There are a number of factors that go into determining the cost of your life insurance policy, as the cost of premiums are calculated based on your life expectancy. Since a policy is charged on the basis of your life expectancy, it is therefore determined via the risk category that you fall under – the higher the mortality rate, the more expensive your life insurance policy will be.
Of course, there are a number of elements that affect your life expectancy, and the cost of any given policy can vary depending on your age, gender, family medical history, overall health, and other lifestyle choices. This is measured by comparing your statistics to other people who have a similar lifestyle profile.
If you are categorised as being high-risk, it means that you are statistically more likely to die at a younger age than other groups. Therefore, this results in a more expensive insurance policy since you’ll make fewer payments when compared to other people who are low-risk and will be paying the insurance company for longer.
Of course, factors such as your age and family medical history are out of your control – but there are certain elements that you can control and that determine your life expectancy. These are aspects such as lifestyle choices, or certain habits that you can change. Over the years, a slightly less expensive policy really adds up and can yield major savings, which is why it’s important to know exactly what you can change to pay a cheaper life insurance policy.
The following lifestyle habits can be crucial determinants for the value of your life insurance policy’s premium:
Smokers are more likely to have ongoing health problems, especially since smoking is linked to health issues such as cancer, heart disease, strokes, lung diseases, diabetes, asthma, and other conditions. This makes smokers more of an insurance risk, which means that your life insurance policy would be more expensive. You are still considered a smoker even if you just have a few cigarettes occasionally. This is because, according to experts, occasional smokers eventually become habitual smokers and turn to tobacco in the long term.
If you lie about your smoking habits and die because of smoking-related reasons, such as cancer or heart disease, your family might not get the life insurance payout. Furthermore, you could be examined medically prior to being insured, which will reveal nicotine in your system.
Note that the term smoking doesn’t just cover cigarettes – it also covers vapes and e-cigarettes, bidis, cigars, pipes, nicotine replacement therapies, and any other form of nicotine delivery system.
Occasionally drinking alcohol won’t affect your premium, but if you’re a regular drinker, this is another aspect you need to factor in. Consuming alcohol on a daily basis is harmful to your health, as you’ll have an increased risk of liver diseases, cancer, kidney problems, coronary disorders, and increased blood pressure. In fact, the World Health Organization has outlined that 3 million deaths per year occur because of excessive and harmful consumption of alcohol.
As explained above, you need to be truthful about your consumption habits or risk all those years of paying insurance premiums going to waste. If you die due to an alcohol-related health problem, the insurance company can void the policy, and your loved ones won’t receive the money you worked so hard for them to have after your death.
High-risk sports or activities
If you’re a thrill-seeker, this one’s for you. Your insurance policy will be more expensive if you engage in activities that are considered to be especially dangerous – these classify you as a high-risk insurance candidate, as the risk of injury or death increases.
These activities include scuba diving, hang gliding, race car driving, flying a plane, off-roading, parasailing, bungee jumping, and other such types of activities. Of course, this applies if you engage in such activities on a fairly regular basis – if you go scuba diving once while you’re on holiday, it won’t necessarily affect your insurance premium.
Essentially, the more frequently you engage in these types of activities and the more dangerous the circumstances you’re in, the likelier it is that they’ll affect your life insurance premium. We understand that these types of activities really keep life exciting and entertaining, but should something go wrong, it may have dire consequences. You are more prone to serious injuries when engaging in high-risk sports, which is why they affect the grading of the insurance.Job
Your job also has an effect on the price of your life insurance. This is because the location where you conduct your job can either increase or decrease the level of risk. For example, someone who works behind a desk at regular working hours is considered to be less risky and is charged less. On the other hand, someone like a pilot would be charged far more, as there is more risk involved with flying.
Unfortunately, in this category, there is not much that can be done to minimise the risk, unless you change your roleto find a safer and less risky job.. More often than not, this is usually too much to ask, as changing your entire career is generally very stressful. What we suggest is trying to improve on the other areas of your life, so as to not be stressed out trying to find a new profession.
Your weight has an effect on the life insurance premium based on your height. A build chart is used to determine the ratio between your height and weight. Then, your results are compared against the mortality rates of your build type. If you are heavier or lighter than the preferred ratio, you will be considered to be a greater risk, and will pay higher premiums. In some cases, you will be denied life insurance coverage altogether.
This is because obesity is linked to an increased risk of health complications such as cardiovascular problems, hypertension, type 2 diabetes, stroke, cancer, and mental illness. On the other hand, being underweight is linked to anemia, osteoporosis, and a weaker immune system which doesn’t properly protect you against bacteria, germs, and viruses.
Keep in mind that losing or gaining a significant amount of weight right before applying for insurance doesn’t mean that your rate will be cheaper. You will need to prove that you’re able to maintain a healthy weight. If you show that you have been actively seeking a healthier lifestyle, maybe picking up a sport, going to the gym, or working with a personal trainer, this can show that you have been seeking and are working towards a healthier and more sustainable lifestyle. Sudden, drastic changes will not help you achieve lower insurance rates.
Your driving record affects your life insurance policy pricing because of the risks on the road. According to the World Health Organisation, approximately 1.3 million people die each year due to driving accidents. Between 20 and 50 million people are seriously injured, with many ending up with a disability due to their injury. That is the danger of driving on the road.
Obviously, bad driving affects your likelihood of dying at a younger age. Getting speeding tickets on your driving record would show that you drive from point A to point B without really caring about safety on the road. Furthermore, driving recklessly may indicate that you are the type of person that is reckless in other aspects of life. On the other hand, minor parking tickets don’t really cause concern.
Therefore, if you have a bad driving record, you’ll be considered a high-risk person and pay more money for your life insurance. However, it’s not your not your entire driving record which will be considered – the most recent part of your records is more relevant and crucial.
Illegal drugs such as marijuana, cocaine, heroin, etc. will impact the cost of your life insurance policy. The medical test prior to getting life insurance will reveal whether you take drugs or not, irrelevant of whether you disclosed it on your form. If you test positive for drug use, you will need to produce proof that you don’t take drugs, or the application will be denied.
Drugs affect your health and can cause death especially if you are a drug addict or are taking prescription drugs irresponsibly. A recovering drug user will need to prove that they are not still dependent on illegal substances.
If you don’t disclose your drug habits and die in a drug-related incident, your loved ones will lose out on the life insurance payout, even if you’ve been diligently paying your premium for years and years.
Travelling brings its own share of risks, which is why your life insurance premium might be more expensive if you travel a lot. The cost is affected by the frequency, time, duration, and destination of your travel. The destination is crucial because other countries are safer than others – for example, certain countries are targeted by frequent terrorist attacks, or have a higher risk of certain life-threatening diseases. The amount of time you spend at your destination, as well as the number of times you travel, will also affect your cost, as they affect the risk levels.
Furthermore, travelling often is always associated with the risk of flying. Flying is considered a high-risk means of travelling, which means that the cost of your life insurance policy will go up if you fly often.
Your regular lifestyle
The choices you make in diet, activity, and hobbies affect the price of your life insurance policy. Everyone has adopted different ways of living depending on their financial means and preferences which affects their overall health.
Working long hours, eating a poor diet with a lot of junk food, lacking sleep, lacking exercise, sitting down all day, and other such aspects of your life add up to unhealthy living, which can affect your wellbeing and thus make you more at risk of death. These aspects not only affect your physical health, but also affect your mental health, which is why they’re crucial components of determining the price of your life insurance premiums.
We understand that your medical history is probably largely out of your control, but it is still taken into account – if you’re an accident-prone person and are in and out of hospital for injuries, you need to try and make sure to avoid such accidents. Your medical history shows exactly how much you frequent the hospital; if you regularly put yourself in harm’s way and end up needing either medication, surgery, or treatment, then naturally, this will affect your insurance.
Your medical history is a good indication of what may happen in the future because it describes the type of person that you are. Reviewing your past, past activities, and the reasons why you got certain injuries, enables us to forecast and evaluate the risk of you passing away earlier than expected. This is why your medical records may influence your insurance grading.
All these elements factor in when it comes to the pricing of your life insurance policy. If you make sure that you’re living the healthiest life you can possibly live and avoid putting yourself in harm’s way, you’re not only reducing risk of harm or injury, therefore increasing the likelihood of a long life, but you might also get to enjoy a reduced life insurance premium. Certain habits and lifestyle choices may be harder to drop than others, but if you truly want to change things, both for your own benefit and to lower the cost of your life insurance, you can always seek the help of your loved ones.
This article is not meant to put you off buying life insurance – we’re just explaining exactly what you can change to enjoy a cheaper life insurance rate. However, there are many options that will fit your budget and not burn a hole in your pocket, even without changing all these habits. Even a small annual premium adds up to an impressive life cover that will help your loved ones cover their needs. There are also many plans that are tailored to suit your lifestyle and budget.
You can find out more information about our life insurance plans here. If you need any help with your life insurance plans, don’t hesitate to contact us on (+356) 2226 9500, or email us at [email protected].