7 factors affecting your life insurance premium

Life insurance is one of the common yet the best ways to protect your family’s life financially in your absence. But, there are several factors which you tend to avoid or your insurance agent or broker do not tell you. Sometimes, understanding these factors becomes a cumbersome process before buying a policy, but remember that knowing these factors might help you in reducing your premium and optimising your maturity amount and allied benefits.

Health and medical history

Yes, it doesn’t matter that we are talking about life insurance not health insurance. Your health history is what matters the most. If your medical records are poor, you might have to pay a high premium. Your insurer will have a look at the overall health checkups like weight, cholesterol levels, blood pressure and other metrics that could indicate future medical conditions.

Occupation

Insurer gives a significant focus on your occupation. In the case of your involvement in the riskier profession, you might have to pay higher premiums than others. Riskier occupations like pilots, loggers and roofers.

Habits

If you are a regular smoker or drinker, you have to pay a higher premium than a person who is not habitual of such consumption. Before buying life insurance, you have to disclose such a situation, otherwise it could become a reason for a denied insurance claim.

Time horizon of policy

Yes, the policy itself affects your premium amount. If your life insurance's time horizon is for a longer period of time, you have to pay less premium than short duration ones. Since you are paying a premium for a longer period of time, the company provides you more benefits as they can also have a span of time to stay invested and get benefits from their investments.

Gender

There is no promotion of inequality towards males and females, but there is a belief that says females live longer than male 5 years. This might be the reason why females have to pay less premium than male, which becomes a plus point for women who are looking forward to buying life insurance.

Age

Age is the most important factor on which your life insurance premium amount depends. If you are young, it means you will be going to pay more premium in your life span, thus have to pay less premium than older ones.

Hobbies

If you love to go to adventurous activities, you have to pay more premium than those who have non-adventurous hobbies. Adventure activities like sky-diving, racing cars, climbing treacherous mountains, and many more. These activities give high risk to insurance companies, so they charge high premiums from you.

Out of the above mentioned factors, some factors are controlled by you while buying a life insurance policy to make the best utilisation of your protection money. However, there are various other factors like age, which are not in your control. Your policy is already making an adjustment for that. You can control your controllable factors to give the best financial security to your family in the case of your unfortunate demise.

Anushka Trivedi is a freelance financial content writer. She can be reached at anushkatrivedi.com