How Does Family History Affect Your Life Insurance Premiums?
Life insurance can serve several roles in your financial plans. For most people, it’s a reliable way to create an instant estate for their loved ones, should disaster strike. Depending on the type of policy you buy, life insurance can help you save for retirement, build savings and access to cash in emergencies, and protect family members from financial losses.
Still, insurance companies exist to make money. To do that, they must maintain very strict underwriting guidelines when issuing life insurance policies.
If you’re wondering, “Does my family health history affect my cost for life insurance?” The answer is YES! And today, the experienced team of insurance agents at Einsurance.com is here to help you understand how and why that happens, in an unbiased way.
This article covers:
Let’s begin with a look at how your family history affects the life insurance application process and product pricing.
How Does Family History Affect the Life Insurance Application Process?
During the life insurance application process, the insurance company will ask many questions about your health and the health of your family. Two major concerns are cancer and heart disease. If your parents or siblings have passed away from either of these issues, you will probably pay more for your insurance premiums.
Other Information Your Insurer Needs
In addition to your family history, they’ll ask about your:
AgeGenderOccupationHeight and weightBlood pressureMedical history (in detail)Current prescriptionsMental health statusTobacco useAlcohol useRecreational drug useCurrent physician informationDangerous hobbies (like skydiving)Safe driving recordCriminal history
Many life insurance companies will also send a lab technician to you to check your blood pressure in person.You don’t need to pay anything for this service, the insurer will pay for it.
Once the insurer gathers this information, they’ll look into your medical history. They WILL call your doctor to verify everything you’ve said.
While you go through the life insurance application process, it’s important to be very honest about your health and that of your family. They will find out the truth. And a material misrepresentation — that is, a lie about something that matters to the insurer when deciding to insure you or how to rate you — will label you as a moral hazard.
short, if the insurer catches you misrepresenting details about your health or age, your price will increase even more, and they’ll share this information with other insurers.
Health Conditions in Your Family that Might Affect Your Life Insurance Premiums
A family history of heart disease and various types of cancer will almost always affect your life insurance premiums. And insurers have plenty of access to health insurance records and death records.
Specifically, they’re looking for:
Various types of lung cancerProstate cancer among malesCervical cancer among femalesKidney/renal diseasesBone cancerHeart diseaseHIV (but this is changing, and we’ll address it below)
Again, it’s important that you speak truthfully when filling out your life insurance applications. Insurers keep very thorough databases and share their information with other companies.
How Do Insurance Companies Know About my Deceased Relatives?
This is a question our life insurance specialists hear occasionally. Insurance companies pay their actuaries a lot of money to study death records and statistics very closely, and to create risk groups for all kinds of people. Much of this information comes from country registrar offices, who keep track of vital statistics and the information logged on death certificates.
Ultimately, the risks an insurer will accept — and the premiums they charge to do so — are based on the Law of Large Numbers. This is the theory actuaries use to calculate the odds of someone passing away based on their age, health, family health, location, occupation and more.
About the Law of Large Numbers
Insurers have access to health records and death statistics for millions and millions of people, over decades of time. Through deep statistical study, actuaries can confidently predict, for example, the number of 72-year old males who will pass away this year in your state. More specifically, they can tell you how many will die of cancer, heart disease, motorcycle accidents and more.
So, insurance companies can generate this data for every gender and every age. And the Law of Large Numbers has proven something else to them: that individuals with a family history of either cancer or heart disease are more likely to pass away early, and from these diseases.
Other Factors Affecting Your Life Insurance Premiums
Most factors which affect your life insurance premiums have to do with your age, gender, overall health and lifestyle. Of all these, age is (arguably) the most important factor to insurers, aside from major chronic disease.
For instance, imagine three generations in the same family: a healthy male aged 25, his father aged 50, and a healthy grandfather of 75. They will all pay very different premiums when signing a new life insurance contract.
It makes sense that the 25-year old will pay much less than the 75-year old, his life expectancy is much longer. This gives the insurer more time to invest those premiums and make money before paying out a death benefit.
Lifestyle Choices That Might Affect Your Life Insurance Premiums
While your age and family health history are not things you can personally change or control, some factors that affect your life insurance prices can be controlled.
Smoking and Tobacco Use
Smoking is one major issue to which insurers pay close attention. A history of smoking can lead to more expensive premiums, as smoking is linked to several types of cancers and other health issues. And, even if you only smoke a few cigarettes in a week, you will still pay the same premiums as a heavy smoker.
“What if I Lie About Smoking on my Life Insurance Application?”
Whatever you do, don’t misinform the insurer about your smoking habits. Not only is this unethical and immoral to everyone else paying for life insurance, the insurer will surely catch on sooner or later.
They may discover the truth when contacting your doctor to follow up on your application. Or, they may discover it later when you’re being treated for another illness. And finally, they may find out when looking at your death certificate many years from now.
If you pass away, and the insurer discovers that you’ve misrepresented your tobacco use or smoking, it’s considered a material misrepresentation. They’ll fight in court to avoid paying the full death benefit to your loved one. This is completely legal!
If your heirs are lucky, they will receive the premiums you’ve paid as a refund, but nothing else.
Think of it this way, you’d be better off putting those premium funds in a savings account and letting it earn interest for your loved one, rather than lying about tobacco use on your life insurance application.
Dangerous Hobbies Can Affect Your Life Insurance Premiums
Certain hobbies come with a risk of death. If you’re into skydiving, aviation in “ultra lights,” hang-gliding or intense moto-cross competition, your life insurer needs to know about it. Some insurers consider equestrian sports (horse riding) to be a dangerous hobby as well.
Your Occupation Matters to Life Insurance Companies
Certain occupations are considered high-risk as well. Lumberjacks, oil field workers, construction workers and hazardous material tanker truck drivers may find themselves paying higher premiums for life insurance.
Your Personal Health Matters to Insurers More Than Family Health History (Sometimes)
Sometimes, a family history of certain diseases may not affect your life insurance premiums much or at all. Gender plays a big role here. (We know gender topics are somewhat taboo at the moment. However, you must recognize that insurers do base their risk groups and premiums on statistics and health issues associated with gender, and we aim to explain this in an unbiased manner.)
For example, when a female life insurance applicant tells the insurance agent that her father passed away of prostate cancer, the insurance company knows this she cannot suffer from this particular disease. In this case, her family health history will not affect her life insurance premiums.
Now, imagine a male applicant explaining that his mother passed away from cervical cancer. The insurer knows this applicant will never suffer from cervical cancer, so it may not affect their risk rating.
Insurers may place you in a more expensive risk rating if you’re living with:
AsthmaObesityDiabetesDepression and other mental health concernsAutismAnd epilepsy
And, depending on your state, they may consider HIV status.
HIV Status and Life Insurance: It’s 2023 and Times are Changing
There was a time when individuals with HIV, or those with a family history of it among parents and siblings, had a very difficult time buying life insurance. But, thanks to advances in modern medicine, insurance companies and some state insurance commissioners have noticed that individuals with HIV are living much longer, healthier lives.
So, HIV test results are becoming less important to life insurers. And in California, life insurance companies (and disability insurance companies like AAFLAC) can no longer decline a request for insurance based on HIV test results.
We must point out that the operative word here is “decline.” An insurer doing business in California cannot turn you away entirely for positive HIV test results, but they can place you in a specific risk group with other HIV-positive individuals of similar age and gender.
And in 2023, some life insurance companies are specifically marketing towards individuals with HIV or other medical conditions.
This leads nicely into our next point: how to shop for life insurance if you have health issues.
How to Shop for Life Insurance if you Have (or Suspect) Medical Conditions
The internet has made it easy for life insurance companies to market directly to individuals with particular needs. Whether you have HIV, a heart condition, cancer or something else, there is probably an insurer ready to do business with you. Simply visit your favorite search engine and enter “life insurance for people with…”
Consider Term Life Policies with No Medical Exams or Questions
One of the most common types of policies for individuals in this situation is a term life policy with no medical exam or questions. These policies tend to be a little more expensive, and the death benefit relatively small, but they will provide you with that peace of mind that you’re creating an instant estate for someone who matters.
When applying for these policies, you’ll still need to answer basic questions about yourself, including your age, gender and tobacco use. Armed with that information, and the data the insurer can collect about your health, they will offer you a life insurance policy regardless of your health or your family’s health history.
These policies make good sense for older individuals, those with major health problems in their family, and people living with serious medical conditions.
Just remember that term life policies are only valid for a set period of time (it could be 5, 10, 20 or 30 years.) And after that term is over, you will need to apply for a new policy. You’ll be that much older, and your premiums will be higher.
Our Final Thoughts on How Your Family Medical History Affects Your Life Insurance Premiums
In all fairness, it makes sense that insurers consider your family members’ health profiles when selecting your insurance premium. They’re in the business of earning profits, not handing out billions of dollars.
Still, you can be proactive to get the best prices on life insurance, even if your family history includes some illness. We suggest you:
Shop around with several insurers before making a commitmentBe frank and honest on your life insurance applicationsConsider “bundling” your life insurance policies with an insurer you already useAnd make healthy life choices in the meantime
If you’d like to get some quotes on life insurance today, try our handy online tool at Einsurance.com. We look forward to matching you with the perfect insurer for your needs.
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