Final answer:
Life insurance companies can discriminate based on age due to actuarially fair insurance principles but cannot legally discriminate on the basis of race, disability, or gender.
Step-by-step explanation:
Life insurance companies are allowed to make policy rate discriminations based on age, because premiums are set at actuarially fair levels, which means that the amount people pay reflects their risk group. For instance, elderly individuals often face higher premiums due to their higher expected healthcare costs. However, it is important to note that discrimination based on race, disability, or gender is illegal and against the principles of equality and fairness protected by various laws and regulations.
While certain types of discrimination could be subjected to the rational basis test, such as laws that treat men differently from women, in the context of life insurance, it is generally acceptable and legal for companies to use factors like age to determine premiums because they directly affect the risk and cost associated with the insurance policy. Other forms of discrimination, particularly those based on race or gender, are not permitted as they do not hold an actuarial basis and are protected against by legislation like the Civil Rights Act of 1964.