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How Are Life Insurance Rates Determined?

Get a better understanding of what factors into your premium.

If you’re shopping for life insurance, figuring out how life insurance rates are determined can seem like a bit of a mystery. While each insurer may define and measure risk in its own way, most companies will ask for some basic information to get a picture of your health. Some general factors that usually determine life insurance premium are use of tobacco or nicotine, high cholesterol, one’s height/weight ratio, preexisting medical conditions such as diabetes or high blood pressure, or activity that could decrease a person’s life span.

Life insurance rates are a reflection of the risk each policyholder presents to the insurer. But just like other types of insurance, life insurance underwriting takes into account numerous factors in setting a final rate.

How much is life insurance per month on average?

Determining an average cost for life insurance is hard to say, just like it’s hard to determine an “average” cost for any type of insurance. The cost of insurance depends on what you’re insuring. Premium for insuring a $100,000 home is going to be very different than the premium for insuring a $1 million home. The same stands for life insurance, and there might be even more factors involved as each person is unlike any other. Below you can see a sample life insurance rates by age chart for a $500,000, 20-year, fully guaranteed level term life insurance policy with Amica Life. While these are just sample premiums for our best risks, they can help you get an idea of how much life insurance costs. You may just find that you’ve been overestimating the cost of life insurance. 

Age Monthly Premium for Female Monthly Premium for Male
25 $16.56 $19.53
30 $17.40 $20.38
35 $18.25 $21.65
40 $25.89 $31.84
45 $37.78 $47.54

How are life insurance rates determined?

As a part of the life insurance underwriting process, insurers look at these risk factors:

  • Health status

    Your current health and past medical history can affect your rate. However, things like diet, exercise and stress reduction will also be taken into account. “Having a health condition doesn’t mean you’ll get a higher rate,” says Shiela Companie, Senior Vice President and General Manager at Amica Life. “For example, the potential risk posed by slightly elevated blood pressure can sometimes be offset by medication, exercise, diet and weight reduction.”

  • Tobacco use

    Given the proven relationship between smoking and mortality, rates for nonsmokers are lower than for smokers. Tobacco use has a dramatic impact on premiums – and if you quit, you can get a better rate. “Depending on how much time has passed since you’ve quit and your other health conditions, you could qualify for a nonsmoker rate,” Companie says.

  • Gender

    Women tend to pay less for life insurance than men of the same age and health. In 2021, data from the Centers for Disease Control and Prevention shows that life expectancy in the U.S. was 80.2 years for women and 74.8 years for men. So statistically, women as a group live to an older age than men do, making life insurance rates for women lower, on average. 

  • Age

    Life expectancy is an important factor in determining rates, so younger people will likely pay less for coverage. That’s because, on average, a 35-year-old man is more likely to live longer than a 45-year-old man.

  • Lifestyle and occupation

    What you do on a day-to-day basis can impact your health and therefore can impact your life insurance rates. A passion for hiking or bird-watching won’t affect your premium. But if you’re into more daring leisure pursuits – skydiving or scuba diving, for example – you may see a higher premium.

Is there anything you can do to lower your life insurance rate?

One of the most important things you can do is ensure that any changes to improve your overall health have stayed in place for a while. For example, if you’ve lost a significant amount of weight or quit smoking, most life insurers will want to verify the change has held steady for at least a year before offering a policy at a better rate. For preexisting conditions, insurers are looking at severity and control. For example, someone whose diabetes is managed well will receive a better rate than someone whose sugar levels vary regularly and widely. Stability helps insurers feel more comfortable with the risk they’re taking on.

Can future changes in health or lifestyle affect your rate after you get a policy?

Once a policy is issued, the rates cannot be changed by the carrier due to increased risk as long as the policy remains in force. If a policy lapses, customers may be required to provide proof of current insurability and health in order to reinstate. On the other hand, individuals can apply for rate class reductions if there’s a significant improvement in risk profile, as previously mentioned. The rate can only be decreased due to improved health, not increased due to declining health. If your health has improved, evidence is required and will include a new application and may include doctor’s reports or lab tests.

How do you apply for a life insurance policy?

If you’re comfortable with your initial quote, you’ll start an application for coverage. Some insurers may require you to meet in person or speak over the phone. Amica Life offers the convenience of starting the application online in most cases. Then you’ll speak with an Amica life insurance specialist to complete medical questions on the application. However, you can contact a life insurance specialist to assist you at any point.

After your information is submitted, it’ll go through the underwriting process, when you may be asked more detailed questions to ensure you’re getting the best and most appropriate rate. For most types of coverage, the premium is guaranteed for the level term period purchased or life of the policy. That’s why life insurance companies will collect as much information as possible when determining your rate.

Lastly, an Amica life insurance specialist will contact you to confirm if coverage can be offered and at what rate. Or, if your application is approved as applied, you’ll be notified via email. 

Want to learn more about Amica life insurance?

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Provisional Life Expectancy Estimates for 2022, Centers for Disease Control and Prevention, 2023

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ALIC01024 Apr-29