Top 12 Factors That Affect Your Life Insurance Rates
Life insurance is a trusted form of investment that helps to safeguard your loved ones financially in case of unfortunate events, but the parameters you need to meet can be rather demanding, from medical examinations to background checks. Like all investments, you reap the best benefits if taken up well in time, when health and age are on your side.
A host of factors help to determine the amount of premium that will be required as payments for the chosen insurance policy, no matter the type. The simple thing to remember when you’re perusing life insurance quotes is that the higher the risk you pose, the higher will be the premium for any policy you choose to invest in.
What Are the Major Factors You Need to Keep in Mind?
With that in mind, here are 12 most important factors that insurance firms consider when deciding the premium rates of individual policies:
#1 Age and Gender
It’s well known that women live longer than men, and younger people are typically less likely to cash in their policy, being healthier than their older counterparts. These two combined factors play a significant role in determining your life expectancy, and the younger you are while shopping for a policy, the lower the premium. This way, the insurance company has enough time to accumulate premiums before making payouts.
#2 Smoking / Drinking
Harmful habits such as smoking and heavy drinking are considered signs of ill health in the future, if not immediately, and are slow killers. Due to this obvious reason, insurers are bound to charge higher rates if you have these habits and are looking to get insured. Smokers and drinkers get charged exorbitant premiums, sometimes triple of what non-smokers and teetotalers are likely to be charged!
#3 Health
While looking to acquire life insurance, you need to provide health records, so that insurers may determine beforehand the possibilities of health issues that might arise, in order to calculate premium rates. Health is a primary concern for any insurer, and higher chances of paying for healthcare and medical bills mean excessively high premiums need to be collected.
#4 Weight / Obesity
Obesity and weight issues can lead to a host of health problems and are a red flag for insurers. They have the potential to bring about the onset of diseases like cancer, heart problems, high blood pressure and many others, thus can result in high premium rates.
#5 Family Health History
You are very likely to undergo health problems that have been passed on through your parents and grandparents. People looking to get insured are bound to pay much higher premium rates if their family has a history of serious illnesses.
#6 Career / Your Occupation
In today’s world, hectic and stressful lifestyles severely affect individuals, and even sedentary lifestyles cause health problems. It is only fair to say that people with dangerous or physically demanding jobs are more likely to pay extremely high premiums for life insurance.
#7 Financial Status
When it comes to investments such as life insurance, your financial status can definitely help to decide what the life insurance rate will be. Insurers are in a better position to price the insurance policies impartially if your financial status is pristine and they can be sure they won’t lose money by insuring you.
#8 Driving Record
While driving styles and control over them are unique to every individual, but rash driving can raise cause for concern. Hence, those people who have a negative driving record are most definitely charged higher premiums when compared to those who drive well and abide by traffic laws.
#9 Hobbies
Certain hobbies like stamp and coin collection are considered safe in comparison to life-threating adventure sports, and activities such as gliding, sky diving, etc. Of course, insurers need to consider such hobbies when deciding on the rate of premium for an adventurous soul. Generally, the more threatening the hobby, the higher the premium.
#10 Bankruptcy
When bankruptcy has occurred or is on the cards, you must avoid even considering a life insurance purchase. This is because insurers do not oblige bankrupt individuals for at least a period of 5 years post their discharge.
#11 Medical History
Every individual’s medical history is an enthralling story that insurers are interested in unravelling. The more bumps you’ve faced along the way, the higher the premium they may extract from you when you’re looking to get insured.
#12 Lifestyle
Your overall lifestyle can tell a lot about what to expect from your future, both financially as well as in terms of health and life expectancy. Of course, this is key for insurers to determine the rate at which you should be billed in terms of premium when you’re seeking insurance.