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How Are Life Insurance Premiums Calculated in Texas?

March 16 2022
insurance agent going over insurance information with couple

Like most insurance policies, life insurance premiums are calculated using a variety of factors unique to each person, including age, gender, and health and medical history. 

For most Texans, finding the right life insurance policy is one of the biggest long-term investments they can make toward protecting their family.  

Life insurance is essential protection that can be affordable for anyone. But how can you make the right decision about life insurance if you’re not sure how much you should be paying? In this article, we’ll go into the most important factors that determine how much people pay for their life insurance premiums. 

What Factors Affect Texas Life Insurance Premiums? 

1. The Type of Coverage 

There are different life insurance options that provide different levels of coverage. In general, the major types of Texas life insurance from cheapest to most expensive are: 

  1. Term life insurance: Most affordable option that lasts for a set number of years (usually between 10 and 30 years). If the insured person is alive after the term, then they may take out a new policy with a new premium. The money you pay in is not recoverable at the end of the term. It only pays out if you die within the term limits. 
  1. Universal life insurance: A flexible policy that lasts as long as you live and allows you to increase or decrease your coverage as life circumstances change. You may borrow against the money in this type of policy and, in the end, the payout will be whatever is left. 
  1. Whole life insurance: A permanent policy that lasts as long as you live and guarantees a payout as long as you pay your premiums. You may also borrow against the cash value of this type of policy. 

For the same level of coverage, a whole life insurance policy can cost up to 15 times more than a term life policy. But, on the other hand, your loved ones are guaranteed to receive the same benefits no matter what (as long as you keep paying your premium). 

2. Age, Gender and Family History 

Some things are simply out of our control when it comes to life insurance premiums. In particular, age plays an important role in determining your premium. The younger you are, the longer you’ll be expected to pay your premiums. And much like with auto insurance, life insurance companies consider men to be riskier to insure than women. 

Finally, family history can be a useful indicator when assessing your risk profile for life insurance. Many common conditions, such as heart disease and cancer, seem to have a genetic component. This means that you could be charged more for life insurance if others in your family have heart problems — even if you’re perfectly healthy. 

  • 3. Hobbies and Activities 

What you do outside of work might be your own business, but life insurance companies will need to know the details before offering you a policy. Here are some common high-risk activities that will affect your life insurance premium: 

  • Riding a motorcycle (even if you have motorcycle insurance
  • Sky diving 
  • Rock climbing and mountaineering 
  • Scuba diving 
  • Flying your own plane 
  • Hang gliding 

Keep in mind that a death caused by a high-risk activity may not be covered by most basic life insurance policies. So, before you climb that next mountain, you’ll want to talk to your life insurance company about specifically adding special coverage to meet your needs. 

4. Current Health Condition 

If you’ve ever applied for life insurance before, then you’re already familiar with the many questions that insurers ask about your health status. Since current health is such a major predictor of mortality, it’s not surprising that life insurance companies want to know as much as possible about your health status as well as your family’s medical history. 

In many cases, you’ll be required to undergo a medical exam with an approved physician before the insurance company agrees on a premium for your policy. The exam is very similar to a routine annual physical and is used to confirm the health details you listed in your insurance application. 

woman getting physical at doctor's office

Here are some risk factors that are likely to affect your life insurance premiums: 

  • Weight: Obesity is linked to a variety of other health problems, which is why obese people are charged higher premiums for life insurance. 
  • Cholesterol levels: High cholesterol has long been known to cause heart issues and lower lifespans. 
  • Blood pressure: People with high blood pressure are riskier to insure. Note that your medical exam will detect if you’re using medication like beta-blockers to regulate your blood pressure. 
  • HIV/AIDS and hepatitis: Though both HIV and hepatitis are treatable with medication, life insurance companies consider these to be high-risk conditions. 
  • Glucose levels: High glucose levels can indicate diabetes or pre-diabetes. 
  • Nicotine use: It’s no secret that using tobacco and nicotine can cause a list of health problems, which is why smokers pay more for life insurance. 
  • Drug use: The medical exam will include a standard blood and urine test for detecting recreational drugs, including marijuana. 

Does Marijuana and CBD Use Affect Texas Life Insurance Premiums? 

It depends. Recreational marijuana use is illegal in Texas, which means that users who test positive for THC (the active ingredient in marijuana) without a prescription will be considered to be high-risk, illegal drug users and charged a higher life insurance premium. This is because unregulated drugs are more likely to contain harmful substances. 

On the other hand, people who use medical marijuana for a health condition might be charged a higher premium, not because of the marijuana use, but rather because of the underlying health condition. 

While it’s legal in Texas to use CBD (a non-psychoactive substance found in hemp), CBD users can run into problems when applying for life insurance. Drug tests don’t look for CBD, but some low-quality CBD products may contain enough THC to lead to a positive drug test. 

On top of that, some insurance companies put legal marijuana and CBD users who vape in the same risk category as tobacco smokers. Other insurers don’t make the distinction. 

If you use marijuana or CBD products, it’s important to be honest about it in your life insurance application to avoid problems with the insurance company later. 

Which Factors Don’t Affect Texas Life Insurance Premiums? 

According to the Texas Insurance Code, insurance companies cannot deny coverage or discriminate based on race, color, religion, national origin, age, gender, marital status, geographic location, disability, or partial disability. 

For life insurance companies, there are limited exceptions that allow insurers to charge higher premiums depending on gender, age, location, and disability. This is because companies have been able to prove that these are risk factors that directly affect mortality rates. 

Life insurance companies aren’t allowed to cancel your policy or charge you more based on the other covered factors which don’t have a proven effect on a person’s health or lifespan. 

Does COVID-19 Vaccination Status Affect Life Insurance Premiums? 

No. As the world gets through the COVID-19 pandemic, Texans are wondering how COVID-19 is affecting existing and future life insurance premiums

Right now, getting COVID-19 or a COVID-19 vaccination isn’t affecting life insurance premiums or insurance payouts. This is for two reasons. First, existing life insurance policies are explicit about the conditions that could cause the denial of a payout, and insurance companies can’t change these terms until it’s time to renew the policy. 

Second, there’s simply not enough data about how COVID-19 and vaccines affect lifespan and mortality over time. As insurance companies gather more data about the long-term effects of COVID-19, its variants, and vaccines, then it’s possible that insurers will charge different premiums based on vaccination status. However, that decision is years away, and insurance companies would need to show that either contracting COVID-19 or getting vaccinated has a provable effect on the mortality rate. 

Texas Life Insurance Is More Affordable Than You Think 

Regardless of your age, health condition, or life situation, you should be thinking about life insurance. While no one likes to talk about death, it’s important to think about what would happen if you unexpectedly passed away. Would your family and your children have the financial support they need? Would your spouse be able to pay off your mortgage on their own?  

People all over Texas look to Baja Auto Insurance for affordable life insurance premiums that provide the protection they need. All it takes is a few minutes for an online life insurance quote, or you can walk into one of our offices or give us a call at 800-401-6870


Life Insurance