How is life insurance calculated?

But understanding the value of insurance is still complicated, precisely because there are variables that reflect on the value of the plan. Do you want to understand how life insurance is calculated and what insurers consider to carry it out? Continue reading to find out more.

How is life insurance calculated?

To calculate the monthly amount to be paid for variable life insurance, some variables such as age, sex, profession, health and marital status are considered.

Based on this information, the insurer performs a statistical analysis and assesses the probabilities and risks that the insured may face according to the profile. Probability techniques are used to calculate the probability that a given person will have a claim within a specified period of time.

This assessment takes place through the biometric table , a tool that helps insurers during the calculation. The biometric table provides survival data and statistics on the population of a given location, including life expectancy based on sex and age.

In addition, the calculation of life insurance also considers the coverage included in the insurance plan. Generally, basic life insurance insures compensation only in cases of death, therefore, the value of the plan may vary according to the areas it covers.

What are the variables considered in the calculation of life insurance?

Carrying out a life insurance calculation is complex, even more so when there are so many factors to be taken into account when defining the premium. However, some of the most important variables are:

Sex

It is public knowledge that men have lower life expectancy than women, so life insurance for men costs a little more.

age group

A simple life insurance indemnifies only in case of death.

That is, to be insured in the event of an accident, total or partial disability , be entitled to funeral aid or other types of occurrences, extra hires need to be made. These coverages will also be added to the amount to be paid.

Life insurance can be a great way to show how much your company appreciates its employees. Therefore, adhering to this benefit can also reflect on the way your employees see the company.

As we have seen, calculating life insurance is not simple and many variables influence the value of the premium, however, group life insurance tends to be very cost-effective.