied altogether.
Tobacco Use
Smoking or chewing tobacco triggers severe health problems. For this reason, users of tobacco pay much higher premiums. As Ai Ling Lee points out, these rates can be lowered over time if the policyholder stops using tobacco.
Family History
A family's health may also be considered. If a family has faced a history of issues, they may be at risk of developing these later on too. Insurers will weigh this information when writing a policy.
Occupation
High-risk jobs cost more in premiums. For industries like logging, fishing, or construction, insurance companies will add on fees to compensate for the threat of these careers.
Lifestyle
How one spends free time also affects life insurance coverage. If someone enjoy dangerous hobbies, like skydiving or racing, premiums are probably going to be higher. Ai Ling and other agents will look at other behavioral indicators also, such as foreign travel, criminal background, and financial history.
Driving Record
One common lifestyle factor insurers will always examine is one's driving record. More than one speeding ticket or accident will drastically raise one's rates. More serious offenses, like a DUI, may disqualify someone entirely.
