6 Factors That Increase Your Life Insurance Premium

There are many factors that determine the price of life insurance premium. Some of these factors are unavoidable to some of us, making the premium cost higher. However, others are within our control. Still procrastinating about purchasing a life insurance plan for yourself? Read on, and find out how you might be able to save on your premium cost.

So what causes your life insurance premium to go UP?

1. Age

The fundamental rule here is: the higher the risk, the more costly the premium. For instance, a 21 year old has a lower health risk compared to a 55 year old. And since the premium rates are determined at the time of purchase, it is advisable to purchase them when you are still young. But how young?

If you are a male, it is most likely you will be getting married someday, if not already, and have a family who depends on you. Therefore life insurance becomes a necessity to you. This does not mean that you have to purchase one at the age of 22. But once you are married, it becomes crucial for you to have one, especially if you are the sole breadwinner in the family. Here it becomes not only critical, but it is also a smart move to purchase one as soon as you can, so that you can lower your premium cost.

However, be aware that you have clearly understood your policy and it’s premium rate structure. As it is not uncommon for insurers to increase the premium rate over time. Shop around and compare plans and quotes.

2. Lifestyle choice and occupation

If you are an adrenaline junkie who jumps off cliffs for fun, you will no doubt pay a higher premium on your life policy. Simply because you are perceived to carry more risk as compared to someone who is not involved in such high-risked activities. Similarly, if your occupation exposes you to risks that may endanger your life, such as a race car driver or a wildlife photographer, you too could be paying a higher insurance premium.

If you have a high risk occupation, it may be smart to shop around before purchasing your life insurance. As some insurers are less stringent than others in treating these high risk occupations and hobbies. But if high-risk sports and activities are your thing, you may just have to put up with the higher premium, if you are not willing to give up your hobbies.

3. Family medical history

One of the information that you have to disclose when purchasing a life insurance is your family medical history. Many chronic illnesses are hereditary, such as cancer, diabetes, and cardiovascular diseases. The insurance company uses your family history to gauge your risk in developing certain health conditions. Therefore, your premium rate will be higher if your family has a history of one or more of these illnesses.

Having to pay higher premium due to your family medical history isn’t something that is within your control. However, having one means that more than anything, you need a life insurance or medical plan urgently. So if you have a family medical history, you should consider purchasing a life plan (if needed) or medical policy while you are still young. This allows you to not only protect yourself at an early age, but also to lower your premium rate.

4. Smoking

Smokers pay higher premium than non smokers. The reason for this is because of the many health conditions related to smoking, such as:

• Cancer
• Stroke
• Heart disease
• Hypertension
• Chronic Obstructive Pulmonary Disease (COPD)

Smokers have a higher risk at developing these health issues and generally have a shorter life span than non-smokers. Insurance companies make no distinction between a social smoker or someone who smokes a pack a day. To them, a smoker is a smoker.

Insurance companies recognize a non-smoker as someone who is cigarette-free for at least 12 months. So to be eligible for a lower premium rate as a non-smoker, you need to quit, and stay quit for a whole year. This isn’t easy at all, but we all know the benefits of not smoking. Not only you save on your premium cost, you also save loads on cigarette while preserving your health!

5. Pre-existing health condition

Pre-existing health condition means any illness that you may have or have had before applying for an insurance plan. For instance if you have survived cancer, or have a history of heart problems, or if you suffer from diabetes. The risks associated with someone with pre-existing condition is much higher, therefore making the premium higher. Also, having a pre-existing health condition makes it harder for you to find an insurer willing to offer a life plan. And because fewer are willing to do so and choices become limited, this too causes premium price to go up.

So again, this is where buying a life insurance at a younger age is beneficial. As the risk of developing health conditions is lower.

6. Substance abuse

Substances such as alcohol, marijuana and heroin are detrimental to human health. So if you have a history of substance abuse, you will be considered high risk. Insurance companies will assess the seriousness of your history and will price the policy according. If you are still consuming these substances, insurance companies may not be willing to cover you.

Premium rate also depends on the type of life insurance policy. The length of the policy and the coverage amount will increase the premium cost. A 10 year term policy generally will be cheaper than a 40 year term policy. This is because the risk of death occurring during a shorter period of time is lower. Term life policies are usually cheaper than whole life policy. The total coverage amount also determines the premium rate. The higher the coverage amount, the more you will have to pay in premium.

To ensure that you get the best quotes, make sure to take your time and shop around. Life insurance is a long term commitment, so you should find the best one for you. Do not settle with speaking to just one agent, instead talk to several representing different insurance companies. Take your time to do your own researches. If you need to speak to a reliable insurance agent, find one that is nearest to you on this online agent directory. Like our Facebook page too so you can get more tips on how you can save money on insurance.