How Your Life Insurance Premiums Are Calculated
Life insurance is difficult enough to understand, but understanding how company computes your premiums is even harder. Calculating your life insurance rates is not as simple and straightforward as calculating your premiums for other kinds of risk, like fire insurance. The rates you pay for life insurance coverage are based on your state of health at the time you apply for the policy, and that risk assessment is made by a qualified medical professional. If you are not in good fit, or if you indulge in risky behaviors such as smoking or street drugs, the insurance company expects to have to pay out more benefits on your policy than if you were totally healthy and did nothing to put your health at risk. That is the reason insurance companies usually require a physical exam before issuing your life insurance policy.
Once the results of the exam are, the company will review not only those findings, but also your family's medical history, your personal driving history, and probably records of your health insurance claims and credit score as well.
In addition to the medical and driving reports, your insurance provider will also have you fill out a questionnaire about your health and lifestyle. Be honest when answering the questions and providing your medical history. If you are found to have lied on your questionnaire, then it could keep your policy claim from being paid in the future. An insurance provider may also cancel your life insurance policy if they find out that you lied during the quote process.
After reviewing all these reports, the company assigns you a score that reflects your risk. That is why the premium you wind up paying may not be even close to the quote the agent gave you when you applied for coverage. If the insurer determines that you are a higher risk level than was originally assumed, your premiums will be higher than your quote.
There are ways to lower your risk. Take good care of yourself. Maintain a healthy weight. Eat well-balanced meals and exercise on a regular basis. If you smoke, stop. Drive safely, and don't get tickets. Auto crashes will also raise your life insurance premiums, not just your auto insurance premiums. In general, be smart. Don't take unnecessary risks
The insurance provider will also take into consideration things that you cannot control, like your age and gender, when determining your life insurance premiums. That is why it is important to improve your health and lower your health related risks. Risk assessment policies vary, depending on the life insurance provider. That is why it is a good idea to do research, ask questions and get several quotes before deciding on a life insurance policy.
Once the results of the exam are, the company will review not only those findings, but also your family's medical history, your personal driving history, and probably records of your health insurance claims and credit score as well.
In addition to the medical and driving reports, your insurance provider will also have you fill out a questionnaire about your health and lifestyle. Be honest when answering the questions and providing your medical history. If you are found to have lied on your questionnaire, then it could keep your policy claim from being paid in the future. An insurance provider may also cancel your life insurance policy if they find out that you lied during the quote process.
After reviewing all these reports, the company assigns you a score that reflects your risk. That is why the premium you wind up paying may not be even close to the quote the agent gave you when you applied for coverage. If the insurer determines that you are a higher risk level than was originally assumed, your premiums will be higher than your quote.
There are ways to lower your risk. Take good care of yourself. Maintain a healthy weight. Eat well-balanced meals and exercise on a regular basis. If you smoke, stop. Drive safely, and don't get tickets. Auto crashes will also raise your life insurance premiums, not just your auto insurance premiums. In general, be smart. Don't take unnecessary risks
The insurance provider will also take into consideration things that you cannot control, like your age and gender, when determining your life insurance premiums. That is why it is important to improve your health and lower your health related risks. Risk assessment policies vary, depending on the life insurance provider. That is why it is a good idea to do research, ask questions and get several quotes before deciding on a life insurance policy.
About the Author:
Tom Martens is the content syndication coordinator at Lifeinsurance-Southafrica.co.za South Arica?s leading Life Insurance and Life Cover portal.
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