When we think about life insurance we think about our health; how we feel now, our lifestyle habits, and our families history. All of that contributes to one thing we don’t often think about directly: our life expectancy.

Life expectancy is the most significant factor for an insurance company when they determine what the life insurance premiums of an individual should be. This is why it is so important to understand how life expectancy affects your policy when you are looking to get life insurance.

In the UK, the average life expectancy is around 87-years-old for men and around 90-years-old for women, although individual life expectancy depends on a few different factors: the year you were born, your gender, your race, any personal medical conditions, and the medical history of your family.

It’s also increasing over time, as we become more aware of how our lifestyles affect our long term health and as medical care advances.

Why You Should Care About the Link Between Life Expectancy and Life Insurance

So, if all life insurance policies take your life expectancy into account, why should you care?

Well, besides hopefully making you more aware of your lifestyle choices and how they may negatively affect your quality of life, it all comes down to money. Taking out a life insurance policy has very different implications for someone in their early thirties and someone in their fifties – even if those two people are physically on par. Why?

Because, simply (and a little morbidly), the person in their fifties is much more likely to have less time left on earth. If we look at the average life expectancy for a woman, a woman in her fifties will likely have another 30-40 years to live, while a woman in her thirties will have another 50-60 years to live. A life insurance policy will likely have a lot longer before it has to pay out for the woman in her thirties.

The longer you wait to take out your life insurance policy, the higher risk you are, and so your premiums will be higher. Bearing this in mind, it is advisable to buy your life insurance policy earlier in life as your premiums will be lower. As well as this, your policy will have longer to build up value to become a more significant sum of money as you grow older.

How Does an Insurance Company Calculate My Life Expectancy?

Firstly, you don’t need to worry that we have some kind of special life expectancy formula that calculates the exact year or date you’re going to move on. It’s all generalisation, and living a healthy lifestyle is the best way to extend your life expectancy and quality of life well beyond what any calculation could assume. (Click here to find out more about outliving your life insurance policy.)

That said, here are the factors most life insurance companies will use to calculate your premiums:

• Current age (birthdate)
• Gender
• Race
• Personal medical history
• Family medical history
• Lifestyle habits (drinking, smoking, exercising)

Where you live/have lived can also affect your life expectancy, so that may also play a part in an insurer’s decision, with life expectancy being lower in typically working class cities by as much as 9 years (Blackpool versus Chelsea, for example).

Why Do You Need Life Insurance?

Taking out life insurance means that, in the event of your death, your family will be financially protected, whether that’s for funeral costs, unpaid bills and debts, a mortgage, or just to make sure they can have a financial buffer for comfort after your passing.

There are a number of variations of life insurance available and which one is best for you will simply depend on you as an individual and your needs.

How Does Life Expectancy Change How You Search for Life Insurance?

Life Insurance ROI

That really depends on how money-focused you want to be. For example, some people like to calculate the ROI (return on investment) for their life insurance policy. For example, if you buy a policy that pays your loved ones £150,000 when you pass, and you pay £50,000 over your lifetime, then they’ll be getting a £100,000 ROI.

This kind of calculation may alter who you decide to buy life insurance from, as you may decide to try and find a policy that will give you the biggest ROI.

Life Insurance Affordability

Of course, as with all insurance, you may also be looking for the most affordable life insurance policy to keep going over time, and that may be your deciding factor.

Type of Life Insurance Policy

You can choose from a term life policy, i.e. ending after a specific time period, or a whole-of-life policy. A term life insurance policy means that once that insurance policy expires the pay-out is renounced so if you live past the date set out, you will get none of what you paid in.

Some people will choose to go for a term life insurance policy because they know that their life expectancy is shorter. Others choose the whole-of-life policy so that they are covered for the entirety of their lives, no matter what age they live to.

Life Insurance That Puts You First

We are always working to give you the best possible insurance policies that put every need of our customers first. We understand the importance of providing clear information to help you determine exactly the right insurance policy for you. We don’t rush you, we’ll spend as much time answering questions and talking through your options as you need.

If you would like to find out more about life insurance and what we have to offer, click here. Alternatively, if you want to have a chat with one of our friendly experts call 0161 537 0555 today and we will answer any questions about our services and how we can best help you.