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Factors That Go Into a Life Insurance Quote

April 10, 2015
Insurance, Life Insurance
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You’re asked a lot of questions when you’re shopping for life insurance, and you may wonder what goes into the calculation of your final price.

Insurance companies consider many factors when determining a life insurance quote, some of which are outside your control. Most factors relate to two words: life expectancy.

Age and sex

Age and sex are the two biggest factors in the rate you’ll be offered. Why? The younger you are, the better rate you’ll get because your likelihood of death is lower. From the life insurance company’s perspective, this means you’re likely to outlive your term life policy — or, if you purchased a whole life policy, that you’ll pay premiums longer before the insurer pays out a death benefit.

Gender matters because women, on average, live longer than men. According to the Centers for Disease Control and Prevention, the life expectancy of American women is now 81.2 years, compared with 76.4 years for American men. Because they’ll likely be paying their premiums longer, women can expect lower quotes in general (health and other factors aside).


Since your health has an impact on your life expectancy, insurers find ways to predict your lifespan based on your current health conditions. People with heart disease, obesity, high blood pressure, high cholesterol and other health problems will pay more for a policy.

Smoking, in particular, can be a quote buster. Even if you’re a “healthy smoker” now, insurers expect things to go south for you in the future. Tobacco use is tied to a lot of medical conditions, like heart disease, dementia, stroke and, in general, shorter life expectancy.

Smokers, on average, die an average of 13 to 15 years earlier than nonsmokers, “thereby eliminating retirement years,” according to the American Lung Association. Because of this, life insurance rates can be 100% to  300% higher if you smoke — be it cigarettes, e-cigarettes or chewing tobacco — according to Life Happens, an industry educational organization.

A life insurance application generally requires a medical exam, which includes a height and weight check, blood pressure, and blood and urine samples.

Type of policy

The type of policy you’re looking for also plays a role in the quote you’ll receive.

Term life insurance costs less than whole life because it covers you only until the term expires. So if you’re still alive at the end of your term, your policy expires and there’s no payout. Whole life insurance lasts your entire life, and lets you build up a cash value in a tax-sheltered account. You can also receive dividends, depending on your policy, or access the cash value in the form of a tax- and penalty-free loan.

All of the best life insurance companies sell a variety of types.

Unexpected factors

Other factors used in pricing may not be as obvious.

Dangerous occupations such as mining or construction will lead to higher rates or denial. Hobbies such as skydiving and rock climbing could also lead to a decline of your application.

Finally, some insurers factor in your driving record (looking for speeding tickets and DUIs) and even a recent bankruptcy.

No matter what your age or health, do your research and shop around. Getting a high life insurance quote from one insurer doesn’t mean others will charge you the same. NerdWallet’s life insurance tool can help you easily compare prices.


Image via iStock.