7 Factors That Affect Your Life Insurance Quote

Life insurance is a great way to protect your loved ones financially, but it’s also a major
investment. Over a period of years, even a slightly lower premium can yield major
savings. The following are some of the biggest factors that insurers consider when pricing
out their policies. Some of these criteria are outside your control, while others are things
you can remedy with simple lifestyle choices. (For related insight, read about how you
can get life insurance.)

KEY TAKEAWAYS

Life insurance can be financial help for your loved ones once you're gone, but it's a big
investment.

Many factors contribute to how high your premium payment is and whether you qualify
for discounts.

Age is the most important factor in determining the cost, as a younger person will make
payments for many years before cashing out; therefore the younger you are, the lower
your payments tend to be.

Gender is also a crucial factor since women statistically live five years longer than men;
as a result, insurance carriers typically offer women slightly lower premiums.

Smoking, health, lifestyle, family medical history and your driving record are the other
key determinents of how much you might expect to pay for life insurance.
Age
Not surprisingly, the number one factor behind life insurance premiums is the age of the
policyholder. If you’re young, the chances are that you’ll be paying the insurer for years
before they ever have to worry about writing your family a check. Consequently, you’re
better off taking out a policy before it’s too late. But that doesn’t mean you need
insurance right after college if you don’t have any financial dependents.

Gender
Next to age, gender is the biggest determinant of pricing. Insurance carriers use statistical
models to approximate how long someone with a specific profile will be around. The fact
is that women, on average, live nearly five years longer than men. And because they’re
usually paying premiums for a longer period of time than males, they enjoy slightly lower
rates.

Smoking
Smoking puts you at a higher risk for all sorts of health ailments. So if you like to light
up, it’s a red flag for insurance companies. In fact, it’s not uncommon for smokers to pay
more than twice as much as non-smokers for comparable coverage. The effect on your
pocketbook is another great reason to try and kick the habit.

Health
The underwriting process for most carriers includes a medical exam in which the
company records height and weight, blood pressure, cholesterol, and other key metrics.
They may also require an electrocardiogram (ECG or EKG) to check your heart in some
cases. It’s important to get any serious conditions like high cholesterol and diabetes
managed before searching for coverage to ensure a competitive rate. Some companies do
offer “no exam” policies, but you can expect to pay more.

Lifestyle
Is your favourite pastime racing cars or climbing treacherous mountains? If so, you’ll
probably have to shell out substantially more for insurance. Any time you engage in high-
risk activities, there’s an increased likelihood that you’ll meet an early end – a big
concern for carriers. Some companies also charge more if you have a relatively dangerous
profession, such as mining, fishing or transportation.

Family Medical History

There’s not much you can do about your gene pool. However, a family history of stroke,
cancer or other serious medical conditions may predispose you to these ailments and lead
to higher rates. Carriers are usually interested in any conditions your parents or siblings
have experienced, particularly if they contributed to a premature death. Some carriers put
more emphasis on your family’s health than others, but it’s likely to have some impact on
your premium.
Driving Record
It may come as a surprise, but many life insurance companies look at your driving record
during the underwriting process. Whether or not they ask about violations on the
application, they can access Department of Motor Vehicles records to find out if you’ve
run afoul of the traffic laws. Keep in mind that the last 3 to 5 years carry the most weight,
so if you’ve improved your driving habits, you may benefit with a more favorable price.

Five factors can affect a plan’s monthly premium: location, age, tobacco use, plan
category, and whether the plan covers dependents.

How premiums are set

Under the health care law, insurance companies can account for only 5 things when
setting premiums.

Age: Premiums can be up to 3 times higher for older people than for younger ones.
Location: Where you live has a big effect on your premiums. Differences in competition,
state and local rules, and cost of living account for this.
Tobacco use: Insurers can charge tobacco users up to 50% more than those who don’t use
tobacco.
Individual vs. family enrollment: Insurers can charge more for a plan that also covers a
spouse and/or dependents.
Plan category: There are five plan categories – Bronze, Silver, Gold, Platinum, and
Catastrophic. The categories are based on how you and the plan share costs. Bronze plans
usually have lower monthly premiums and higher out-of-pocket costs when you get care.
Platinum plans usually have the highest premiums and lowest out-of-pocket costs.
States can limit how much these factors affect premiums.

All Marketplace health plans cover the same essential health benefits. Insurance
companies may offer more benefits, which could also affect costs.

Factors that can’t affect premiums

Insurance companies can’t charge women and men different prices for the same plan.
 They also can’t take your current health or medical history into account. All health plans
must cover treatment for pre-existing conditions from the day coverage starts.

How premiums are set

Under the health care law, insurance companies can account for only 5 things when
setting premiums.

Age: Premiums can be up to 3 times higher for older people than for younger ones.
Location: Where you live has a big effect on your premiums. Differences in competition,
state and local rules, and cost of living account for this.
Tobacco use: Insurers can charge tobacco users up to 50% more than those who don’t use
tobacco.
Individual vs. family enrollment: Insurers can charge more for a plan that also covers a
spouse and/or dependents.
Plan category: There are five plan categories – Bronze, Silver, Gold, Platinum, and
Catastrophic. The categories are based on how you and the plan share costs. Bronze plans
usually have lower monthly premiums and higher out-of-pocket costs when you get care.
Platinum plans usually have the highest premiums and lowest out-of-pocket costs.
States can limit how much these factors affect premiums.

All Marketplace health plans cover the same essential health benefits. Insurance
companies may offer more benefits, which could also affect costs.

Factors that can’t affect premiums

Insurance companies can’t charge women and men different prices for the same plan.
They also can’t take your current health or medical history into account. All health plans
must cover treatment for pre-existing conditions from the day coverage starts.
What Is Fire Insurance?
Fire insurance is property insurance that covers damage and losses caused by fire. The
purchase of fire insurance in addition to homeowners or property insurance helps to cover the
cost of replacement, repair, or reconstruction of property, above the limit set by the property
insurance policy. Fire insurance policies typically contain general exclusions, such
as war, nuclear risks, and similar perils.

What Is Fire Insurance?

Fire insurance is property insurance that covers damage and losses caused by fire. The
purchase of fire insurance in addition to homeowners or property insurance helps to cover the
cost of replacement, repair, or reconstruction of property, above the limit set by the property
insurance policy. Fire insurance policies typically contain general exclusions, such
as war, nuclear risks, and similar perils.

KEY TAKEAWAYS
 Fire insurance is property insurance that provides coverage for loss or damage to a
structure damaged or destroyed in a fire.
 Homeowner's insurance usually covers fire damage but it may be capped at a rate that
is less than the cost of the losses accrued, necessitating a separate fire insurance
policy.

 The policy pays the policyholder back on either a replacement-cost basis or an actual
cash value (ACV) basis for damages.

Understanding Fire Insurance

Some standard homeowner’s insurance policies include coverage for fire, but the policy may
not be extensive enough for some homeowners. If the policy excludes coverage for fire
damage, then fire insurance may need to be purchased separately—especially if the property
contains valuable items that cannot be covered with standard homeowner's coverage. The
insurance company’s liability is limited by the policy value and not by the extent of damage
or loss sustained by the property owner.

Fire insurance policies provide payment for the loss of use of the property as a result of a fire,
or for additional living expenses that were necessitated by uninhabitable conditions as well as
damage to personal property and nearby structures. Homeowners should document the
property and its contents to simplify the assessment of items damaged or lost during a fire.

A fire insurance policy includes additional coverage against smoke or water damage due to a
fire and is usually effective for one year. Fire insurance policies that are about to expire are
usually renewable by the homeowner, under the same terms as the original policy.
How Fire Insurance Works
Fire insurance covers a policyholder against fire loss or damage from a number of sources.
Sources include fires brought about by electricity, such as faulty wiring and explosion of gas,
as well as those caused by lightning and natural disasters. Bursting and overflowing of a
water tank or pipes may also be covered by the policy.

Most policies provide coverage regardless of whether the fire originates from inside or
outside of the home. The limit of coverage depends on the cause of the fire. The policy will
reimburse the policyholder on either a replacement-cost basis or an actual cash value
(ACV) basis for damages.

If the home is considered a total loss, the insurance company might reimburse the owner for
the house's current market value. Typically the insurance will provide a market value
compensation for lost possessions, with the total payout capped based on the home's overall
value.

For example, if a policy insures a house for $350,000, the contents are usually covered for at
least 50-70% of the policy value or a range of $175,000 to $245,000. Many policies limit
how much reimbursement covers luxury items such as paintings, jewelry, gold, and fur coats.

Special Considerations
A policyholder should check the home's value each year to determine if there is a need to
increase the coverage amount. A policyholder cannot get insurance for more than a home's
actual value. Insurance companies may offer stand-alone policies for rare, expensive, and
irreplaceable items that are otherwise not covered in standard fire insurance.