There are some major factors which are taken into account by the insurance provider while calculating a premium for an individual. The insurance business usually deals with a huge amount of money. As a consequence, no insurer would like to be in loss after selling a policy. So they will definitely scrutinize every single risk factor that is associated with the package.
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Sometime it may come as a wonder why the premium of a particular provider is below par. But if you dig deeper, you will find out that they are way more restricted about the policy and has a limited coverage. So, this is always a hectic task to find out the best suitable provider from this competitive market. You have to research a lot either online or by visiting them physically to make sure they are reliable enough to purchase a coverage from. Let’s look at some of the major factors which work significantly behind determining a premium for a policyholder.
Health Status: The more premiums you pay off before passing away, the more financial benefits for the insurer. Although death is uncertain, but if you are having a good health it is inferred that you will live longer. So, you must maintain a good health in order to get a cheaper senior life insurance premium. If you are suffering from various critical diseases, then most likely insurers will limit the coverage and increase the premium rates.
The life insurance company gives more priority on the health condition of the client. You may sit for a medical exam before signing up for a policy. Some of the insurer exempts this step and offer a no-exam insurance policy, but the premium would be higher without any doubt. The insurer are likely to ask questions about your health and try to detect health complications.
Age: The age of the client is another risk factor. The older you are, most definitely you have to pay higher premiums.The senior people are prone to more serious health issues. Some insurer even don’t offer any coverage for senior citizens over 80 years. You will definitely see a lower premium available for the people who are younger than you although both of you are applying for the same coverage amount.
So the suggestion is to get a coverage as early as possible in life. In some cases, if you are older but can prove that your health condition is way better than many juniors, then you can get a cheaper premium.
Bad Habits: The bad habits such as smoking or drinking alcohol is always a disaster for health. In old age, such bad habits effect even badly and this is always a concern for the insurer. So you must wipe out all types of bad habits from lifestyle for getting a cheaper premium.
The smokers are supposed to pay 3 to 4 times higher than a non-smoker. It does not matter how casually or socially you smoke, if medical test comes positive, then you will not be able to get a lower premium. This is literally a prime reason of higher premiums for a lot of senior citizens who are willing to have a decent insurance package. Nonsmokers will always get priority meaning more coverage with reduced price.
Gender: In recent years, the life expectancy of women have increased few years than men at average. This is why some of the insurer favors women more than men. You can consider it as a gender discrimination, but insurance company always looks for a better business deal. So, unfortunately gender is one of ways to determine the premium rates for a lot of insurers.
I’ve discussed about some other factors that are affecting life insurance premium as well.