The total cost of your insurance and the amount of premiums that you pay are computed based on a number of factors. Insurance companies consider the total amount of your coverage, overhead expenses, as well as agent’s commission when computing for your life insurance.
The amount of premiums that insurance companies will charge you is based mainly on the amount of risk that they are taking on your life or the likelihood of you dying. This probability is affected by your age, your health, and your occupation. Making a thorough assessment of these factors helps underwriters come up with a numeric equivalent of how much risk it will entail to cover your life. The more risky you are or the more likely you are to die soon will equate to higher premiums or rejection of insurance coverage.
Age and Gender
It has been proven that women have longer life expectancies compared to men, so therefore women generally get a lower life insurance premium rate compared to men.
It is also recommended that you get your life insurance while you are young because life insurance rates are guaranteed to go up once the age of the client increases because they are obviously more likely to get sick or die. Although it is possible for people in their senior years to find life insurance, it is best to purchase while you are at younger because you will get lower premium rates. If you are in your later years, do not worry. As you can see, there are life insurance options available for people well into their golden years.
Insurance companies prefer clients with a clean bill of health. Your current health condition and your health history play a major role in the computation of your insurance rates. At a certain age, insurance companies would require a medical examination and you are also required to provide information on any pre-existing medical conditions.
Clients with pre-existing medical condition either are charged a higher premium because of their medical rating or would have exclusions in the policy which states that no pay out will be given to your beneficiaries if the cause of death is any of your pre-existing conditions. This exclusion gives patients with pre-existing conditions the option to still get insured with low premium rates.
Lifestyle and Occupation
Your lifestyle and occupation are also factored in when an underwriter computes for your insurance rates. People with healthy life habits like those who exercise and those who do not smoke are generally given lower premium rates compared to those who don’t.
Insurance companies also charge additional ratings for those who have hazardous or risky occupations like pilots or race car drivers. If your job presents a risk of death then you might look at higher insurance premium rates.
Understanding the different factors that insurance companies consider in computing your insurance rates will give you a better chance of doing your part in keeping your premiums to a minimum. If you are planning to take out an insurance policy soon, try to keep yourself healthy and practice better life habits to ensure that you are in the best possible shape when you do get evaluated for your life insurance.