Life insurance companies typically calculate premium rates for different policies based on a number of variables. Those variables generally include age, gender, and use of tobacco. Other variables are included in the underwriting of a policy, such as an individual’s health history. However, the basic and most common variables are typically listed on a life insurance rate chart to give you an idea of what your premium rate might be based on those basic personal statistics.
Why rates are what they are
Life insurance companies generally calculate premium rates with the intent to fund claims, pay administrative costs, and to make a profit. The baseline cost of a life insurance policy is determined by using the information on a life insurance rate chart. However, costs for individual policies are typically determined in conjunction with the health and family history of each person applying for a life insurance policy.
Baselines rates for life insurance policies are based on mortality rates. Life insurance rate charts vary for each insurer, but insurers use statistical information based on mortality rates to determine baseline rates as well. For instance, statistically speaking, an individual who is a smoker who is in otherwise good health is still a greater risk to insure because they are at risk for more illnesses than a healthy non-smoker. Typically, a life insurance policy for a habitual smoker will cost more than a policy for a non-smoker who is the same age and also healthy. In the same vein, life insurance premiums are typically lower the healthier and younger you are, because insurers consider you less of a risk to insure and you are likely to live a long life. The cost of life insurance generally increases with the insured individual’s age because, statistically, people typically die as they get older.
The rates can vary
Life insurance premiums also vary depending on the type of policy you purchase, such as term life insurance, whole, universal, or permanent. Premium rates for an individual policy may also be less expensive than if you were to purchase a family life insurance policy.
Life insurance rate charts may provide a baseline cost for different types of life insurance policies with different insurance carriers. However, the cost for each policy is ultimately determined on factors regarding each individual being insured. In addition, if you would like to add riders or additional coverage to your life insurance policy, the cost of your life insurance policy may increase. It may be helpful to look at the life insurance policy rate charts from different companies and compare rates when shopping around. However, keep in mind that those rates are subject to change based on a number of variables related to you and the life insurance policy you choose.
The cost of life insurance generally increases with the insured individual’s age because. Best PPI Claims Service