Which of these factors is primarily used to align insurance premium costs?

The primary factors used to align insurance premium costs significantly include gender and smoking status because they are directly related to the risk profile of the insured individual. Insurers assess these factors to predict the likelihood of claims based on statistical data.

For instance, data shows that males and females often have different health outcomes and life expectancies, which justifies variations in premiums. Additionally, smoking status is a critical determinant as smokers generally face higher health risks, leading to a higher probability of claims. Therefore, premiums are adjusted accordingly to reflect the increased risk associated with these factors.

In this context, focusing on gender and smoking status provides insurers with concrete evidence to more accurately price policies based on the anticipated expenses related to health claims, effectively aligning the costs of premiums with the genuine risk posed by policyholders.