What do rates for life insurance policies typically depend on?

Life insurance policy rates are primarily influenced by a variety of factors, with one of the most significant being the demographics of the insured. This includes age, gender, health status, occupation, and lifestyle choices, as these factors help insurers assess the risk associated with providing coverage to a specific individual. Demographics provide insight into the likelihood of the insured's lifespan and health, which directly impacts the premiums they will pay for life insurance.

The claims experience of the group is also relevant, as it reflects the historical frequency and severity of claims filed by policyholders. However, this factor typically comes into play more prominently for group insurance policies rather than individual life insurance policies. Insurers analyze group claims data to adjust or set rates based on the experience of all policyholders within that group, but it is not the primary determinant of rates for individual life insurance policies.

Market competition does play a role in determining premiums, as insurers may adjust their rates to attract or retain customers in a competitive marketplace. Nevertheless, competition is more about positioning and market strategy than the actuarial bases that create the initial rates.

State regulations also impact insurance rates by establishing guidelines and requirements for underwriting and rate approval, but they do not directly determine the rates themselves. Rather, they set the framework within