What factor does the cost and availability of life insurance primarily depend on?

The cost and availability of life insurance primarily depend on age, health, and the type of insurance purchased due to the underwriting factors that insurers consider when assessing risk. Age is a significant factor because younger individuals typically represent lower risk; they are presumed to have longer life expectancies and are less likely to experience health-related issues in the near term. Health also plays a crucial role, as insurers evaluate medical history, pre-existing conditions, and lifestyle choices to determine the potential longevity of the insured. The type of insurance purchased is relevant because different products carry varying levels of risk and benefits, influencing pricing structures.

For instance, term life insurance, which provides coverage for a specific period, usually has lower premiums compared to permanent life insurance, which potentially covers the insured for their entire life and includes a cash value component. Insurers analyze these aspects to formulate premium rates and determine acceptability for coverage, making them critical components in the overall evaluation process.