UPDATED: Nov 29, 2011

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Written By: Laura BerryReviewed By: Daniel WalkerUPDATED: Nov 29, 2011Fact Checked

Life insurance is an optional form of insurance coverage that a person can buy in order to secure a financial future for surviving relatives or beneficiaries in the event of the person’s death. Life insurance usually pays a substantial amount in death benefits; these benefits can be used by the surviving beneficiaries to pay off debts, fund a retirement or education, or otherwise substitute for the deceased person’s income. In most cases, your insurance benefit will be substantially higher than the sum total of the payments you make into the policy. How, then, do life insurance companies make their money?

Life insurance companies make a profit by being careful with the way the policies are written. There are two major types of life insurance policy available to consumers, term and universal. The vast majority of insurance policies are term life policies. The way term life insurance works is a customer agrees to pay coverage for the policy term, usually a period of 10 or 20 years. If the insured passes away during the policy term, the life insurance company pays out the death benefit regardless of how much has been paid into the policy. If the insured lives to the end of the policy term, however, a new policy must be taken out and any money paid in to the policy is forfeited.

Insurance companies, then, make their profit by insuring people who are at a low risk for dying while being insured. This is why companies are less expensive for people who are young and healthy than for those who are older or have preexisting medical conditions. In order to compensate for the risk of insuring a person with medical conditions, insurance companies will charge higher rates to those individuals.

In order to determine the health of the insured, the insurance company will usually require a physical exam. This includes obtaining all of the customer’s medical records, as well as screening for any medical concerns and evaluating the individual’s weight.

Why does a Life Insurance Company need my weight?

Obesity is an epidemic in the United States and elsewhere in the world. Obesity causes several other major medical conditions such as diabetes, heart disease, and gastric disorders. Because heart disease is a leading cause of death for Americans, insurance companies want to be sure that the people they insure have a low risk of heart disease occurring during the policy period.

Since obesity is directly linked to heart disease, people who are overweight can expect to pay more for life insurance. Other forms of insurance are also more expensive for overweight people, especially health insurance. In most cases, insurance companies determine acceptable weights on a sliding scale, so you may only need to lose a few pounds to receive a substantial decrease in your rates.

If possible, prior to applying for life insurance, try to determine what your target weight is and at what rate the insurance company will begin charging higher premiums. If it’s possible to get within the target weight, even by just a pound or two, it’s worthwhile to shed those pounds prior to your health inspection. Not only will you obtain lower premiums, losing weight will also allow you to live a healthier and more comfortable life.

Some life insurance companies do not require health inspections prior to obtaining the policy. These are often “high risk” insurers that will take any individual regardless of age or health status. The premiums are usually higher, but if you are overweight or have a preexisting condition a high risk insurance company can provide you with the coverage you need. You can also compensate for the high rates by reducing your coverage to a lower death benefit.

Losing weight can be the first step to enjoying a long, healthy life; it can also help you lower your insurance premiums for both life and health insurance. If that’s not possible, however, you can always obtain insurance through a high-risk insurance company. With so many new high-risk providers doing business, you can lock in your insurance at a competitive rate.

Regardless of whether you buy regular or high-risk insurance, the best way to guarantee a low rate on life insurance is by comparison shopping among several companies. The free quote that you obtain online will not be totally accurate, as it is given prior to the physical examination, but it should serve as a good baseline figure when comparing insurance companies. The more you comparison shop, the more likely you will be to recognize a good deal when it comes your way.

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Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.

A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Written by Laura Berry
Former Insurance Agent Laura Berry

Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Car Insurance Agent Daniel Walker