In the United States, the average life expectancy is 80 years, a number that seems to be trending in the positive direction after it took a dip in relation to the COVID-19 pandemic in 2020. In 2000, this number sat at about 76 years. A study published in the American Heart Association journal Circulation estimated that by meeting five low-risk lifestyle factors at age 50, men could extend their life expectancy by more than twelve years, and women could add fourteen years to their life expectancies.
What does healthy living and life expectancy have to do with insurance? Well, living a healthier lifestyle can not only help you live longer, but it can also save you money on life insurance premiums.
Quick Links
- How Life Insurance Premiums are Determined
- What is No-Exam Life Insurance?
- 6 Factors that Impact Life Insurance Premiums
How Life Insurance Premiums are Determined
When evaluating life insurance applications, providers will require underwriting, which is the process used to determine how much risk the life insurance company is taking on by insuring you. Because certain health factors can have such a significant impact on how long you can expect to live, insurance companies look closely at those factors when deciding whether to issue a policy. It also helps determine the terms they are willing and able to offer.
In other words, the risk of insuring an individual (and having to pay out on that insurance) is factored into coverage amounts and premium payments. The higher the risk of insuring someone, the higher the premium may be. This is why, for example, insurance premiums tend to be higher for smokers in comparison to non-smokers.
With underwriting processes, insurance companies will evaluate the risk that comes with insuring someone. There are a plethora of factors considered in this process, including age, gender, and general health. Ultimately, these features provide an estimation of life expectancy, which then determines the value of the life insurance policy.
What is No-Exam Life Insurance?
As we’ve discussed, most life insurance policies require some form of a medical exam. But, there are alternatives. More specifically, there are no-exam life insurance policies, which forgo the need for a medical exam thereby speeding up the approval process.These policies are great for anyone who may struggle to be approved for a policy if undergoing a more traditional underwriting process.
One type of no-exam life insurance is accelerated underwriting. Applying for life insurance and completing medical reviews can take months to complete. But, accelerated underwriting for life insurance waives the medical exam and instead uses a questionnaire to determine risk. This process is available with some insurance products, so make sure to ask your life insurance agent about no-exam policies that may be right for you.
A second type of no-exam life insurance policy is a guaranteed issue whole life insurance policy. These policies don’t have health questions and instead guarantee coverage. The caveat here is that these policies tend to have high premium rates because the insurance provider is taking on a greater risk. And, there is an initial waiting period, so some benefits may not be immediately available.
6 Factors that Impact Life Insurance Premiums
To gain a clear picture on the risk involved in insurance coverage, life insurance providers will evaluate a few key aspects of your health and lifestyle using health questionnaires and medical exams.
Here are some of the main health factors life insurance companies review in the underwriting process.
BMI
The CDC reported that in 2017–20, almost 42% of American adults were obese—up from 30.5% in 1999–2000. Obesity is associated with numerous health problems, including diabetes, heart disease, stroke, many types of cancer, and increased mortality. People who are overweight or obese often pay more for life insurance, particularly if their weight has contributed to health problems.
Insurance companies commonly use body mass index (BMI) as part of their underwriting calculation. BMI doesn’t actually calculate body fat, but it uses height and weight to make a rough determination of whether someone is underweight, overweight, obese, or at a healthy weight.
For this reason, people who are very muscular, for example, can have misleadingly high BMIs. This is only one factor that insurance companies consider, however, so if your medical records reflect a healthy lifestyle, a high BMI alone isn’t likely to be a deciding factor about your coverage.
Smoking
Tobacco smoking is one of the single most important factors in life insurance underwriting. The CDC estimates that nonsmokers can expect to live ten years longer than smokers, and research indicates that quitting by age 40 reduces the risk of dying of a tobacco-related illness by approximately 90%.
Naturally, underwriters view tobacco smoking as a giant red flag, but they also recognize the value of quitting. Often, former smokers can get rates just 10–20% higher than nonsmokers within a year of quitting, as long as they don’t have other health issues.
Age
The younger you are, the more years you have in front of you. Life insurance companies understand this, and it’s why you can get the best rates on life insurance if you buy it when you’re young and healthy. Insurance companies have minimum and maximum ages for which they will issue life insurance coverage, and these can vary by plan. There are many different types of life insurance products available to serve a wide range of ages, but the longer you wait, the higher your premium is likely to be.
Gender
Life insurance premiums are influenced by life expectancy, so we can’t ignore the connection between life expectancy and gender. On average, men have shorter life expectancies than women. So, men will typically pay higher premiums for life insurance.
Medical History
Part of the underwriting process includes an evaluation of your previous medical history, including any underlying conditions that are part of your family’s medical history. This is used to determine how likely you may be to face certain medical conditions down the line. So, when filling out a life insurance application, you may be asked about your family’s history of cancer, cardiovascular disease, melanoma, or congenital heart disease.
In addition to your family’s medical history, you’ll need to also provide your own medical history. That doesn’t mean that if you have a chronic condition you won’t be approved for a policy. But, you might face higher rates. So, it will be important to apply for a life insurance policy that meets your unique needs.
Lifestyle
Have you considered that some of your lifestyle choices can impact your coverage options? Someone who lives a riskier lifestyle might need to pay higher rates in comparison to someone working a desk job. Some activities that are considered dangerous hobbies or occupations include skydiving, scuba diving, or piloting a plane.
With all of this in mind, it may be time to evaluate your lifestyle choices, especially if you haven’t yet applied for life insurance. While there are some factors that are out of our control, like age, gender, and family medical history, there are ways that you may be able to lower your likelihood of a high insurance premium.
If you’re looking for long-term coverage, ELCO Mutual has a variety of whole life insurance products available that fit your needs. And, if you have questions about your health status or the underwriting process, feel free to reach out to one of our independent insurance agents. Get in contact with us today to learn more!
*No history of tobacco smoking, being physically active, healthy diet, moderate alcohol consumption, normal BMI