Life Insurance costs and rates?

[Carbtree]

How are the insurance costs and rates determined?

[jpg7n16]

Some actuary company somewhere calculates how likely you are to die over the next X years.

They take that probability times your benefit should you die - and add in some profit for the company.

So if there's a 0.2% chance that you will die this year - and the face value of your policy is $500,000, you should be charged $1000 on a 1 year policy for them to break even. And if you'd like such companies to stay in existance, they need to make a profit, so you might pay $1300 or something.


Now I don't know what the actual death rates are, or what the profit margins are, so those are just used as an example. But that's the general idea. (if the death rate is 0.5% you should be charged 2500, 1% is 5000, etc.)

[JohnSaveOn]

jpg7n16 nailed it on the head. Some of the smartest people in the world work in actuary, calculating how much to charge me and you for all kinds of insurance. Unfortunately for us, they are very, very good at what they do.

[Joan.of.the.Arch]

How would life insurance companies know anything about my ethnicity? As a representative of a life insurance company or companies (are you a broker DeniseMancini?) do you really want to tell me that insurance companies are assigning a mathematical value to what they think might be my ethnicity?