Life insurance can be mystifying, and often, we take whatever the agent in front of us tells us as gospel. We assume that there really isn’t much that can be done to reduce the cost of our premiums and settle for whatever is offered. But you must know exactly which factors could end up affecting how much you pay. Knowing that will allow you to make certain adjustments or prepare for higher rates. Let’s take a look at some of the factors that can directly affect the price of life insurance.
One of the first things people worry about is medical conditions and they do have to be considered. Some of the conditions that are likely to affect how much you pay for insurance include:
- High blood pressure
- High cholesterol
- Heart disease
- Acid reflux
As you can see, some of these conditions can be remediated, while others might seem benign, like acid reflux. This means that you have to take the steps necessary to correct these if you can, not only so you can reduce your premiums, but for your health as well.
When it comes to chronic diseases like diabetes, there are also things that you can do to find coverage and make sure that it’s reasonably priced. One option would be to go with experts that deal specifically with that type of insurance.
I’m Insured is a perfect example. They’re an independent broker who have been dealing with diabetes life insurance for years and will help connect you with the best providers on the market. You’ll have the chance of getting the best deal on life insurance with diabetes without having to run from provider to provider only to get rejected. They will facilitate the whole process for you and give you a few pointers on how you could save even more.
You also have to be very careful during the application process and before. You want to first start by getting as much information about your condition from your healthcare professionals. You also don’t want to rush the process of getting insurance as a higher risk person can take a little more time and the process will be much more strenuous.
You want to verify the information on the documentation that you have with the physician and other healthcare professionals you are dealing with. Having detailed and accurate diagnostic dates and treatment regimens will help expedite the process.
Health and Lifestyle Indicators
Insurance companies will not only look at whether you have chronic conditions; most policies you’ll find are medically underwritten, meaning that a variety of other health factors will be taken into consideration. You can look at life insurance in NZ for more on this.
If you’re a smoker, you will be penalised. And don’t bother trying to lie, as it will all show up when in the exams. They will also look at things such as alcohol consumption, BMI, and activity levels, among other things. What this also means is that you should consider getting in shape now if you intend to get life insurance anytime soon. This is also why you should welcome any medical exam if you feel like you’re in great condition.
Family Medical History
Heredity is another thing that could make a difference in how much you will be paying. If there’s a history of severe hereditary illness in your family, you will most likely have to compensate for this. An insurer might ask questions about your family’s medical history, and could even ask for documentation on some of your family members. Things like cancer, Parkinson’s disease, and type 2 diabetes in your family are all things that could have an impact when calculating premiums.
The Cover Amount
As a rule, the higher the level of protection, the more you’ll have to pay on premiums. The amount of coverage needed will usually depend on the number of dependents you have and debt. For instance, if you have a family of five who you assume will need assistance to cover for a mortgage, you won’t need as much coverage as a family of two living in a flat. This is why you don’t want to make the mistake of being over-protected and unnecessarily inflating your premiums.
The Term of Your Policy
The term of your policy will also dictate how much you can expect to pay. A lot of people will decide to go for a whole life policy, and these are good, but they will cost you more. There are term policies, on the other hand, that will only pay out up to a certain period. While these can be cheaper, they’re also a gamble. You don’t know how much you’ll have to pay if you outlive the coverage and have to get a new policy.
The length of the term itself will also make a difference. For instance, the premiums on a longer-term insurance policy will usually be higher than on a shorter one – again, due to the higher statistical chances that you make a claim. The goal here is to make sure that the policy will last long enough for the main needs of your family and loved ones to be met.
You may want to be able to support your children through university or help your partner deal with the mortgage payments. If you take too short of a term, you might end up leaving them exposed, but going too long will cost you also, so you have to be careful when taking out these types of policies and take a long hard look at your financial situation and obligations.
The Type of Policy
The type of policy you take out will also make a difference. For instance, you could decide to go for reviewable or guaranteed premiums. Guaranteed premiums allow you to keep the exact same premiums for the whole term of the policy. While they’re great if you want to avoid fluctuations, they tend to initially be more expensive as well.
Reviewable premiums, on the other hand, will most likely increase in intervals during the term of the policy. Note that while you may be able to make initial savings, you could eventually end up paying more in the long run.
Another thing that will affect the cost of your policy is if you have something like critical illness cover. This will cover you in the case you die or are incapacitated by a critical illness.
The younger you are, the less you can expect to pay for life insurance. The only factor that could change that is if you have a debilitating condition or are involved in a particularly dangerous line of work or business.
The rationale here is that you’ll simply be less likely statistically to make a claim. Unfortunately, too many people decide to take a life insurance policy when they’re already entering middle age. This is when premiums start increasing significantly. The best age to start shopping should be around the late 20s early 30s. This is when the best deals can be found and when you’ll most likely still be in very good shape.
These are all things that could have a direct and significant impact on your life insurance premiums. Whatever you do, always make sure that you speak with an expert first, and then take the steps necessary to keep your costs as low as possible without compromising your coverage.