Will You Be Viewed As A Risk To A Life Insurer?

Whether it’s concerning your job, gender or physical condition – will you be viewed as a risk to a life insurer? If you are, your premium rates will rise and this is to off-set any loss on the part of the insurance company.

Applicants who are older, have health problems, smoke, or have a hazardous hobby or job will likely pay more for life insurance.

Before an insurance company can rate a policy they have to place applicants into the right classifications, noted Edward E. Graves, author of “McGill’s Life Insurance.”

But when you consider risks, it makes sense that not all people should be offered insurance on the same terms. For instance, should nonsmokers and smokers have the same rates?

There may be some unavoidable disparities in the risk classification system because everyone’s situation is different, and each classification must be broad enough to include a variety of risks.  The challenge for insurance companies is to avoid creating extreme unfairness between policy owners based on risk tables that are too narrow. Will you be viewed as a risk to a life insurer?

Insurance companies use a process called underwriting to decide whether to sell life insurance to someone and how much to charge them. The company will consider several factors to determine the premium to charge. Those include:

  • age
  • family history
  • gender
  • medical condition
  • tobacco usage
  • hobbies and occupation

Younger applicants and people in good health, don’t smoke, and don’t have a hazardous hobby or job will receive lower rates because the company expects that these policyholders will live longer.

Most insurance companies offer online underwriting guidelines and if shopping for insurance, this will give you an idea on the underwriting requirements and factors that are taken into consideration. Prudential offers some questions and answers, while Banner and William Penn offer an abbreviated version of classifications.

Getting a good insurance policy will not matter whether you live in Beverly Hills or Detroit; rates are not affected by where you live. If you make $100k or $10K, you pay the same price.

Getting a good life insurance rate can, however, depend on your  driving history. Factors include the number of moving violations especially in the last 3-5 months, which also includes DUIs, DWIs, reckless driving convictions and license suspensions or revocations.

There are so many exceptions and talking to a qualified agent is always your best choice. You need to be aware of what your lifestyle and health offers in terms of rate class to an insurance company. And whether you be viewed as a risk to a life insurer.

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