How Does Your Life Insurance Agent Determine Your Policy?

| November 8, 2013
Universal Life Insurance Company

Universal Life Insurance Company (Photo credit: Thomas Hawk)

A lot of factors of your life are analyzed when an insurance agent makes a recommendation for your life insurance policy. Here’s a little look inside the process of determining a life insurance policy.

First they determine if there is a current need or gap in their current life insurance portfolio. They look at debts to be covered, income replacement, final expense costs and other factors, such as education funds to be left for children and many more. From here they can make a recommendation on the amount needed to cover your life insurance need and how that can be done to fit in your budget.


You can’t help your age, but health and lifestyle is one way you can have a bit of control over to improve your life insurance rate.

Be healthy.

Life insurance policies require an underwriting process, which means that insurance agencies assess the risk someone poses before backing them with insurance. This process looks at your current and past health conditions. That means depending on your age and the amount you applied for, the agency can just look at the prescriptions that you take, or they can do a full health review. A full health review includes testing in labs and an ECG, which measures heart health.

Make safe lifestyle choices.

Some lifestyle factors also play into life insurance. Tobacco users will generally pay a higher rate than people of the same age and good health who abstain from tobacco.

Certain jobs can also pay a higher rate if their job is considerably high risk. Although some people might have the impression that insurance agencies wouldn’t even cover them at all, it is still possible for them to get insurance, they will just have to pay a higher rate. According to the Bureau of Labor and Statistics, truck drivers, farmers, construction workers, loggers, fisherman, aircraft pilots and engineers, iron and steel workers and roofers all had high fatal work injury rates. Workers in these occupations usually can get a policy if they are willing to pay the higher rate. Insurance policies tend to use data provided by the Bureau of Labor and Statistics to determine high-risk occupational rates.


Most life insurance can cost anywhere from about $350 a year to $3,000 a year, depending on your age, health and lifestyle factors.

Your policy will cover an amount determined by the above factors, household size, number of dependents etc. A rule of thumb that some people use to determine how much your policy covers is that your policy should be about 7-10 times your annual salary, subtracting a bit from that number to account for other funds that your family members or other beneficiaries will be able to get money from such as social security, retirement savings, etc. All these factors will be taken into account when determining the coverage of your policy, but the average policy covers $250,000.

Make sure to ask any questions to your life insurance agent if you have any doubts or concerns about the determination process!

Stephanie Wilmsmeyer is life insurance agent for State Farm in Columbia, Mo. You can find more information about life insurance on her Google+.


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Category: Life Insurance

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