Term Life Insurance Digest

Why does it cost more for smokers term life insurance?  If you’ve ever asked this question, you are not alone.  Life insurance almost always costs more for people who smoke.  The reason behind this has to do with what life insurance is and how a life insurance company determines the prices for life insurance.

Life insurance is a financial product designed to create peace of mind and protection in the case of an unexpected death.  Most people who get life insurance will never receive a financial benefit from it, because they will not die during the period of time they are covered (unless you have a whole or universal life insurance policy that covers you til death).

So, to determine the prices, the life insurance companies hire actuaries who look at mortality rates and tables to determine the likelihood of death among certain groups of people.  Then they price their policies based on the risk involved to insure you.  If you are more likely to live longer, you will pay less because you are less of a risk.  If you are likely to live shorter (because you smoke, or for many other reasons), you will end up paying more because you are more of a risk to insure.

To learn more about smokers term life insurance and why it costs more for a smoker, visit Wholesale Insurance.

This entry was posted on Monday, November 26th, 2007 at 6:06 pm and is filed under Life Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.