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Published On: Wed, Jun 22nd, 2016

Top Factors Affecting your Life Insurance Premium

Life insurance can be a great way to financially protect your loved ones while making future investments at the same time. Before accepting your application, an insurance company considers several factors when pricing out your premiums. Outlined below are the top factors affecting your life insurance premium (some of them are beyond your control, while others you can influence):

Age

This is an incredibly crucial factor. All other factors constant, the younger you are, the lower your premiums. This is simply because you are less likely to pass away when you are younger. On the contrary, the older you are at the time of taking life insurance, the higher your premium rate is likely to be as insurers will consider you as a higher risk. 

Your medical history

Your medical history, including any health conditions that you may have at the time of applying for life insurance will affect your premium. It is however important to note that not all health conditions will lead to higher premiums; only those with the potential to lower your lifespan. 

Most insurance companies will heavily rely on the answers you provide on the medical examination questioners, so it’s critical to be as honest as possible. Most companies will further subject you to physical medical examination with key emphasis on blood pressure, height, weight, cholesterol, among others. 

Family medical history

You are very likely to pay higher premiums if you have a major family history of serious illness such as cancer and heart disease, which can be hereditary. Your insurer will be mostly interested in any conditions your siblings, parents or any close relatives have experienced, and more so if such conditions contributed to premature death. 

photo supplied, courtesy of guest blogging network

photo supplied, courtesy of guest blogging network

Lifestyle and occupation 

You are also very likely to pay higher premiums if your lifestyle and occupation is considered to be of high risk. Soldiers, fishermen, pilots, and off-shore gas or oil industry workers for instance can expect to pay a little more than those who work in areas considered to be safe environments such teachers and office workers. Some companies may also charge you higher of you have relatively dangerous hobbies such as mountain climbing and sky diving.

Driving record

Your driving record is another factor that will affect your premium. Insurance companies do look at applicant’s driving records and take incidents like DUI/DWI, license suspension, reckless driving etc. seriously. A few parking tickets here and there won’t be that big of a problem – only practices that increase the risk on your life will call for a higher premium. A good idea would be to order your own Motor Vehicle Report (MVR) – price range from $2 for California up to $25 for Oklahoma and Delaware. The majority are under $10 and Iowa and Indiana are completely free.

Gender

Insurance providers can approximate how long someone with your specific profile is going to be around by use of statistical models. Generally, women’s lifespan is on average about five years longer than men’s. Due to the fact that they are usually paying premiums for extended periods than men, their premiums are slightly lower.

Smoking or tobacco use

Due to the established link between smoking and life-threatening ailments such as throat and lung cancer, smokers generally lead shorter lives. This is a red flag for insurers. Insurance companies will therefore charge you higher if you are a smoker as compared to a non-smoker for a comparable coverage. Generally, you are considered a smoker of you have used tobacco within the last 12 months. This includes any tobacco based product such as cigarettes, cigars, nicotine patches or e-cigarettes

The individual impact of the above factors on your insurance depends on how your insurance company rates each of them, as well the cumulative effect of multiple factors. Before making a life insurance application, it important to first assess yourself based on the above factors, and then choose an insurance company that is least likely to penalize people of your particular profile. 

Guest Author: Isabele Hernandez

 

About the Author

- Outside contributors to the Dispatch are always welcome to offer their unique voices, contradictory opinions or presentation of information not included on the site.

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