- Gender: Men generally pay more for insurance than women mainly because women have a longer life expectancy.
- Age: Insurance is typically cheaper for younger people. The older you are the more you will pay for insurance because of the probability of dying increases as you age.
- Smoking status: Smoking being linked to a shorter life expectancy, smokers will have higher rates. Most insurers will give standard rates after 12 months of quitting.
- Health conditions: Past and current health conditions for you or immediate family members (parents and siblings) can have an impact on your premiums.
4 Factors That Influence My Life insurance Quote
Life insurance is a product that is tailored to each individual. Let's take a look at some crucial factors that influence your life insurance quote.
Life insurance is an excellent way of protecting your loved ones. If you pass away, your dependants' lifestyle will be maintained, your annual salary having been replaced by a lump sum death benefit. Millions of Canadians have embraced life insurance, which is remarkable. However, not many life insurance buyers are aware of how their premiums are calculated.
Life insurance is a product that is tailored to each individual. If your friend has a life insurance policy and pays a certain amount in premiums, your rates might vary even if you purchased the same policy. There is no "one-size-fits-all" policy or set of premiums. Therefore, it is crucial that you know what factors influence your life insurance quote.
While the actuaries of the insurance company juggle with dozens and dozens of variables to create their insurance product, as a consumer, your primary concern is with more general criteria. Our goal here at emma.ca is to make insurance easy and accessible. (That's why we wrote this quick read!) Everybody deserves to have access easy to understand information when making such an important purchase.
We also understand that you want to buy a policy that offers you good coverage at the most affordable price on the market, and it's the reason why most people shop around a bit before they choose their insurer. As a broker, Emma's role is to shop around for you and find you the best price for your needs! Once you make your choice, our experts guide you through the entire process.
Generally speaking, companies will offer varying rates based on the market conditions in which they operate, government policies, economic forces, and many other factors. Some of the variables that affect life insurance can be influenced while others can not. You can control certain factors such as your habits or lifestyle to reduce the price of your premiums, thus getting a better quote. However, factors such as your age are beyond your control.
Let's take a closer look at the mains factors that influence your life insurance quote:
Gender is one of the major factors that affect life insurance rates. If you take a look at the life insurance premium charts for men and women, you will notice that across all insurance companies, men have higher premiums than women for identical coverage. No, insurance companies aren't sexist. All that matters to the actuaries pricing the product are the statistics, and the numbers don't lie. Life insurance products are priced based on the risk of death. Generally speaking, women live longer than men. The average man is, therefore, a higher risk client compared to the average woman.
The male life expectancy in Canada is approximately 80 years old in contrast to 84 years for women. That 4-year gap is quite significant. Insurance companies are aware of this, and they know that the chances of paying a claim for a male buyer are higher. For this reason, they have to cover this risk by increasing male premium rates. Men also tend to lead riskier lives. You are more likely to find substance abuse and excessive speeding on motorways among the male population. Statistics also point to less healthy eating habits and a tendency to engage in dangerous hobbies such as deep-sea diving, skydiving, motorcycle racing and contact sports, among the male population. These hobbies and habits can often result in injury or death.
What one does for a living also has a big influence on their lifespan. While times are changing, historical data points to men generally working in higher-risk occupations such as mining, firefighting and construction. Therefore, since men are the likely candidates of some of these high-risk occupations, insurance companies tend to charge them more for premiums. Also, due to ingrained stereotypes of what it means to be a man in present-day society, men are less likely to seek help and are more at risk of being diagnosed with depression or committing suicide, which increases mortality risk for the insurer.
It is the sum of these considerations that generates a difference in prices amongst men and women.
Age is among the top considerations when purchasing life insurance. Insurance companies generally have lower premiums for younger people. It's because buying a policy when you are young means you have more time ahead of you than behind you. The insurer is not worried about having to write a check to your beneficiaries any time soon, and therefore, is willing to bring down the price of your premiums.
The more you age, the higher the likelihood of developing health problems. It could be a purely age-related disease or a condition developed due to your lifestyle. Either way, your risk of dying goes up, and you end up paying more for life insurance when you buy a policy at an advanced age.
Don't fret! You don't have to rush into buying a life insurance policy when you are still in school, especially since you might not have the means of paying for the premiums. Each insurance company has products with different age forks. Some companies have policies for children, and while your child can't be the policyholder as a minor, when they are a few weeks old, they can be insured. Most products also have a maximum age to subscribe to the policy, which can vary depending on the type of life insurance, whether it be a term or permanent insurance. A few companies also have special plans for people of advanced ages who may be troubled by certain conditions.
As previously stated, while you cannot change your age, you can decide when you want to buy life insurance, but the decision to purchase life insurance at 28 or 50 is yours to make.
Smoking is associated with several risk factors. Many people know about the risk of getting lung cancer among smokers. But this is not the only one. Studies by health experts have revealed that smoking is associated with many other conditions such as colon cancer, esophageal cancer, and even cardiovascular diseases.
Insurance companies consider a smoker to be a high-risk person. Therefore, a smoker will generally pay more for life insurance.
The insurance companies determine the rates charged to smokers. Some companies can charge as much as double the nonsmoker’s rates, whereas others only add a small percentage.
For most insurance firms, you are considered a smoker if you have smoked within the past year. It's means you will be charged the smokers' rates for premiums if you have been smoking a whole pack per day or if you have been lighting up occasionally in the past twelve months. The reason for this is that many people who smoke get addicted, and the person who smocks once a week could end up going through a whole pack a day eventually.
The good news is that quitting is good for health and good for your wallet! After 12 months of living smoke-free, you could be eligible for nonsmoker rates with some insurance firms.
Your health condition is another underwriting consideration. Generally, the healthier you are, the less you pay for premiums. This is simply because a healthier person is seen as a lower risk individual by the insurer.
People with certain health conditions might pay more for life insurance because they present a higher risk for the insurer, but not all health conditions are treated equally by the insurer. Several factors come into play. They are and are not limited to past medical procedures, hospitalizations, disease type, illness length, treatment plans etc. To determine your health risk, your insurer may want to know about your family history. Because some diseases are inherited, your insurer will want to determine the likelihood of you developing a particular condition during your lifetime. You may also be required to share information about your prescription history, both past, and present because an increase or change in medication can indicate that a health condition is not properly controlled. Finally, your insurer may require that you undergo some medical tests to ascertain your health condition if they require more information to choose your dossier.
Your health condition is greatly influenced by many things, which can vary from hereditary and environmental factors to lifestyle-related choices. If you needed additional motivation to get that morning jog done or to cut down on the sweets, remember that the healthier you are, the cheaper your life insurance quote.
To summarize, the variables mentioned above are the main factors that will influence your life insurance quote. Your insurer will present to you the exact price after doing several checks to ascertain your honesty. The premiums you pay will also be determined by factors from the insurer’s end, such as the market forces.
As you shop for life insurance, armed with this information, you now know what long term choices you can make to ensure the best possible price. No matter how tempting it may seem, always remember to be honest when purchasing life insurance. Any voluntary false claims may lead to your policy being declared void. There is nothing worse than believing you are covered and not being protected. Happy shopping! 😀