A life insurance policy is a contract in which the insurer agrees to pay a premium in exchange for a sum of money to be paid to a beneficiary in the event of the purchaser’s death. In order to acquire one of these policies, a premium has to be given as a “down payment”. Before an insurance company agrees to the policy, they run a check on each applicant to establish how risky a client is. This will decide how high or how low a premium payment can be. Below are five aspects to be aware of that affect your life insurance premium.
Health History
A life insurance premium’s price will fluctuate based on your personal and family’s health history. This is based on a health screening to check weight, cholesterol levels and other factors that could cause future health concerns. Any consistent medical conditions will also be considered.
Substance Use
Tobacco use has been proven to cause lung cancer and other serious ailments. Regular tobacco use will heavily raise the price of a premium. If you are looking to purchase a life insurance policy and you are a smoker, be prepared that many companies require a smoke-free time period to show the risk inducing habit has been eliminated. These time periods usually start around a year without smoking.
Age and Gender
This is one of the largest factors because life insurance policies grow over time. Many people purchase life insurance policies while they are young in order to have more money gradually build. Chronic illness is usually diagnosed later in life, so it is less likely to get a low premium. Premium rates are higher for men than women because, statistically, men have shorter lifespans. Because life insurance policies are based on a rate of mortality, men typically have a more expensive premium.
Credit Attributes
It is not widely known, but some credit attributes can be linked to mortality. Examples of activities insurance companies look to avoid are bankruptcy and fraudulent activity. These instances can highlight risky behavior or even illness which has caused medical bill debt. Using credit attribute information is still new to the life insurance decision making, so some companies do not use it as a deciding factor.
Driving Records
Driving Records are looked into and considered when applying for a life insurance policy. A large number of at-fault accidents is viewed as a risk to mortality and increases the price of a premium. Speeding tickets may also cause a rise in price. However, like car insurance, after a period of time, these accidents and tickets roll off and are less likely to affect a premium.
While all of these factors can sound daunting, purchasing a life insurance policy is a great investment. If you have questions about the factors above and want to discuss your options, contact one of our team members and we will be happy to find the right fit for you.
We hope this helped you and answer a few of your life insurance policy questions! Care Financial is a privately owned and operated business providing families, individuals and businesses with comprehensive wealth management strategies. Contact us online at www.carefinancialonline.com or call us at 251-633-7122.
