If you’re just starting to look for life insurance plans, you may be curious about how much money will you have to pay for the insurance coverage. There are multiple factors that determine the premium applicable to you and it can be quite confusing at times to comprehend why you have to pay a rate that is higher than others for a life insurance plan
Let’s look at the factors that can be cause of higher life insurance premium for your:
1. Higher Age
Life insurance premiums are dependent on age - the older you are, more you pay. If you buy a policy at a younger age, you will pay lower premiums for the policy duration as compared to some one older. How? Because with increasing age, there is higher chance that your health might decline, and the insured event may happen significantly prior.
Women tend to pay less for life insurance plans. Though this isn’t because they are favored more, but that they generally tend to live a longer life than men. Numerous studies have demonstrated that women outlive men by five to seven years.
3. Your Lifestyle Habit Includes Smoking
Because of the proven link between smoking and diseases like lung and throat cancer, smokers statistically live shorter lives and therefore pay higher life insurance premiums. So, if you like to light up, you at a higher risk for all sorts of health ailments, and thereby a red flag for insurance companies.
4. Choice of Higher Sum Assured or Longer Policy Term
The larger the sum assured and longer the policy term, the more you must pay for it. In simple words, this is because the risk of your demise is higher for a policy that covers you for 30 years than a policy that covers for 10 years.
Also, the more the sum assured that will be paid out to your nominees, the more you will be charged for coverage.
5. You Are Not Buying Product Online but From A Distribution Agent
With competition growing intense, insurance companies are offering cheaper premium than offline policies to creating their space online. Most online life insurance plans are around 30-40% cheaper premium compared to offline plans. This is because the purchase directly happens between insurer and customer which reduces the paperwork cost and agent’s commission.
So, if you are buying life insurance plans from an agent and not online, be ready to pay higher premiums.
6. Counter Offer Based on Declarations in The Proposal Form
Hobbies: If your favorite pastime is climbing treacherous mountains and racing cars or you take part in dangerous or extreme hobbies, you will probably have to shell out substantially more for premium. This is because, when you engage in activities, there’s more risk on your life – which is a great concern for insurance companies.
Occupation: Certain occupations are deemed a higher risk than others. For instance, pilots, soldiers, fishermen, gas industry workers, mine workers can expect to pay more than those who work in safer environment, such as teachers, office goers or shop workers.
Country of Travel: The insurance company isn't interested in your last family vacation to Switzerland, however in whether you have been anyplace that would pose a potential risk. For instance, if you have travelled to a country with a high level of tropical diseases or HIV instances. Also, if you travel abroad regularly for business, it could increase your premium.
7. Counter Offer from The Company Based on Medical Investigation
You are Not Physically Fit: If you weigh more than you should, lead a sedentary lifestyle, or your medical reports show negative signs, you come out as a higher risk and are hence charged higher premiums than an active individual with suitable body weight.
Your Medical History is Not The Best: Pre-existing medical conditions can also jack up your premium for life insurance plans. It’s a simple insurance basic: people with medical conditions, are more expensive to insure because of the likelihood that they will require more tests, diagnostics, medication, treatment, and other expenses because of their state of health.
Your Family History Shows Occurrence of Hereditary Illness: You may be in perfect health, but then your family history shows diabetes, cancer, heart disease, hypertension – or dozens of other conditions. To the insurance company, this means you are a greater risk because you may inherit the same medical conditions and hence, the higher premium.
The Bottom Line Is:
Regardless of the fact that you are charged higher premiums, getting life insurance coverage is important and one must not delay it. Your life insurance premium may sound like a payment today, just like your mortgage, your student loans, or Netflix. But, after your unexpected demise, if your family faces financial uncertainty, the premiums you pay would be more than just another monthly bill. In short, your life insurance plans will offer a doorway to financial stability for your loved ones.