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Save up to 70%

off Life Insurance!

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Risky Business: Paying for Life Insurance

Insurance premiums are largely calculated on the insurance provider’s ability to predict risk. While some risks are based on personal factors within your control, others are based on internal company investments and costs.

Personal Factors

Simply stated, those individuals posing the lowest risk of death to a life insurance company will receive the lowest premiums. Personal factors which influence premium rates are overall health, including weight, history of disease, and tobacco use. Obesity, illness, and tobacco use all increase a person’s risk of death, presenting a greater risk to the insurance company.

In addition, your credit rating may also affect your life insurance premiums, as it is a reflection of how likely you are to pay your premium on time.

Company Factors

Insurance companies often invest the premiums they collect to earn interest on the funds. Another component of calculating insurance premiums for any life insurance company is the company’s investments, and the predicted rate of return on those investments.

While you cannot control all of the risk factors for calculating your life insurance premium, it is important to understand the process so that you can get the best policy for your insurance dollar.