Which of the following is a key factor in determining life insurance premiums?

The determination of life insurance premiums heavily relies on the insured’s age and health status as they are critical indicators of the potential risk to the insurer. When calculating premiums, insurers assess the likelihood of a policyholder making a claim in the future, and these two factors are among the most significant.

Age plays a vital role because, statistically, older individuals have a higher likelihood of passing away compared to younger individuals. Therefore, as a person ages, the premium typically rises to reflect this increased risk. Health status is equally important; a person with pre-existing medical conditions or a history of serious illnesses may face higher premiums than someone in good health. Insurers often require medical examinations or health questionnaires to assess these factors, making them central to the underwriting process.

Other options may influence certain insurance products but are not as fundamental in the context of life insurance premiums. For instance, while an individual’s occupation could have some impact based on associated risks (like high-risk jobs), it does not outweigh the primary factors of age and health in most cases. Similarly, a credit score or the value of real estate may be relevant in different types of insurance, like credit or property insurance, but they do not serve as key determinants for life insurance premiums.