What kinds of things affect the cost of my life insurance?
In order to work out how much you will be paying for your life insurance, it’s important to first work out what kind of policy you will be taking out.
First and foremost, you’ll have to note the duration of the policy.
Whole life insurance.
This kind of policy will last up until you die and will pay out to your next of kin upon your death. This type of policy has no end date and will in the vast majority of cases be the most expensive kind of life insurance you can take out.
Term life insurance.
Term life insurance will be set to a pre-designated time, for example you may take out a policy for 20 years, and should you pass away within that time, you would get a pay-out but if you lived beyond it your policy would stop. People generally would take term life policy out to cover a period of financial commitment like a mortgage or paying for someone’s education.
Next, you will want to take into account what kind of premium you want:
You can either choose a guaranteed premium, which will stay the same cost throughout the policy, but will be more expensive than a reviewable premium, whereby you will be reviewed by a medical professional at regular intervals who will decide on whether you need to pay more or less.
Once you’ve made decisions about term length and premium type, there will be a number of factors that come into play. Below is a list of things that your insurer will take into account before deciding on how much you need to pay.
Pretty much every policy will be underwritten by a medical professional. When assessing you, they will take into factors such as your BMI, how much alcohol you drink and the amount of exercise that you do. They will also take a look at your medical history, if for example you have a history of heart failure then an underwriter will judge this as a risk and you will pay a higher premium.
Family Medical History.
One thing that an insurer will look into is any hereditary illnesses that might run in your family. If you have a perfect medical history but your family have had a series of cases of diabetes for example your insurer may judge this as an additional risk.
How you spend the majority of your time can have a big effect on how much you will be paying for a life insurance policy. If you are someone who works on an oil rig and enjoys extreme sports in their spare time, then the chances of your dying are increased due to living a relatively dangerous lifestyle which will increase the cost of your policy.
One of the most obvious factors that will have a massive impact on how much your will be paying for your insurance policy is whether or not and for how long you have been a smoker. If you have given up smoking, then you will need to have been clean for 12 months before you can be classified as a non-smoker, which is something you will want to consider as it’s not unheard of that smokers can pay up to twice as much as non-smokers.
A few pointers to help you get the best rate.
- It’s best to take out a life insurance policy when you are younger as you will be paying a cheaper price than if you were older.
- Don’t be fooled by extra levels of insurance that you won’t need, as with anything companies will try to sell you more comprehensive levels of cover but if you don’t need it don’t buy it.
- Make sure you take of yourself in general, exercise often, eat healthily and try to keep a limit on the amount of alcohol and cigarettes you ingest.
- Don’t lie!. If your insurer finds out that you weren’t completely truthful it will void your policy.