Why is My Life Insurance Premium so High?

Chris Stocker

Chris Stocker

Owner and author of The Life of a Diabetic. He's been writing about Diabetes related topics for over 10 years, and has been featured in HealthLine, Diatribe, Diabetes Advocates and JDRF.

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Last Updated on September 24, 2023

What You Need to Know About Life Insurance Underwriting

No one wants their families to inherit financial stress, so having a life insurance policy can really make a difference in easing that difficulty. Life insurance can cover funeral expenses, or even help send relatives to college or cover lost income during difficult times.

We’ve continually said that life insurance is one of the most important financial products you’ll ever purchase.  But of course, you also want to have all this protection at an affordable price. As you compare different policies, you are going to want to keep coverage and premiums in mind as well as your budget.

People with Diabetes need to understand that oftentimes their life insurance premiums will be more expensive compared to those without any type of Diabetes.  There are some tips and tricks an applicant can follow, but please remember that your rates are most likely going to be higher.  

Firstly, let’s understand what life insurance rate classes are.

Rate Classes

There are 14 – 16 classification levels that insurance providers use to determine the rates of the premiums. The classes with the lowest amount of risk involved for you include:

  • Preferred Plus or Prefered Best
  • Preferred
  • Standard Plus or Standard Select
  • Standard

If your risk is higher than standard, the rate classes get categorized into tables with multiple levels that are numbered or lettered in order. For example, Table 1 or Table A would be first, then Table 2 or Table B, and so on.  Every life insurance company will have different guidelines on how many tables of risk, they are willing to accept on a case by case basis.

Remember, that the closer to Prefered Best you are, the lower you will pay for your premium. Each tier you go down increases the rate you will pay for your premium. Table 1 will be the cost of the Standard premium + 25 percent. Table 2 will be Standard premium + 50 percent, and it will continue onwards in that fashion.  

Now, your premium rate is calculated from the classification you reach based on an underwriting decision, amount of life insurance coverage, and the type of life insurance policy you select. 

During the underwriting process, your insurance company will assess the risk of insuring you by looking at your application, health lifestyle, and a few other factors. Once they finish going over your application, you will be notified if you were approved or declined. At this point, you will receive your final premium rate.

Some companies will do something called “table shaving,” which is when they will reduce the number of tiers you are away from Prefered Best if you have favorable factors in the underwriting process. This can lower the cost of your premium.


Premium Rate Factors

There are many things that can affect your premium rate. For example, before the underwriting process, the type of coverage and policy you want to have can have an effect on the level of underwriting you can expect to see on your application.

The longer the policy and the higher the death benefit will make your premium higher. Not only do these longer policies cost more, but they will have more intense underwriting and application reviews. 

Permanent or whole life insurance policies last longer and cost more.  However, permanent policies are generally underwritten in the same manner as term life insurance products.

Shorter policies that cost less may not need as much information. This all varies on the company, policy, and carriers, so make sure to check it out with your insurance provider.

The payment plan you pick can also affect the cost of your premium. 

Most people choose monthly or quarterly premium payment plans for their life insurance, and insurers sometimes charge a fee for the premium modes. So, paying annually could reduce your premium cost by 10%. 

However, some insurance companies have flexible payment plans and schedules for premium payments. If you are a strict budget follower, a bi-annual or annual payment plan may be perfect for you.

Underwriting Factors

If you have done any looking around for a plan already, then you probably know that you must provide some information about yourself and your life before receiving a premium quote.  Having Diabetes means you’ll need to share more information about yourself, to obtain realistic quotes.  If you receive a quote, and have not completed a Diabetes questionnaire, the information you’ve received is 100% fake and not accurate.

The three initial factors that drive the underwriting process are age, gender, and tobacco use. Once those three have been examined, they will then consider health, lifestyle, and criminal records.  With Diabetes, your Diabetes history and control will play a big part in the types of rates you’ll receive.

The main factors considered in the underwriting process are usually the age of the applicant, the answers to health and lifestyle questions, and financial stability. These factors heavily influence the rate of your premium.

Here’s some more information on these 6 key factors.

  • Age

The younger you are, the cheaper your premium is likely to be, since as your age increases, your life expectancy decreases, and so the likelihood of the insurance company having to pay out your policy increases.

On average, the cost of life insurance at 40 years-old is 65 percent more expensive than at 30 years-old. At age 50, it goes up 96 percent from age 40.

  • Gender

Women typically drive safer and live longer than men, so premiums for women are lower on average. 

Another thing to consider about your insurance provider is that they underwrite based on your gender at birth, not your gender identity. This can cause disputes between companies and folks who do not identify with their sex at birth.

  • Tobacco and Other Drugs

Insurance companies want to see that you have not been treated for alcohol or drug abuse in the past 10 years, otherwise you may pay more or be denied. 

  • Smoking

If you smoke, your premium will be higher than a non-smoker because of the risk of death that is associated with smoking and vaping.

It is fairly common for a smoker to pay twice as much as a non-smoker with the same bill of health for the same plan.

Depending on the company, being a non-smoker who used to smoke is classified as 12 months without any kind of nicotine (including patches or gum) or 5 years without nicotine. 

  • Marijuana

Less than 10 years ago, marijuana users would not be able to get a policy. Now, admitted marijuana users in legalized states can get non-smoker plans. 

If the applicant uses marijuana for medical purposes, examiners typically underwrite it as a medical condition. Underwriters will ask to see the medical-marijuana card to prove its legitimacy.

However, in states where marijuana use is illegal across the board, applicants will usually get declined since it is viewed as an illegal drug.

  • Prescription Drugs

Part of the underwriting process is typically doing a search of the applicant on the prescription drug database.  With your Diabetes history and treatment, you’ve most likely taken a variety of medications over time.  Please be prepared to share details of current and recent Diabetes medications you have taken.

The underwriter will be able to see any and all drugs prescribed to the applicant, and many applicants do not know that this is a possibility for undisclosed ailments to be discovered by the underwriter.

  • Criminal Record and Driving

Safe drivers with fewer tickets and accidents will be favored by insurance companies and receive lower premiums than those who have histories of reckless driving or have multiple tickets against them.

People with criminal offenses like insurance fraud or DUI’s will have a much harder time getting approved.

  • Health

Your health history, family history, and current health will all be looked at by underwriters. Any conditions associated with earlier death may make you uninsurable. Having a healthy weight and BMI is also important. 

Controlled diabetes is usually not a problem. If your family has a history of health conditions you may be denied or have to pay higher premiums.  However, please understand that the type of Diabetes you have, will be a major determining factor into your underwriting classification.

We’ll point out that people with Type 1 Diabetes, unless Diagnosed as an adult, will almost always be rated as a substandard risk.  People with Type 2 Diabetes, may qualify for Standard to Preferred rates.  If you’re a person with Gestational Diabetes history, you could always be in line for Preferred life insurance rates, maybe even Preferred Best.

In the event you have a history of Diabetes related complications such as Neuropathy, or Retinopathy, you may end up paying higher life insurance premiums, compared to a person without complications.  If your Diabetes complications are severe enough, you may only qualify for guaranteed acceptance types of policies.

  • Lifestyle, Job, Travel, and Hobbies 

Keeping an active, healthy lifestyle will benefit your case while being a frequent bungee jumper or skydiver may jack up the cost of your premium.

If your job is hazardous or dangerous, such as construction workers or nuclear waste managers you may have a higher life insurance premiums. If you partake in risky hobbies, they may negatively affect your case.

Travel to “safe” countries for less than 183 days a year is typically fine, but over 183 days is labeled as “foreign resident” can limit rates available.  Foreign travel may be an issue for various life insurance companies.

Frequent travel to dangerous countries such as Iran or Ukraine, or war zones can increase your premium as well or be a decline of life insurance coverage.

Life Insurance Application

Although it can feel intimidating, knowing how the process works can help you feel more secure in picking and applying for your life insurance policy. 

Parents with young children usually pick a term life policy that would act as income replacement. This is different from a whole life insurance policy or even a burial insurance policy, which is mainly to secure money for paying funeral costs and other end-of-life costs. 

There are plenty of life insurance companies in the USA, so finding the right one may take some time, but using an independent agent can help you find the perfect company for you.

Make sure to answer questions honestly and do not stray. If the question is: did your mother have any conditions after age 65?  Do not include conditions before 65, or conditions your sibling had/have. Be truthful and concise.  Companies ask questions in a specific way, so please pay attention and answer honestly.  Your agent will be there to assist from start to finish.

At worst for most people with Diabetes, the underwriting process may take a little longer than usual.  If you complete a paramedical examination, and allow companies to review your recent medical records, an underwriting decision will take about three to four weeks.  If you opt for a non medical examination policy, you may receive a decision from the underwriter in as little as two to three days.

Having Diabetes will not be an automatic decline for life insurance.  However, it means you will want to make sure that you work with an agent who’s dedicated to the Diabetes community.  We love what we do every day here at Diabeteslifesolutions.com  Please feel free to complete a quote request to receive information, or call 888-629-3064 to speak with a licensed agent in your state.  

Matt Schmidt is a nationally licensed diabetes insurance expert. Over this time frame he's helped out over 10,000 clients secure life insurance coverage with Diabetes. He's frequently authors content to Forbes, Entrepreneur, The Simple Dollar, GoBanking Rates, MSN, Insurancenews.net, and Yahoo Finance and many more.

Matt Schmidt is also the Co-Founder of Diabetes Life Solutions and Licensed Insurance agent. He’s been working with the Diabetes community for over 18 years to find consumers the best life insurance policies.  Since 2011, he has been a qualified non-member of MDRT, the most prestigious life insurance trade organization in the USA

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