When a life insurance company decides to insure you, they have to make sure it is a profitable transaction for them. There are a number of things that are taken into account to decide an individuals premiums. These are age, gender, state of health, smoking habits and hazardous pursuits.

Health Ratings

Many insurance companies use four general health categories: Preferred Best, Preferred, Standard and Tobacco.

Preferred Best is the category for people in perfect health. The proposed insured has no adverse medical history and is not on any medication. Also, the persons family, both immediate and extended, must have no history of cancer, diabetes or a number of other long term, life threatening diseases that may be hereditary. These people are unlikely to die for many, many years and will pay the lowest premiums.

The Preferred category is similar to Preferred Best, but allows for the proposed insured person to be slightly less perfectly healthy.

Most people fall into the Standard category. These are people who have minor health issues, may be on medication and may have a family history of mild diseases. They could also be mildly overweight. People who are grossly overweight or obese will certainly find their premiums are loaded

The Tobacco category covers people who smoke. These people are considered to be at much higher risk of dying of smoking related diseases and will pay proportionately higher premiums for their life insurance.

Age and Gender Considerations

Life insurance premiums are calculated with reference to mortality tables. These are statistically based tables showing average life expectancies. For example, a male aged 25 will be expected to live for many more years than a male of 75 years. Using these tables the insurance companies produce rate tables showing premium contributions for each different age.

Statistically women tend to live 3-7 years longer than men so many insurance companies use the male rate less 4 years when calculating the life insurance premium for a female proposer.

Other Considerations

Having read the standard rate from a premium rate table, the insurance company can then choose to load the premium if the proposer engages in a dangerous occupation or in dangerous hobbies. If you spend your weekends pot-holing or hang-gliding you must expect to pay a substantially loaded premium or you may even be declined.

Life insurance companies rely on an individuals health and lifestyle choices when making a decision whether to insure or not to insure and what premium to set. Consequently it is very important that you are truthful on the application form. If a claim is made and you are found to have lied on the application form, the life insurance policy can be declared void and the company will not pay out.