When you’re purchasing life insurance, you don’t have much say about your insurance premium. It’s decided by the company and your only decision is whether or not to accept their offer.
However, there are some known factors that go into determining the premium. While you can’t control some of them, it will help you fill out your application and talk to the company intelligently if you know what they’re looking for.
Factors You Can’t Control
Age is a primary factor the helps determine your life insurance premium. Younger people will have the best premiums, as older people have a higher risk of dying.
Gender also contributes to your premium. Women usually go to the doctor more often than men, so they catch dangerous conditions earlier, and they typically live longer, so they will pay less for insurance.
Your health history also goes a long way when a insurance company is figuring out your premium. Any diseases you’ve had or have currently, as well as your family history of disease, are all contributing factors. It may be tempting to stretch the truth about your health history when applying for insurance. Doing this, however, puts you at risk for policy cancellation if the company finds out.
Showing that you have recovered from a life-threatening or serious condition, like cancer, or that you are taking care of something chronic, like diabetes, can help lower your premium, depending on the company and type of insurance you’re applying for.
The insurance company will also want to know if you have anything in your past that indicates you might engaged in risky behavior. This includes anything from bankruptcy filings to mental illness. Any risk you’ve demonstrated in the past will cause you to pay higher premiums.
Factors You Can Control
If you’re a smoker, you will pay more for insurance than a non-smoker. Note that this normally pertains to people who smoke regularly and not to those who smoke cigars or pipe tobacco occasionally with their friends.
In addition, your general physical condition, especially your weight, contributes to your life insurance premium. If you are over or under weight for your height, you will pay more. Those with a low-average weight will have the best premium.
What you do for a living and what you do for fun also help determine your premium. If your job is dangerous or you have potentially lethal hobbies (like extreme sports) you will pay more for your life insurance than an accountant who likes to read.
Finally, the amount of foreign travel, as well as the places you’ve travelled to and how long you’ve stayed there, also influence your life insurance premium. If you travel frequently and spend a lot of time overseas, your life insurance will cost more.
Purchasing Life Insurance
Hopefully, knowing these factors will help you as you seek the life insurance and life insurance premium that is right for you, your family, and your circumstances. If you have questions about how your particular insurance company handles one of the issues mentioned above, be sure to ask about it before you purchase the insurance.