5 Top Factors That Affect Your Insurance Rate

Life insurance premiums are calculated by the insurance company before you enter a contract with them. The interesting point about insurance premiums is that people pay a different amount, even if they sign up for the same coverage. While how each company calculates your exact premiums will have to depend on their own internal policies, there are certain known factors that will have a huge influence on your premiums.

Your age

Age is perhaps the single most important factor. It is a known fact that younger people tend to pay less in insurance premiums, and age is perhaps the reason why. If you are young, you are more likely to pay a stable and continuous sum to the company for years. Thus, the company will not have to worry about writing you a check for a long time.

Conversely, if you buy an insurance policy at old age, your risk of passing away while the terms are in effect is high. For this reason, the older you get, the more you have to pay for insurance. Therefore, most experts would agree that you should consider buying insurance before it is too late. However, this certainly does not mean buying insurance when you are fresh out of college!

Gender

Gender does not look like a huge influence, but the reality is that it is. Insurance companies will calculate premiums based on your expected lifespan. Statistically, women live on average five years longer than men. For this reason, men typically have to pay more for their insurance premiums. However, the difference between men’s premiums and women’s is typically not that high. Men will only have to pay a slightly higher rate than women.

Health

Your health is an important factor. People who live a healthy lifestyle are much less likely to be hospitalized or to require medical assistance. Thus, insurance companies will not have to pay out a huge sum to cover their bills. Conversely, people in a bad shape might have to pay more, as they are more likely to use medical services.

Before you enter a contract with a company, you will have to go through the underwriting process. In this process, the company will ask you to write down your body measurements and health conditions. Conditions such as diabetes or high cholesterol might end up becoming a huge liability, so you might want to take care of them before getting an insurance policy. There are certain companies that do not require medical exams. However, they tend to charge more for their services.

Smoking

Though it technically falls into the health category, smoking deserves a special mention. Smoking is always a big red flag for insurance companies. Smokers are at a much higher risk of getting terminal diseases, which deteriorates their health rapidly. For this reason, smokers are typically charged a much higher premium as compared to non-smokers. Sometimes, smokers have to pay as much as double the usual rate!

Driving records

Your driving records might not sound that important, but insurance companies do take a particular interest in them. Your driving records will tell the company more about your driving habits as well as any possible infraction. All of these factors will play a significant role in the underwriting process, so it is a good idea to keep your driving records pristine if you want to get insured. It is also interesting to note that the last 3-5 years carry the most weight. This means that if you have improved your driving habits considerably, the premiums might not be very high.

Insurance companies are very meticulous when they calculate your premiums. Although the above might be some of the most important factors deciding the premiums, they are not the only ones around. If you have more questions about your premiums or your insurance policies, don’t hesitate to give us a shout. We would love to hear from you!