Insurance can help you pay for major expenses such as healthcare costs or repairs needed after an auto accident, but maintaining insurance coverage can be expensive. Insurance companies have to charge customers rates that are high enough to cover the cost of claims and have cash left over to make a profit. Insurance rates can vary significantly from person to person based on a variety of risk factors, and insurers often use statistics to help determine risk.
Age is a key factor for determining certain insurance rates. Young people tend to pay much less for health insurance and life insurance than older people, since the young are generally healthy. According the Social Security Administration, 40-year-olds are about twice as likely to die in a year as 20-year-olds, and the likelihood doubles again from 40 to 50 and 50 to 60. On the other hand, young people, especially men under age 25, tend to pay more for auto insurance than older drivers, since inexperienced drivers are more likely to have accidents. Statistics from the Centers for Disease Control show that young people between the ages of 15 and 24 account for around 30 percent of traffic-related injuries despite making up only 14 percent of the population.
The law doesn't allow discrimination in the workplace, but when it comes to insurance rates, you might pay more or less for coverage depending on your gender. Men tend to pay more for auto insurance coverage than women, because they are statistically more likely to get into serious accidents. According to MSN Money, males caused about 70 percent of fatal crashes in 2009. Similarly, men may pay more for life insurance than women because women live longer than men and men tend to have more dangerous jobs than women on average. Social Security data tables show that men are more than twice as likely as women to die between ages 18 and 40, and their chance of death remains higher throughout old age.
Habits that affect your health can have a large influence on your insurance rates. Health insurance and life insurance providers can make you pay more for coverage if you are a smoker or engage in other risky behavior. CDC statistics show that smoking is responsible for one in five deaths annually and that it causes around 440,000 deaths per year. People who are overweight or obese may also end up paying more for health and life insurance coverage, since high weight is associated with an increase in health problems.
Where You Live
The neighborhood where you live can be an important factor in determining auto and homeowners insurance rates. If you live in an area with high crime rates, you'll probably pay more for auto and homeowners coverage, since you are more likely to be a victim of crimes such as theft and vandalism. Installing anti-theft devices in your car and home may reduce your rates. In addition, the farther you are from the nearest fire station, the more you are likely to pay for homeowners coverage.
- Forbes: What Really Goes Into Determining Your Insurance Rates?
- State Farm: What Affects Car Insurance Price?
- MSN: 10 Things That Can Lower Or Raise Your Homeowners Insurance Rates
- Ohio Department of Insurance : Ohio Insurance Premiums & How They Are Determined
- Social Security Administration: Actuarial Life Table
- MSN Money: Are Car Insurers Unfair to Men?
- Centers for Disease Control and Prevention: Teen Drivers: Fact Sheet
- Centers for Disease Control and Prevention: Smoking & Tobacco Use
- Dave Ramsey. "The Total Money Makeover: A Proven Plan for Financial Fitness," Page 73. Thomas Nelson, 2003.
- LIMRA. "2018 Insurance Barometer Study," Page 7. Accessed Aug. 22, 2020.
- American Journal of Public Health. "Medical Bankruptcy: Still Common Despite the Affordable Care Act." Accessed Aug. 22, 2020.
- Kaiser Family Foundation. "Hospital Adjusted Expenses per Inpatient Day." Accessed Aug. 22, 2020.
- Kaiser Family Foundation. "2019 Employer Health Benefits Survey." Accessed Aug. 22, 2020.
- Social Security Administration. "The Faces and Facts of Disability/Facts." Accessed Aug. 22, 2020.
- Council for Disability Awareness. "2012 Long Term Disability Claims Review," Page 3. Accessed Aug. 22, 2020.
- MyFloridaCFO. "Disability." Accessed Aug. 22, 2020.
- Guardian. "The Cost of Long Term Disability Insurance." Accessed Aug. 22, 2020.
- National Highway Traffic Safety Administration. "Police-Reported Motor Vehicle Traffic Crashes in 2018," Page 1. Accessed Aug. 22, 2020.
- National Safety Council. "Motor Vehicle Deaths Estimated to Have Dropped 2% in 2019." Accessed Aug. 22, 2020.
- CDC. "10 Leading Causes of Death, United States: 2018, All Races, Both Sexes," "2018, United States, Unintentional Injuries, Ages 5–9, All Races, Both Sexes," "2018, United States, Unintentional Injuries, Ages 10–14, All Races, Both Sexes," and "2018, United States, Unintentional Injuries, Ages 15–24, All Races, Both Sexes." Accessed Aug. 22, 2020.
- National Highway Traffic Safety Administration. "The Economic and Societal Impact Of Motor Vehicle Crashes, 2010 (Revised)," Page i. Accessed Aug. 22, 2020.
Gregory Hamel has been a writer since September 2008 and has also authored three novels. He has a Bachelor of Arts in economics from St. Olaf College. Hamel maintains a blog focused on massive open online courses and computer programming.