What is an insurance premium?
An insurance premium is the cost of your insurance — how much money you agree to pay to the insurer for coverage. It depends on the type of policy that you want — different insurance caters different needs which also comes with different amount of money.
There are various factors that affect the life insurance premiums and it is not always the same for every applicant. Insurers will consider a range of factors in determining the cost of your premium. That is why there will be a lot of questions asked by the insurer before both come to an agreement to seal the contract.
Factors that can make your life insurance premium soar
- AGE
Your age will dictate the price range you’ll be paying the insurer for insurance cover. Premiums usually will increase with age — the older you are, the higher premium that you have to pay. This is because the risk is higher when you’re older. The 40-year old you may not be as healthy as you were when you were 20 years old. Here, the insurer will consider you as a higher risk.
- HEALTH
The insurance company will typically undergo an underwriting examination of your health when you apply for life insurance. The insurer will analyse the risks and determine what is the right amount to charge premiums based on the level of risk and review if you can get coverage based on the underwriting.
- SMOKING
If you are a smoker, then you are likely to be charged higher premium insurance compared to non-smokers. This is because smokers pose a higher risk to be diagnosed can lead to serious health problems such as cancer, stroke, hypertension, heart disease, and the chances of the cost of your insurance will be more expensive.
However, it is possible to cut the cost of your insurance premiums if you quit smoking. But to do so, you have to stop for at least 12 months to qualify yourself as a nonsmoker.
- Family Medical History
It is common for insurers to ask questions regarding your family’s medical history during an insurance application process. This will help the insurer have a better understanding of your overall health and longevity as some medical conditions are genetic.
Insurance companies will evaluate your family’s medical records to determine your risk of certain diseases. If your risk is high due to an illness found in your family health history, it may affect how much you pay.
- GENDER
Males have to pay a higher premium compared to females. Why? On average, females live nearly five years longer than males! Females’ life insurance costs may be cheaper since they have a longer life expectancy and more time to pay premiums. According to World Health Organisation that females live six to eight years than males.
- LIFESTYLE & OCCUPATION
Do not be surprised, the insurance company may pose a question regarding your job, hobbies and lifestyle. If you enjoy extreme and high-risk activities, your premium price will be higher than those who do not practice such a lifestyle. Same goes to your occupations. If your job exposes you to risks that could endanger your life, you may also need to to pay higher premiums to make up for the extra risk.
The more risking your jobs and lifestyles are, the riskier you are to the insurance company.
How to reduce life insurance premiums?
So now you already know what makes insurance pricing expensive. But are there any possible ways to lower the pricing? Do not worry, because there are ways that you can do to get a cheaper premium! How? Let’s refer to the points below:
- Purchase earlier!
Insurance premium increases in line with age. Your young age is the key to lower life insurance premiums! For most of the time, it is wise to recommend you begin in your early 20s. The younger you start, the more money you can save on your premiums. How? Insurers will see you as a perfectly young adult with less liability compared to those who are in their 40s-50s, who are seen riskier!
- Take care of your health
Most insurance companies are always looking at a healthy policyholder with clean medical history. So get in shape, start working on your health. Individuals who suffer from illnesses such as heart disease, hypertension may have to pay a high amount of premium.
- Shop around
Never rush into getting a life insurance plan. You will not lose anything, in fact, you will be getting the best life insurance if you do enough research for a policy that suits your needs. Nowadays, you can get all the information at your fingertips, all you have to do is just hop around the web to make a comparison from one company to another!
Life insurance is a major investment that is not only beneficial for you but for your loved ones too, especially upon your passing. You can ensure that your family will be taken care of finally after your demise through a life insurance cover. Be a smart investor! Reach out to our agents to know more about life insurance, medical insurance, and more at Bjak!
(Sources: World Health Organization)
