Each life insurance policy is tailored to your specific risk profile (each client is different). When you apply for an insurance policy, you will be expected to provide a full medical history (including family history) as well as questions regarding your lifestyle. This information is used by insurance actuaries to determine your risk profile and how your premiums will be calculated.
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. Younger individuals will pay a lower premium, due to the decreased likelihood of dying from natural causes at a young age.
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.
On average, premiums are slightly lower for women as statistics have proven that there is an increased probability that they will live six years longer than men.
It is a known fact that smoking is hazardous to one’s health and puts you at risk for a variety of health ailments. Smokers are regarded as red flags for insurance companies and 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.
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 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?”