Factors That Affect Your Life Insurance Premiums

Life insurance should be a part of everyone’s financial plan, yet it’s often ignored or forgotten. Having a policy in place is important because it’s meant to protect your loved ones financially in the event you pass early.

So when should you get a life insurance policy? Well, that’s up for debate, but if you have any dependents, you need to have a policy now. The cost of an insurance policy won’t even break your budget, however, there are quite a few factors that will affect your life insurance premiums.

The underwriting process may seem a bit complicated, but in the end its your age and health that will determine how much you pay.

The factors that affect your life insurance premiums

Age – This is one of the main factor when determining what affects your life insurance premiums. The younger you are, the lower your rates will be. Obviously when you’re younger you have a much lesser chance of dying, so insurance underwriters don’t need to worry about paying your family anytime soon. Even though rates are lower is your younger year, you don’t need to pick up a policy ASAP unless you have dependents.

Gender – Statistics have proven that women live longer, so as a result, their can expect their life insurance premiums to be lower. Women on average live 5 years longer than men, so that’s why they need to save a little more for their retirement compared to men.

Health – Taking a medical exam when purchasing a life insurance policy is pretty standard, and the results help determine what premiums you pay. If you’re in good health, you’ll get the best pricing, but if you have conditions such as high blood pressure or cholesterol , you can expect to pay more. Some insurers may offer “no exam” policies, but those will almost always cost more.

Weight – Similar to your health, weight is a big factor when determining your life insurance premiums. If you’re overweight or obese, you’ll definitely end up paying more. It’s been proven that overweight people experience more health issues and die earlier. These extra risks means more costs for the insurer, which they’ll just pass onto you.

Smoking – Everyone knows that smoking is bad for you, it does some serious damage to your health, and as a result it also ups the cost of life insurance. If you’re a smoker, don’t be too surprised if your premiums are double than non-smokers. If you’re ready to call it quits, many insurance providers will lower your premiums once you’ve been smoke free for a year.

Drinking – Similar to smoking, insurance companies want to know if you’re a heavy drinker. Having the occasional drink is fine and normal, but if you’re a heavy drinker, you and your liver will pay for it.

Your Medication – If you happen to be taking any medication for a serious illness or condition, you better believe that insurance underwriters want to know about it. Many medications can have side effects that affect your health, which in turn will increase your premiums. LSM Insurance has a great article about 5 medications that could affect your life insurance application that’s worth checking out.

Your family history – Unfortunately, your family medical history is pretty important to insurers. If your family has a history of heart disease, cancer, or any other major health condition, you can expect your premiums to go up. Not all insurers will put a heavy emphasis on your family’s medical history, but it’ll still have some kind of impact.

Lifestyle – Do you live life to the max? Does skydiving, race driving, or climbing mountains get your adrenaline going? Well these activities will increase the odds of you dying prematurely so as a result, you’ll pay a premium on your insurance policy. Even if you work a “dangerous” job, there’s a good chance you’ll pay extra.

Final thoughts

Keep in mind that you might already have some life insurance through your employer. The good thing about that is you won’t have to take a medical exam and you can usually top up your coverage. The major downside of course is that if you ever leave your employer, you might be in a position where you’re not insurable due to your current state of health. To fully protect yourself, simply purchase a separate policy.