Which factor may influence the determination of insurance premiums?

The age and health status of the insured are significant factors that influence the determination of insurance premiums because they directly correlate with the risk the insurer assumes when providing coverage.

When evaluating an individual's application for insurance, insurers consider age as it affects both life expectancy and the likelihood of incurring health-related costs. Generally, as individuals age, the chance of developing health issues increases, leading to higher potential claims. Similarly, an applicant's health status provides critical information about their risk profile. Individuals with pre-existing health conditions or poor health are statistically more likely to require healthcare services, which can lead to more claims and higher costs for the insurer.

Thus, underwriters analyze both the age and health status to assess the overall risk, and consequently, set the premium at a level that reflects that risk, ensuring the sustainability of the insurance plan while covering potential expenses related to claims. This assessment process is fundamental in the insurance industry as it helps maintain a balance between affordability for policyholders while protecting the insurer's financial health.