Life insurance rates: How factors can influence the costs

Many people put life insurance off and make other insurances a priority without realising the importance of insuring one’s life.
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Published: Thursday, December 10th 2015
General
If you have dependents who will suffer financially when you die, chances are you need life insurance as this policy provides cash to your family after your death. Known as the 'death benefit', life insurance replaces your income and can help your family meet many important financial needs like funeral costs, daily living expenses and university funding. What’s more, there is no federal income tax on life insurance benefits. There are also many types of life insurance which are tailor-made to fit your life. It is important to distinguish between the advantages and disadvantages and how the rates are affected by certain lifestyle factors. Listed below are the factors that affects the rates of life insurance: Age is an important factor The number one factor behind life insurance premiums is the age of the policyholder. If you are young, the chances are that you’ll be paying the insurer for years before they ever have to worry about writing your family a cheque. With this in mind, you’re better off taking out a policy before it’s too late as each year you turn older brings you closer to your life expectancy. Taking out life insurance straight after university may be a little to difficult to swing, but as you settle into the working world it is important to start considering how you will take control of your life. As you start to take on financial dependents so increases the prominence of life insurance. Gender Next to age, gender is the biggest source of pricing.  Statistical models are used by insurance carriers to estimate how long someone with a specific profile will be around. The fact is that women, on average, live nearly five years longer than men. Also, females usually pay their premiums for a longer period of time than males, which gives them the benefit of paying slightly less than males. Smoking your insurance rates down the drain It is a known fact that smoking is hazardous to one’s health and puts you at risk for a variety of health ailments. ISmokes are regarded as red flags for insurance companies a end up paying twice the amount that non-smokers pay. Both the health and financial implications of smoking could be the push you need to nip it in the 'butt' indefinitely. Healthy lifestyle The approval process for most carriers normally consists of a medical exam where your insurance company will record your height, weight, blood pressure, cholesterol,as well as other key metrics. They may also require an electrocardiogram (ECG or EKG) to check your heart in some cases. It’s important to get any serious conditions like high cholesterol and diabetes managed before searching for a competitive life insurance rate. Do you have an extreme hobby like racing cars or climbing tricky mountains? If your answer is yes, then you may find it beneficial to spend a bit more on insurance. Any time you engage in high-risk activities, there is an increased likelihood that you’ll meet an early end – a big concern for insurance carriers. Some companies also charge more if you have a relatively dangerous profession such as mining, fishing or transportation. Do you know your family medical history? Do you know if you cancer in the family? A family history of strokes, cancer or other serious medical conditions may predispose you to these ailments that leads to higher rates. Insurance companies are usually interested in any conditions your parents or siblings have experienced, particularly if they contributed to a premature death. Some insurance companies may put more emphasis on your family’s health than others, however if there is an ailment in the family, it is likely to have some impact on your premium. Now that you have a better understanding about life insurance and the reasons why rates are affected, why do you need life insurance you may ask? Life insurance is important as it reduces the burden on your family by helping to meet any financial obligations that you may leave behind. Taking out a life insurance policy, therefore, isn’t a question of “should I?”, but rather “when should I?” and “how much should I take out?” Written by: Lynn Prins Edited by: Jessica Woodruff