How to Identify Factors that Affect Life Insurance Premiums

A life insurance premium is a policy where the insurer pays a sum of money to the designated beneficiary upon the death of a policyholder.  This type of plan is very important because it protects the beneficiary from the horrible financial hardships after a death.  Losing a financial provider can be horrific.  The premiums are calculated by reviewing certain factors. 

• Consider your age when calculating life insurance premiums.  Age is a very important factor when calculating life insurance premiums.  A young person will be able to pay a lower premium.  This is because they are less likely to die and the insurer will probably not need make a payment soon.  Also, they are more likely to make payments for a long period of time.  An older person will have a higher payment because they are more likely to die and cause the insurer to pay the designated beneficiary.  They tend to make payments that will not last for a long period.


• Accept the fact that your health will affect your life insurance premium.  Health is the other major insurance premium factor.  A person who is healthy will have a lower premium.  They are less likely to perish and will be more likely to make payments over a long period of time.  A person who is healthy is at their target weight, has acceptable blood pressure and does not have a long history of illnesses and diseases will be less of a risk for the compay.


• Remember that other factors include the type of employment of the applicant, whether or not they have a criminal history and whether or not they use drugs.  A dangerous employment position such as a soldier or a police officer will mean that the insurance company is more likely make a payment in a short period of time.  A criminal record could indicate a dangerous lifestyle and presents a potential risk.  A smoker, drinker or drug user will indicate that the premium needs to be higher since that person may perish in a shorter period of time.


• Know that sex, hobbies, family history and foreign travel are other important factors.  Women tend to live longer than men and dangerous hobbies such as bungee jumping and playing with crocodiles are indicators of potential risks to the insurers.  If a family has a long history of high blood pressure and heart attacks, the insurance company will be more cautious and charge a higher premium.


• Avoid the high premiums by applying before the risks are deemed to be present.  If someone is healthy and applies for the plan, they will receive the plan and it will be the same once they are suffering from health conditions.  A young policyholder can keep their same plan so that they do not have to pay a large amount when they are senior citizens.  Insurance companies normally keep the same rate that was offered at the beginning of the agreement.