While life insurance is an excellent way to financially protect your loved ones, it is also a significant expense. Over the course of several years, even a minor reduction in premium might result in significant savings. The following are some of the most important factors that insurers take into account when determining the price of their plans. While some of these characteristics are beyond your control, others can be improved by simple lifestyle changes.
Unsurprisingly, the primary factor affecting life insurance premiums is the policyholder’s age. If you’re young, the likelihood is that you’ll pay the insurer for years before they have to worry about writing a check to your family. As a result, you’re better off purchasing insurance before it’s too late. However, if you do not have any financial dependents, you do not require insurance immediately after graduation.
2. Sexual orientation
Gender is the most important factor of pricing, second only to age. Insurance companies employ statistical models to estimate how long a person with a particular profile will live. The fact is that women live approximately five years longer on average than males. 1 Additionally, ladies benefit from slightly lower rates because they often pay premiums for a longer length of time than males. Apologies, gentlemen.
Life insurance rates are calculated using a variety of criteria, some of which are out of your control; while comparing plans, consider the seven characteristics listed above and choose an insurer that is less likely to penalise persons in your particular situation.
3. Cigarette smoking
Smoking increases your risk of developing a variety of health problems. Therefore, if you enjoy smoking, this is a red flag for insurance firms. Indeed, it is not uncommon for smokers to spend more than twice as much for comparable coverage as non-smokers. The financial impact is another compelling reason to attempt to stop the habit.
For the majority of carriers, the underwriting procedure includes a medical exam during which the firm records the applicant’s height and weight, blood pressure, cholesterol, and other vital statistics. In some situations, they may additionally require an electrocardiogram (ECG or EKG) to check your heart. Prior to shopping for coverage, it’s critical to treat any major problems such as high cholesterol or diabetes to secure a competitive rate. Certain organisations do offer “no exam” plans, but they will cost you more.
5. Way of life
Is your preferred pastime automobile racing or mountain climbing? If this is the case, you will almost certainly have to pay significantly more for insurance. When you engage in high-risk activities, the possibility of dying prematurely increases – a major issue for carriers. Additionally, some firms charge more if you work in a hazardous trade, such as mining, fishing, or transportation.
6. Medical History of the Family
There is little you can do to influence your gene pool. A family history of stroke, cancer, or other major medical issues, on the other hand, may predispose you to these conditions and result in increased rates. Carriers are typically interested in any health problems your parents or siblings have had, particularly if they resulted in early death. While some carriers place a higher priority on family health than others, it is likely to have an effect on your premium.
7. Driver’s License
It may come as a surprise, but many life insurance firms do an underwriting review of your driving record. Whether they inquire about traffic offenses on the application or not, they can examine Department of Motor Vehicles data to determine if you’ve violated any traffic rules. Bear in mind that the latest three to five years are the most influential, so if your driving habits have changed, you may benefit from a lower rate. You might also be able to get car insurance with a good offer.