Life has a series of  unpredictable moments . It is practically impossible for human beings to control everything around them. But at the same time, he can prepare himself so that such situations do not catch him off guard. Having life insurance is often the best way to protect yourself. It is estimated that only  4% of households in Brazil  have some form of  life insurance . In nations like the US, the percentage rises to somewhere around 70%. The low number of the Brazilian reality is largely due to  doubts on the subject  — such as the issue of life insurance readjustment.

With that in mind, we will explain in this article how  variable life insurance correction works  , as well as other important topics on the subject. Check out!

What variables are considered in the life insurance readjustment?

All life insurance has a pricing process, also known as pricing, which determines the amount to be paid for the  premium . To define exactly the amount, you need to know what we call variables.

The variables are several factors ranging from the person’s health to their lifestyle. As each individual’s daily life is determined by some of these points, it is necessary to make a series of adjustments to the insurance.

mortality table

The first factor is what we call the death table. The table is used to calculate the life and death possibilities of a population, according to age and sex.

It is worth remembering that the table is determined from data from population censuses, but also from a survey of  insurance policies  , in order to obtain as much information as possible about the population in which the insured person is located.

The risk of  claims  also impacts the mortality table. It will be defined by statistical studies, according to the characteristics of the group that purchases the insurance. Therefore, it is necessary to be aware of all the price formation factors.

Insured’s habits

There are already some plans with a slightly more elaborate acceptance logic. They are sold to a high-income public, in which, in addition to the contractor’s gender, the insurer verifies habits such as smoking and physical activity.

In that case, the insured takes a series of exams and the analyzes are sent to the insurer. With this, it is possible to check the health situation of the client and which insured profile he fits. In addition, it may be necessary to verify the existence of dangerous hobbies, such as extreme sports, thus interfering with the monthly amount paid to the insurer.

Health care

Technology is also used as a variable when calculating the  insurance value .

Using its own application, the insurer analyzes how many steps the customer takes per day, how many kilometers he walks or runs. Therefore, if the person exercises a lot, it is considered that he has a lower mortality level than the general population.

In practice, the mortality table assesses whether or not the client has a high risk of dying — always comparing it with the average of the general population. These variables are checked for both the sale and the readjustment of life insurance. In short, the life insurance values ​​and readjustments are established within the mortality table.

Is there a fixed life insurance readjustment rate and a maximum limit?

The answer to the question is no. The readjustment takes place in an ascending curve, following the mortality table of a certain age. According to Nelson Emiliano, actuarial technical director at Mongeral Aegon, many insurance plans do not vary according to specific age, but rather by age group — for example, every 5 years.

To stipulate the price, companies quote as if the person were in the middle age range. For example, from 36 to 40, age 38 is used; so when she jumps from one age group to another, in reality the jump is 5 ages. However, in the intervening four years, it flattens out with no increase in value.

In addition to the readjustments that occur by age group in the pay-as-you-go plans, other factors have an impact on the total — such as monetary restatement, inflation, to restore purchasing power. It is applied to both the insured capital and the premium.

Does insurance increase with age?

A very common doubt when it comes to readjusting the calculation of life is the increase according to age. In reality, not all insurances have rising rates over the years.

There are two types of insurance. One of them is called “distribution”: with each age, the cost becomes more expensive, because the mortality rate rises. “Capitalization” insurance, in turn, forms a reserve. So, what happens is a leveled rate, which does not increase from year to year as a function of age.

“When we compare capitalization insurance with pay-as-you-go insurance, the former is more expensive in the early years; but after a while it becomes cheaper.

So, it’s as if you paid more at the beginning and then paid less at the end, because you are older”, highlights the actuarial technical director.