Factors That Determine Insurance Premium Rates
Your lifestyle and health history have a significant impact on your life insurance premium. These factors impact your health class, such as preferred or standard. "Standard" is the rate category most likely to be assigned to the average person.
Several of the factors that determine your premium rates are within your control, while others are not. Listed below are issues you'll need to report when applying for a life insurance policy.
Weight | People who are significantly overweight or obese will pay higher premiums for life insurance. Over the years, scientific research has proven that obese individuals have a shorter lifespan. This makes them higher risks to insure. A healthy lifestyle and weight management plan can not only make you live longer, but also reduce your premiums.
Smoking | It's common knowledge that smokers will pay a higher premium for life insurance. If you're considering a life insurance policy and wish to qualify for the lowest premium possible, quit smoking! Keep in mind that many insurance companies require that you quit at least a year before applying for life insurance, in order to qualify as a non-smoker.
Age | A policy purchased when you are young will cost you significantly less than if it is purchased when you're middle-aged. The best time to purchase life insurance is when you are younger as opposed to older. Remember, once you have a life insurance policy in effect, it generally cannot be cancelled unless you fail to pay your premiums. So having a policy now protects you against not being able to get one later in life if you should develop a health problem.
Health History | Your family's medical history plays a large part in which rate class you may be offered. While some risk factors can be labeled as modifiable (such as weight), others such as heart problems and diabetes are labeled as generational or non-modifiable. Insurance companies also need to know whether a non-modifiable problem appears in your immediate or extended family. For example, a parent with cancer has greater impact on your rate than a more distant family member with the same disease.
When you apply for insurance, remember: honesty really is the best policy. Disclose your risk factors accurately, so that insurance carriers can quote you a rate based on your real risk factors.
Do apply for life insurance, even if you have significant risk factors, since there are life insurance policies designed for higher-risk individuals. (Those with terminal illnesses can sometimes be insured by applying for a Guaranteed Issue policy.)
Term life insurance rates will vary depending on all these personal factors listed above, which is why it is important to choose a healthy lifestyle and be a role model for your family. The best gift you can give them isn't the policy itself, but your own long and healthy life.
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