Statistics Used in Determining Insurance Rates

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.

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.