Factors that Affect Health and Life Insurance Coverage

Data drives the insurance industry. How an insurance company balances their exposure to risk with the premiums they collect determines if they ultimately survive. When applying for health or life insurance coverage, the questions asked are used to develop a suitable premium.

While premium formulas are proprietary to each insurance company, most use the same underlying statistics to underwrite their policies. Understanding what characteristics are considered in your application may help you find companies to best meet your financial needs.

Here is a general list of factors that affect health and life insurance coverage:

Age – As we grow older, our remaining life expectancy diminishes, increasing the cost of life insurance. Additionally, more ailments requiring medical treatment arise as we age, impacting health insurance costs. 

Gender – Females statistically live 5 years longer than men, resulting in lower life insurance premiums. However, health insurance premiums may be higher if a woman opts to include coverage for pregnancy.

Hobbies – Most hobbies like golf, reading, or exercising are no issue for insurance companies. However, if you pursue more dangerous activities such as skydiving, spelunking, or scuba diving, expect some insurance companies to add specific activity exclusions to your policy or charge an increased premium for coverage.

Occupation – Certain occupations pose an increased risk to insurance companies. If your occupation includes an element of danger, expect insurers to either increase your premiums or include specific exclusions within your policy. 

Tobacco Use – Smokeless or not, tobacco in any form is known to increase rates of cancer, heart disease, and other health issues. Insurance companies have significant data to support their substantial increased premiums for tobacco users.

Marital Status – While your marital status has a limited impact on actuarial rates, the ability to share limits of insurance, deductibles, or copays can make certain health plans more attractive than those offered to single individuals.

Driving Record – Some insurance companies will factor in an applicant’s driving history before determining insurability. Drivers with a history of DUI or reckless driving convictions are undesirable and may result in difficulty in obtaining desired coverage.

Underlying Health – When applying for health or life insurance, insurers will want to see a snapshot of your current overall health. While preexisting conditions may not prevent you from obtaining coverage, they could impact your premium or the benefits available to you.

Alcohol Consumption – The excessive consumption of alcohol can play havoc with the body’s most important organs. Insurance companies who learn about applicants imbibing higher than acceptable limits of alcohol can surcharge premiums or decline coverage altogether.

Body mass index (BMI) – The ratio between someone’s height and weight determines their body mass index. Health issues, such as diabetes and cardiovascular problems, are more prevalent in individuals with a high BMI. This can result in higher insurance premiums.

Family Medical History – Your family genes may make you more susceptible to certain chronic disorders such as heart disease, high blood pressure, Alzheimer’s, diabetes, arthritis, cancer, and obesity. Insurance companies may factor in your family’s medical past when rating your insurance coverage.