TABLE OF CONTENTS: What is Life Insurance? Why Life Insurance Matters in Your 20s-40s Locking in Lower Rates Protecting Your Loved Ones Covering Final Expenses Tax-Free Payouts The Cost of Life Insura...
Life insurance is a topic most people like to avoid for obvious reasons, but it’s also a necessary topic that we should discuss with our loved ones. Life insurance is not something purchased to benefit the insured, but rather it plays a keen part in preserving the lifestyle and financial future of those left behind.
Like auto insurance and some other forms of insurance, life insurance rates will vary from person to person due to a list of varying factors such as age and health. If you've received a life insurance quote and felt a bit of sticker shock, I'd like to go over a few things that could be negatively impacting your rate, and what, if anything, you can do to help your rate go down.
1. Weight
Our weight affects our overall health in many ways. Individuals that struggle with maintaining a healthy weight are more susceptible to major health issues such as diabetes and heart disease, and in the eyes of insurers, individuals that are overweight are seen as high risk because obesity can lead to the likelihood of a premature death.
In other words, the more overweight you are, the higher your rate will be. Obviously, maintaining a healthy weight comes with tremendous benefits including a better quality of life, more energy, higher confidence, etc., but it can also make your life insurance rate less expensive. Losing 15-30 pounds can put you into a lower-risk tier, which could possibly mean a lower rate.
2. Smoking
We all know how dangerous smoking is, and how it can wreak havoc on our health. In fact, according to the CDC, one in five deaths each year in the U.S. is caused by smoking. Because smoking can dramatically increase the odds of an individual having major health issues and/or dying prematurely, life insurance underwriters will make these insureds pay for it by way of higher rates.
According to NerdWallet, a smoker can pay more than double for an equivalent life insurance policy as a non-smoker. You can have your rate lowered if you quit smoking, but it will take at least a year of being tobacco-free to receive the lower rates.
3. Risky occupations
When you apply for life insurance, one of the many questions you’ll be asked is your occupation. The fact is, some occupations are more dangerous than others. For example, pilots, firefighters, and roofers take on far more occupational risk on a daily basis than accountants or educators.
4. Dangerous hobbies
Do you consider yourself a daredevil? Do you enjoy skydiving, skiing, mountain climbing, or scuba diving on a regular basis? Well, friend, this may lead to higher premiums. Anything that an underwriter believes can statistically increase your chance of a premature death—including jumping out of a moving plane—can lead to higher rates.
Related Reading: Lock in Lower Life Insurance Rates While You Still Can
5. Your age
Statistically speaking, the younger you are, the longer you have to live—or at least that’s how life insurance underwriters see it. While you obviously can’t control how quickly you age, you can control how quickly you purchase life insurance to lock in a lower rate. The older you get, the higher your rate will naturally climb, so my advice is to purchase a policy sooner, rather than later.
It's important to remember that even if you have to pay a higher rate due to any of the issues listed above, in the long run, it will be worth the extra cost. Knowing that your family will be financially protected in the event of your death is priceless.
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