How Do Agencies Determine Your Life Insurance Rates?

How Do Agencies Determine Your Life Insurance Rates?

Life Annuities

When you apply for life coverage, you will have to go through an underwriting process. This process consists of a detailed analysis of you current health and financial situation, lifestyle and family medical history. The point of this complicated process is to decide your policy’s costs.An insurance agency wants to insure the healthiest and youngest people who can pay. If an insured dies, the agency loses money, so it makes sense to increase the premiums for people who are more likely to die. What counts? When calculating your policy’s rates, an agent will be interested in the following:· age· weight· height· blood pressure· cholesterol levels· if you suffer from any terminal illnesses like cancer· if you are a smoker/drinker· family medical history (for possible genetically inherited diseases)· different medical records· your income· your occupationAs you can see, a lot of things influence the premiums! The severity of every investigation depends largely on the insurance company. Some are more severe, but others are more lenient. It is also possible that some agencies are not interested in some of the issues outlined above.Who fits where? Depending on the results from the medical examination and on other details you will be put in a group, depending on the risk that you pose for the agency. There are usually 6 big categories:1. Preferred Plus No Nicotine.This is category offers the best rates available, but it is very hard to meet the conditions. You’ll need to be young and in the best shape possible, have strong health and a substantial income. Other conditions are: non-smoker for at least five years and a clean driving record!2. Preferred No Nicotine. If you are in excellent health and don’t smoke, but you didn’t make it in the first group, you will receive preferred no nicotine rates.3. Preferred Nicotine. If you are healthy, but are a smoker, you will get preferred nicotine rates, which can double and even triple your policy’s premiums!4. Standard No Nicotine. From here on, there is a substantial price increase. People who qualify for standard have some health problems like: high blood pressure and high cholesterol levels.5. Standard Nicotine. Smoking spikes your insurance rates, especially if you are not very healthy!6. Substandard. The highest rates and it includes: former cancer patients, people suffering of obesity or with abnormal blood pressure levels.I hope the information in this article will help you understand the underwriting process better!