Six factors that determine the cost of life insurance

Life insurance is a great way to protect your loved ones financially, but it's also a significant investment. Even a slightly lower premium is going to offer you significant savings over a long period of time.

The following are some of the biggest factors that insurers consider when pricing out their policies. Some of these criteria are outside your control, while others are things you can remedy with simple lifestyle choices.

It shouldn't come as a surprise that the number one factor behind life insurance premiums is your age. If you're young insurers are expecting you to be paying your premiums for a lot longer than if you're already 65, so your costs will be lower. Locking it in while you're eligible for a lower premium might be a good idea.

Following age, gender is the next biggest determinant of pricing. Insurers use statistical models to approximate how long someone with a specific profile will be around. The fact is that women, on average, live nearly five years longer than men. And because they're usually paying premiums for a longer period of time than males, they enjoy slightly lower rates. Sorry, guys.

Smoking puts you at a much higher risk for all sorts of health issues, but also death. So if you like to light up, it can be a massive red flag for insurance companies. In fact, in some cases being a heavy smoker can push your premiums up to twice the cost of what non-smokers pay for the same cover. The effect on your wallet is another great reason to try and kick the habit.

General health
Depending on the type of cover you're after, and the insurance company you're dealing with, it's not uncommon for them to want to take a closer look at your general health, to help identify if you have any current health issues that might affect how long you'll be able to pay their premiums. These generally include checking your basics, such as height and weight, but also blood pressure, cholesterol levels and sometimes even an electrocardiogram to check your heart.

If your idea of a good time is white-water rafting or jumping out of planes with nothing but a wingsuit, you can expect to have to pay substantially more for your life insurance. Any time you engage in high-risk activities, there's an increased likelihood that you'll meet an early end – a big concern for carriers. Some companies will also charge more if you have a relatively dangerous profession, such as mining, fishing or transportation.

Family medical history
They say you can chose your friends, but not your family – and your family's medical history is another one of those factors that's outside of your control. So if your family has a history of heart disease, cancer or another serious medical condition, that means you might have a higher chance of suffering from one of these ailments too, which will mean you'll probably end up paying a higher premium. Insurers are usually interested in any conditions your parents or siblings have experienced, particularly if they contributed to a premature death. Some insurers will put more emphasis on your family's health than others, but it's likely to have some impact on your premium.

If you'd like to review your life cover, we'd be happy to assist. Simply give us a call on 0508 THE MARSHALL (0508 843 627).


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