Why Are Life Insurance Rates Decreasing?

MN Health Staff Writer | July 10, 2019

First, it is important to understand what affects life insurance rates.


Your individual rate is determined by age, health, and policy type. The industry wide rates are majorly affected by business expenses, mortality rates, and the amount of interest a company can earn through investing.  You can get online Term Life Insurance Quotes for Minnesota.


Business Expenses:


Rates depend on what will allow for a decent profit, so the cost for a business to keep its doors open and running will be factored into life insurance rates.


Mortality Rates:


Insurance companies use tables containing data based on factors such as age, health habits, location, income, and more to predict your life expectancy. These tables are called mortality tables. The mortality tables calculate a death probability for each age.


Interest through Investments:


Insurance companies take the interest that they receive from premiums and invest it. A greater return on investment for the insurance companies leads to lower life insurance rates.


So, why are life insurance rates decreasing?


Longer Life Expectancies:


Due to medical advancements, people are living longer lives. Since the likelihood you'll die sooner is lower, insurance companies can provide lower rates. Advancements have also improved life insurance companies' ability to predict life expectancies, which allows companies to offer lower rates to those people with longer expected life expectancies.




There have been changes to the reserve ratio regulations for life insurance. A reserve ratio is the amount of money that a company is required to have on hand at all times so that they can pay out policies if needed. Life insurance companies are now allowed to have lower reserve ratios.


Technology Advancements:


Technology advancements to the underwriting and claim filing processes have made life insurance companies more efficient and cut business expenses.

Category: Common Questions