What Factors Can Influence My Life Insurance Premiums?

When you buy life insurance, you invest in a policy that will offer your loved ones financial help after your death. However, while you remain alive, you will have to pay for your coverage. Still, depending on multiple factors, your precise premium cost will vary. What are some of these influencing factors? a group of people in a garden

Understanding Life Insurance Premiums

In insurance terms, a policyholder’s risks are the likelihood they have of filing a claim on a policy. When they make a claim, a policyholder costs the insurer money. As a result, the insurer will have to recoup these cost risks. They often do so by charging higher premiums to those who have high chances of making a claim.

To life insurers, an insured’s risk of death is their primary risk factor. So, to set your rates, your insurer will measure your likelihood of dying and triggering a claim. Some of the factors that might influence you having a higher or lower risk rating include:

Buying Term or Whole Life Insurance

A term life insurance policy only lasts for a certain number of years. Whole life policies last indefinitely, so long as the policyholder pays for it. Since whole life policies will last until your death, then insurers already know that you will die while you have the policy. A term life policy will expire at the end of its term regardless of whether the insured dies. As a result, it often costs less.

Your Policy Limits

As you increase the benefit your life insurance will pay, you will likely pay more. The more your insurer must pay out on your death, the more you will have to pay while you are alive.

Your Health Overall

Your health is a risk factor to life insurers. People who are unhealthy are more likely to die, after all. So, most insurers will require applicants to undergo health screenings before enrolling in coverage. Having a medical history of conditions like high blood pressure, cancer or other pre-existing conditions might disqualify you from certain policies or mean you must pay more.

Age

Of course, your age has a lot to do with your risk of death. That’s why the earlier you enroll in life insurance, the lower your premium might be. Most people get the most favorable rates by buying a policy in their 20s or 30s.

Tobacco Use History

Tobacco use is a risky behavior that increases your risk of premature death or chronic illness. If you use tobacco products, then your premiums will likely be higher than those of a nonsmoker.

Keep in mind, other factors like your hobbies and occupation can influence your rates, too. All the same, your life insurance agent can work with you to find coverage that is still affordable.

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