What Affects Your Life Insurance Premium?

Thursday, February 16, 2012, 2:00 AM | Leave Comment

Life insurance is one of the few products you buy that you never intend to use. But if you do wind up having to use it, you want to make sure you have gotten the best deal possible.

Understanding the factors to affect your ability to get life insurance and how they affect your premiums is imperative to getting the best deal.

What Affects Your Life Insurance Premium

  • The number one factor…

    The number one factor that affects how much you will pay for life insurance is your age.

    Generally, the younger you are, the less your premium cost is.

    This is because the younger you are, the less likely you are to die.

    This is important for term coverage because it lessens the likelihood that the company will ever have to pay anything on the policy.

    It’s an important factor in whole life coverage, too, because the longer you pay your policy, the more likely the company is to get enough out of you to cover the payout when you do die.

    Many insurance policies, especially whole life ones, have premiums that increase as you age.

  • The second important factor…

    Another major factor in life insurance premiums is your health. Many life insurance companies require candidates to take a physical to get a life insurance policy, and the life insurance you get is dependent on you passing that physical.

    So when taking out a new policy carefully check the requirements and small print especially when using comparison sites like comparethemarket.com.

    Insurers will set different premium rates depending on your current health, including your blood pressure, cholesterol levels and weight; your family history of disease; and any unhealthy behaviors you have, such as smoking.

    If you are in poor health, it may be difficult to get life insurance unless you can get into a group plan.

  • Other important factors…

    • Some insurers also may look at the kind of job you have when providing a life insurance quote.

      If you are in a dangerous occupation, such as law enforcement, firefighting or race car driving, it may cost you more to get life insurance, because these occupations increase your risk of dying on the job.

    • You might also pay more if you are in a job that causes you to be exposed to hazardous materials that could lead to illnesses later in life and cause a premature death.

    • Lifestyle factors may also play a role in how much your life insurance costs.

      For example, if you like to go skydiving or mountain climbing, it increases your risk of dying prematurely and will bump you into a higher risk category, therefore increasing your premium cost.

      Some policies may even exclude certain activities from coverage.

    • One other factor that affects your life insurance premium is whether you are getting an individual policy or a group one.

      Premiums will almost always be higher for an individual life insurance policy.

      You may be able to get group life insurance through your employer or through groups to which you belong, such as a union, trade group or association such as AARP or AAA.

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