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Blog | Haven Life | Life insurance & Personal Finance Tips

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When shopping for life insurance, it's safe to say we're all seeking the best value. We want to get the most coverage for the lowest price.

While comparing life insurance quotes across insurers is one of the best ways to secure affordable pricing, there are many other factors at play. Some of these factors are in your control, and others aren't.

If you're in the market for medically underwritten term life insurance (usually the best bang for your buck), the premium pricing is personalized to you. This means an underwriting platform (or person) is looking at you and only you to offer you the most affordable rate available based on your lifestyle and health history.

With the help of some actuary all-stars on our team here at Haven Life, we've identified key areas besides coverage amount and term length that impact term life insurance pricing throughout the industry.

Your age

Age is one of the most substantial underwriting considerations. It not only dictates the price of your policy but also impacts how much coverage you can purchase.

Younger people get the best insurance rates because they present a lower risk to insurers. You can't control your age, of course, but you can control when you buy a policy. (Assuming you're only purchasing life insurance when you need it.)

For example, a 35-year-old man in excellent health can buy a 20-year, $500,000 policy starting at $21 a month. If that same applicant waited until he turned 40, coverage would start at $30 a month. That extra $9 a month may not seem substantial, but over 20 years, it would add $2,160 to the cost of coverage.

Proactivity is key. As time passes, the more likely you are to develop a disease or condition that would make it harder for you to get coverage at a good rate. Ensure your insurability by making moves sooner rather than later.

Gender

In almost all states, premium rates are higher for men than for women. (Fun fact: Montana is the only state to require unisex rates.) The rationale for why is actually simple. Statistically, men have a shorter life expectancy than women. And since insurers base pricing on mortality risk, it means pricing is adjusted for male applicants.

While underwriting by age and gender can be a hot-button issue for some, it's also important to know what kind of factors life insurance companies cannot legally include in their underwriting decision. For example, how race and ethnicity affect life expectancy cannot be considered.

Tobacco use

It's no secret, but tobacco is terrible for your health. And it's not only about lung cancer. According to the Centers for Disease Control, tobacco harms just about every organ in your body and can lead to premature death. Because of this, insurance companies face a much higher risk with tobacco users.

There's no way around it. Insurance companies face a much greater risk with tobacco users. But, how does this risk translate into premiums? A 37-year-old woman in excellent health who does not smoke could purchase a 30-year, $500,000 policy for about $36 a month. If she were a smoker, she would pay around $128 a month. Over 30 years, that policy would cost a tobacco user $33,120 more.

If you are a tobacco user and you're thinking about quitting and applying for term life insurance, it's important to know that most insurance companies require that you be tobacco-free a certain amount of time before they will offer you a non-smoking rate. For example, Haven Life requires you to be tobacco-free for a year.

Personal health history

Not surprisingly, to purchase a medically underwritten term life insurance policy, you're going to be asked about your physical and mental health history.

The healthier you are, the cheaper your policy. So, if you were looking for a little push to lose some weight and improve your cholesterol, you can always use "affordable life insurance rates" for added motivation.

Another factor in your personal health history will be any persistent medical conditions. You shouldn't fear a health questionnaire and medical exam if you have a chronic condition. Medically underwritten coverage can still be a better value than a simplified issue or group policy, which doesn't look at your full medical history but charge you more for the unknown risk insurers are taking on.

Because all applicants are evaluated on a case-by-case basis, eligibility and pricing will depend on the type of illness or condition, when it occurred, treatment plan, and if there was a recent surgery or hospitalization - just to name a few factors.

Prescription history

Along with your medical history, underwriting will also take into account your prescriptions, both past, and current. By looking at your prescription history, underwriters can see that it matches what you've already told them and be confident that you are an honest applicant. If you omit something from your Rx history, an underwriter might logically assume that you may have made other omissions. This could lead to an additional investigation and lengthen the time it takes to get your policy.

Being open and honest in the application allows the underwriter to feel comfortable that no critical data is missing or inaccurate. This, in turn, allows them to give you the best rate possible for your situation.

So, like your parents, grandparents and teachers always said, honestly really is the best policy.

Family health history

To get a complete picture of your health, insurers must also examine your immediate family's health. Insurers will ask about your family's history of illnesses like diabetes, heart disease, and cancer to have an understanding of your subsequent risk over time.

Many diseases have a hereditary component. In some cases, having a family history of illness increases the chance that an individual will develop a condition later in life. Underwriters consider the severity, age of onset and whether it caused a loved one's death in making their final decision.

It's also worth noting that some life insurance companies have begun using genetic testing information. Exposing more data to an underwriter could have both a positive or adverse effect on your premium, but it would give the applicant the chance to demonstrate that they do not carry the same genetic marker as a family member that had a particular disease. In that case, having a family history of something like cancer may not impact your underwriting class at all.

Driving or criminal records

Accidental death is something that underwriters have to consider when making their final decision. One way they can determine your risk is by looking at your driving records. For example, if your driving record includes multiple, at-fault collisions over the past few years or significant speeding infractions, it may cause a rate increase. If it's been more than three years since your last accident, your driving record is less likely to have an impact on your premium amount.

Additionally, a criminal record may impact your eligibility for several reasons. It can indicate a tendency toward riskier behavior (do you see a trend here?) and incarceration can cause poor health and premature death.

Credit attributes

While your credit score is not something the life insurance industry would consider in underwriting, your credit attributes might be.

Credit attributes indicate your track record for making sound financial decisions and speak generally to your risky or responsible behavior. You might be interested to know that many industry studies show a strong correlation between certain credit factors and mortality.

An example of a credit attribute that life insurance companies would look at is whether or not you have filed bankruptcy. While for many people, bankruptcy can be a result of unfortunate events that occurred beyond their control, for some it can indicate poor decision-making or even be a red flag for medical problems because many bankruptcies are the result of medical bills. Additionally, the life insurance industry carefully monitors fraudulent policy activity, so a poor financial history could be an indication that an applicant intends to purchase a policy for illegal purposes.

The impact of credit data is still evolving in the insurance industry. While some underwriters will use it as a triage method to decide whether or not to order additional info from an application, many agencies (including Haven Life) do not directly use credit data to make an underwriting decision.

How you work and play

Your job is considered in the underwriting process because, let's face it, some people have risky occupations. For example, active military personnel, police officers, firefighters, and even helicopter pilots (but not major airline pilots) and construction workers all have careers that put their lives at a greater risk than those with desk jobs. In most cases, this would not prevent you from being able to secure coverage, but it can increase your premium rates.

(Full disclosure: active military is not currently eligible for our Haven Term policy.)

Additionally, life insurers will also seek to find out if you are an adrenaline junkie. If your hobbies include mountain climbing or skydiving, you present a greater risk to insurers, and your eligibility and premiums will be affected. Though it's still possible to get coverage, how often you participate in risky activities will make a difference. Skydiving once is less dangerous than skydiving on a weekly basis, and insurance underwriters recognize frequency.

The benefits of being honest and open

Providing personal information feels, well, personal, but the term life insurance underwriting process is essential to assessing risk and offering you as affordable a premium as possible. In group policies, where you answer fewer (or no) questions, that uncertainty is priced into your premium.

Since there are many companies out there selling cheaper policies to people who share information, insurers assume that those who opt not to are riskier and therefore charge them more. As a result, if you are indeed a healthy individual, you will often have to pay a significant premium if you don't buy a personalized medically underwritten policy.

As with all things in your application, it's imperative that you are truthful and honest. If a claim were ever made on your policy, the insurance company would do some routine investigating before paying the death benefit. So, if it turned out that you were deceitful, your beneficiaries (maybe your partner or children) might not get the payout.

Getting life insurance coverage provides you with peace of mind that your loved ones are financially protected. But just because this is such an important product, doesn't mean it needs to be complicated to buy. By having a good grasp on industry underwriting practices and key factors that contribute to determining premiums, you'll be more confident about your purchase and selecting a policy that's right for your loved ones.

Real Rate is based on your application and third party data obtained during underwriting.

Haven Term is a Term Life Insurance Policy (DTC 042017 [OK1] and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. Policy and rider form numbers and features may vary by state and may not be available in all states. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Our Agency license number in California is OK71922 and in Arkansas, 100139527.

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Top factors that impact your life insurance premium | Haven Life

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When shopping for life insurance, it's safe to say we're all seeking the best value. We want to get the most coverage for the lowest price. While comparing life insurance quotes across insurers is one of the best ways to secure affordable pricing, there are many other factors at play.

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What are beneficiaries and how they receive payment?

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What are beneficiaries and how they receive payment?

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A beneficiary is the person who receives distributions from trust or life insurance policy. Beneficiaries receive payment by filing a claim then waiting for the insurance company to pay out.
Premiums and Factors that Determine them
1. Gender
2. Age
3. Your medical history
4. Credit attributes
5. Driving or criminal record

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Types of life insurance and what they are

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Types of life insurance and what they are

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1. Term - Type of insurance policy that provides coverage for a specific period of time or term of years
2. Whole - A type of permanent life insurance which means the insured person is covered for their whole life as long as premiums are paid on time
3. Universal - Type of cash value life insurance. Excess of premium payments above current cost of insurance is credited to cash value of policy
4. Variable - Type of insurance that builds cash value

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Final expense insurance

If term life insurance, whole life insurance, or other permanent policies aren't a fit, but you're still looking for a way to cover funeral or burial costs, final expense life insurance might be right for you.

Final expense insurance is a unique type of policy that covers the cost of anything associated with your death, including medical care, a funeral, or cremation. It's usually issued only to people of a certain age and the policy is valid only up to a certain age.

Like other permanent life insurance policies, there's a cash value that can grow over time. The two types of final expense life insurance policies are simplified issue and guaranteed issue.

Final expense insurance is usually attractive to older people who don't have other life insurance coverage (maybe they outgrew their term life policy) and don't have enough savings to pay for their own funeral, which costs $8,000-10,000 on average. Coverage is usually for small amounts, from $5,000 to $25,000, to cover those expenses. It's useful if you don't have another way to pay for your funeral and don't want to burden your family with the costs.

However, final expense insurance has higher life insurance premiums for a relatively low coverage amount. If you or your family can pay for a funeral through other means, that's your best bet.
→ Read our guide to the best life insurance companies for seniors.
Simplified issue life insurance

Simplified issue life insurance is a type of whole life insurance that falls under the final expense category.

Typically when you apply for life insurance, you go through a paramedical exam as part of the underwriting process so the insurer can find out how risky you are to insure. The exam helps them set your premium rate.

With simplified issue life insurance you can skip the medical exam. That's the "simplified" part of this policy type. This is also known as a " no exam policy." You're not out of the woods completely, though. You don't need to go through the medical exam, but you do need to fill out a health questionnaire, answering questions about smoking habits and serious illnesses.

People in poor health may have to take the exam if they have too many health issues, and they could be flat-out denied by insurers. For healthier people in a hurry, it can be a way to skip scheduling the paramedical exam, which adds some time to the underwriting process. But this benefit comes with a major financial drawback.

With a term life insurance policy, your premium rates are directly tied to your chances of outliving your policy. If you're young and/or healthy, you'll pay lower rates than someone older and/or in poor health. That's why the medical exam is important. Since there is no medical exam with simplified issue life insurance, the policies tend to be more expensive than term policies.

Even if you think a term life policy will be prohibitively expensive, it's worth getting a free quote to see exactly how much you'd pay. You may be surprised at how affordable it is.
→ See our full cost guide to determine how much life insurance may cost for you.
Guaranteed issue life insurance

Guaranteed issue life insurance takes the concept of simplified issue life insurance - forgoing the health exam - a step further in that you don't have to answer any questions about your health, either. As long as you can pay the premium, the insurer will cover you, needing only your age, sex, and state of residence.

That makes it appealing for older people, whose declining health makes it prohibitively expensive to get coverage with other insurance types. Guaranteed issue life insurance is useful for elderly applicants, but others can likely get more life insurance coverage at a lower cost with a different policy type.

Just like with simplified issue life insurance, the lack of insight into your health conditions that a medical exam and interview would provide means that you're going to be paying more for coverage.

Group life insurance policies

Group life insurance is an employee benefit provided by some employers. It isn't technically a life insurance type, but it's important to know how it's different from privately purchased term life.

Group life insurance is most commonly term (although it can be whole). The real reason we bring it up, though, is that most people think their employer-sponsored life insurance is enough when in most cases it isn't.

Make no mistake: If your employer is offering life insurance at no extra cost to you, it's a great benefit. By all means, get insured. But if you need life insurance to protect your family, employer-provided coverage may not be sufficient.

Employer life insurance provides fairly low coverage, usually only one to two years' worth of salary. If your income is $50,000 per year, for example, you might need $500,000 or more in coverage to meet your financial obligations.

If you want more coverage, it's likely to be more expensive than buying your own policy if you're a person in relatively good health.

In short, don't automatically pass up group life insurance, but don't dismiss other options, either. Make sure it fits your needs and see how you can work it into your private coverage.

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If term life insurance, whole life insurance, or other permanent policies aren't a fit, but you're still looking for a way to cover funeral or burial costs, final expense life insurance might be right for you. Final expense insurance is a unique type of policy that covers the cost of anything associated with your death, including medical care, a funeral, or cremation.

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Life insurance is a contract between an insurance policy holder and an insurer. The insurance policy holder makes a promise to pay a specific amount in exchange for premium until the insurer's death.

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A life insurance policy is a contract with an insurance company. In exchange for premium payments, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries upon the insured's death.

Typically, life insurance is chosen based on the needs and goals of the owner. Term life insurance generally provides protection for a set period of time, while permanent insurance, such as whole and universal life, provides lifetime coverage. It's important to note that death benefits from all types of life insurance are generally income tax-free. ¹

There are many varieties of life insurance. Some of the more common types are discussed below.

Term life insurance

Term life insurance is designed to provide financial protection for a specific period of time, such as 10 or 20 years. With traditional term insurance, the premium payment amount stays the same for the coverage period you select. After that period, policies may offer continued coverage, usually at a substantially higher premium payment rate. Term life insurance is generally less expensive than permanent life insurance.

Needs it helps meet: Term life insurance proceeds can be used to replace lost potential income during working years. This can provide a safety net for your beneficiaries and can also help ensure the family's financial goals will still be met-goals like paying off a mortgage, keeping a business running, and paying for college.

It's important to note that, although term life can be used to replace lost potential income, life insurance benefits are paid at one time in a lump sum, not in regular payments like paychecks.

Universal life insurance

Universal life insurance is a type of permanent life insurance designed to provide lifetime coverage. Unlike whole life insurance, universal life insurance policies are flexible and may allow you to raise or lower your premium payment or coverage amounts throughout your lifetime. Additionally, due to its lifetime coverage, universal life typically has higher premium payments than term.

Needs it helps meet: Universal life insurance is most often used as part of a flexible estate planning strategy to help preserve wealth to be transferred to beneficiaries. Another common use is long term income replacement, where the need extends beyond working years. Some universal life insurance product designs focus on providing both death benefit coverage and building cash value while others focus on providing guaranteed death benefit coverage.

Whole life insurance

Whole life insurance is a type of permanent life insurance designed to provide lifetime coverage. Because of the lifetime coverage period, whole life usually has higher premium payments than term life. Policy premium payments are typically fixed, and, unlike term, whole life has a cash value, which functions as a savings component and may accumulate tax-deferred over time.

Needs it helps meet: Whole life can be used as an estate planning tool to help preserve the wealth you plan to transfer to your beneficiaries.

How cost is determined

Insurers use rate classes, or risk-related categories, to determine your premium payments; these categories don't, however, affect the length or amount of coverage.

Your rate class is determined by a number of factors, including overall health, family medical history and your lifestyle. Tobacco use, for example, would increase risk and, therefore cause your premium payment to be higher than that of someone who doesn't use tobacco.

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A life insurance policy is a contract with an insurance company. In exchange for premium payments, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries upon the insured's death. Typically, life insurance is chosen based on the needs and goals of the owner.