Between health, life, auto, disability, and homeowner/renter insurance, paying to insure your belongings--and yourself--can be a significant portion of your monthly budget. However, some of the factors that impact insurance rates are well within your control. In fact, taking control of these factors might help reduce the amount you may pay for these insurance products. Read on to learn more about some of the factors that can impact your life, health, and auto insurance policy rates.
Life Insurance Policy Rates
The factors that most impact your life insurance policy rates are[1]:
- Age. All other factors being equal, the older you are, the more expensive your premium might be.
- Gender. Because women have an average life expectancy of about five years longer than men, life insurance policies for women are often cheaper than the policies that cover men.1
- Family health history. If you have a family member who died of a condition that can be passed along genetically—anything from breast cancer to Parkinson's—you may be charged a higher rate than someone who doesn't have any negative family health history.
- Smoking status. If you're a current smoker, you'll likely pay more for your policy than you would if you were a nonsmoker. Those who have smoked in the past but no longer do may qualify for lower premiums, but could still be penalized. And don't be tempted to lie about your smoking status on your application—if the insurance company discovers this falsehood, your policy could be canceled—even after your death.[2]
- Occupation. Those in dangerous professions or those with higher-than-average suicide rates (like police officers, mine workers, pilots, or attorneys) may be charged higher premiums than those in safer or less stressful jobs.
Health Insurance Policy Rates
Some large employers (especially governments) have group health insurance policies where everyone is charged the same rate. However, if you work for a smaller company or are purchasing your health insurance on your state's ACA exchange, you might be charged more (or less) depending on a few factors.[3]
- Age. The older you are, the greater your risk for a variety of health conditions, and the more your insurance provider will charge.[4]
- Weight. If you're overweight or obese, you may pay more for insurance; extra weight can put you at risk for a number of different conditions, from heart attack to certain kinds of cancer.[5]
- Occupation. Certain jobs can be tough on your health—truckers, mine workers, and those who work around toxic or carcinogenic substances may pay more for insurance.[6]
Auto Insurance Policy Rates
Auto insurance rates can be influenced by a variety of factors—and not all of them may be intuitive.[7]
- Age. Unlike health and life insurance, here, youth can be used against you. Young people tend to have higher insurance rates because of their relative inexperience.
- Driving and claims history. If you have a string of accidents or traffic tickets on your record, your insurance costs will likely increase.
- Credit score. Although your credit score may seem irrelevant to your driving reliability, someone with a high credit score may pay less for insurance because they're deemed less likely to submit a claim.2
- Location. Certain parts of the country have higher insurance costs than others.
Although you can't control all of these factors, you can shop around for rates. In the long run, by improving your credit score and maintaining careful driving habits, you might be able to lower your auto insurance costs.
Important Disclosures:
This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contact your insurance agent. This article is intended to assist in educating you about insurance generally and not to provide personal service. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company. If you need more information or would like personal advice you should consult an insurance professional. You may also visit your state’s insurance department for more information.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
1 https://datacommons.org/place/country/USA?utm_medium=explore&mprop=lifeExpectancy&popt=Person&hl=en
2 https://www.experian.com/blogs/ask-experian/how-much-does-credit-score-affect-auto-insurance-rates/
[1] https://www.investopedia.com/articles/investing/102914/7-factors-affect-your-life-insurance-quote.asp
[2] https://www.forbes.com/advisor/life-insurance/reasons-for-claim-denial/
[3] https://www.ncsl.org/research/health/small-business-health-insurance.aspx
[4] https://www.healthcare.gov/how-plans-set-your-premiums/
[5] https://www.healthcare.gov/how-plans-set-your-premiums/
[6] https://www.healthcare.gov/how-plans-set-your-premiums/
[7] https://www.iii.org/article/what-determines-price-my-auto-insurance-policy
Sources
https://www.investopedia.com/articles/investing/102914/7-factors-affect-your-life-insurance-quote.asp
https://www.forbes.com/advisor/life-insurance/reasons-for-claim-denial/
https://www.ncsl.org/research/health/small-business-health-insurance.aspx
https://www.healthcare.gov/how-plans-set-your-premiums/
https://www.iii.org/article/what-determines-price-my-auto-insurance-policy
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