Factors affecting life insurance premium

Posted by Rishi Agarwal on January 28th, 2019

We all love our families and always try our best to provide them with all the basic amenities and financial aid. However, it is not always possible.  Life insurance is the only means which ensures that our loved ones are leading their life easily even when we are not here. The policy allows you to acquire a remarkable sum that can be used for the betterment of the family.

It is a comprehensive plan that has been designed intelligently and pays supreme attention to various aspects.  When a person buys a life insurance, he/she pays a certain amount of sum, known as premium, on a regular interval. This premium amount varies as per the nature of the policies and the need of the policyholder. In addition, it is entirely dependent on various factors which drive it. It is highly recommended that a person should be well aware of all these premium-affecting factors to avail the maximum benefits from the policy. We have jotted down a few key factors that affect the premium of your life insurance policy directly and indirectly.

Age- The age of the policyholders plays an important role to decide the premium value of your life insurance.  If you purchase the life insurance policy at a young age, then you are likely to pay less premium amount as compared to those individuals who buy a life insurance policy later in life. The reason here is that, in general, a young individual is not likely to get into the nippers of any life-threatening disease at such a young age. So, buying life insurance at an early age is an intelligent move. But that doesn’t mean that you buy just right after college. Buy when you are financially independent.

Weight – The weight of the insured has its own impact to determine the premium amount. Life insurance providers have specific health class rating wherein there is a pre-defined list of ideal weight as per the height. If your weight exceeds the limit and you get labeled as an obese, then you are likely to pay the extra premium amount. It is well-known fact that being overweight makes you more susceptible towards various health issues like heart disease, diabetes, hypertension, and cancer as well. The presence of all these health issues establishes that fact that you need extra life coverage.

 Gender- There are various scientific studies and research that confirms that life expectancy, some sort of disease and recovery power is dependent up to a certain extent on the gender of an individual. If we go by the statics of all these studies, we will get to know that women are likely to live five years more than men at the minimum. On the same note, men are more likely to get indulged in activities like alcohol consumptions and smoking which are the root cause of various health issues.  So, if you are a woman, then you are going to pay less premium amount as compared to the men.

Family history – There are some life-threatening health conditions like diabetes and hypertension which run in the family.  Your life insurance provider precisely takes the previous health records of your family and determines whether you are also under risk or not. If all these issues run in your family, then you are going to pay the extra premium amount as compared to an individual which belongs to a hale and hearty family.

Current health situation- Every life insurance company demands a body check-up to rule out the presence of any underlying health issue in a person who wants to buy a life insurance policy. If you are suffering from any health issue before or at time of buying the life insurance, then the premium about would be on higher side.

Your marital status- If you are married, then it is advisable to buy the life insurance plan along with your spouse as various life insurance companies give an additional discount on the dual application. In other words, a bachelor has no discount benefits in comparison of a married insured.

The nature of the policy- Apart from all these external factors, the premium amount is sometimes affected with the nature and duration of the policy. Life insurance policies which are of longer period are likely to demand less premium amount for more number of years. On the other hand, short life insurance policies have to accumulate a considerable assured sum in a short period of time and thus demand high premium value.

The nature of your profession- The premium amount is likely to get affected up to a certain extent by the nature of the job and occupation of the insured. Individuals who are involved in occupations like fishing, oil industry, mining, gas-plants, and various similar risk-possessing occupations are going to pay a large premium amount in comparison of their other counterparts. Though hidden and unseen risks are involved in every profession, these professions come with various sort of direct risks which can’t be ignored at all. That is why life insurance companies never ignore the nature of the individual who seeks to buy a life insurance policy.

Your lifestyle choices and Hobbies- The premium amount of your life insurance is dependent up to some extent on your lifestyle choices. If you like to get indulged in activities like scuba diving, mountaineering, car or bike racing, consuming alcohol and cigarettes, then chances are high that your premium amount is going to be little higher in comparison to the individuals who maintain a safe distance from all these activities. Basically, indulging in all these activities increase the chances of an individual to get hurt, seriously injured or even die early. Henceforth, your premium amount increases. Each life insurance will look out the lifestyle, hobbies, and a way of leaving the individual to do the right analysis- whether they are at risk or not.

In conclusion- With a life insurance, you can easily provide a financial stability to your family, once you bid adieu to the world. However, its inputs and output are highly dependent on various factors like age, gender, lifestyle choices, and occupation of the insured. Check the premium policy of your life insurance precisely and make sure that you churn out the maximum benefits out of your investments.