Life insurance companies use a variety of factors to arrive at a policyholder's premium cost. The customer's age, geographic location, existing health conditions, desired level of benefits and lifestyle are common criteria that companies include in the algorithms they use to determine premiums. The most subjective of these criteria is lifestyle. Life insurance companies look at various aspects of a policyholder's lifestyle and may consider any number of life insurance policies as evidence that the customer has a higher risk factor. A client who is a high risk factor, meaning that the insurance company's actuaries determine that there is an increased likelihood that he will die sooner rather than later, will always pay higher premiums than a client who is a lower risk assessor.
Lifestyle factors that often affect life insurance premiums include smoking, obesity, occupation and even hobbies. Enthusiasts of activities like skydiving, bungee jumping, scuba diving and extreme sports, the things you see at the X-Games, can expect higher life insurance premiums, all other variables being equal, than someone who plays golf and golfs. his free time.
Getting lower life insurance premiums is an easy and effective way to free up money in a monthly budget. Because everyone likes the idea of paying less for the same thing, the following five tips can lead to lower life insurance premiums.
Quit smoking
Avoiding tobacco products is the easiest way to pay less for life insurance. Note that the word used is simplest and not simplest. The difficulty of quitting smoking once addicted is extensively documented. Most would-be chatterers try to fail several times before finally giving up tobacco altogether.
In addition to better health, smokers who are thinking about quitting have an incentive to do so now rather than later. Life insurance is more expensive for tobacco users and often by a wide margin. An example of a $500, 000, 20-year term life insurance policy for a 30-year-old man has a monthly premium of $20. 88 per month for a non-smoker and $77 per month for a smoker. For a 50-year-old, the difference in dollar amount is even greater: $81. 35 for a non-smoker and $337. 75 for a smoker.
If you take out life insurance as a smoker and then cancel, you don't have to apply for a new policy to get lower premiums. Almost all life insurance companies will lower a former smoker's premiums if they are tobacco free for a certain period of time.
Slimming
Aside from smoking, maintaining an unhealthy body weight is one of the main reasons people pay more than they do for life insurance. Obesity is associated with a variety of diseases that can lead to early death and therefore are risk factors for an insurance company.These conditions include diabetes, heart disease, stroke and cardiovascular conditions.
Insurance companies generally use body mass index (BMI) to determine if an applicant's body weight falls within a healthy range. The BMI formula only considers two factors: Height and Weight. It ignores bone structure, body composition or muscle-to-fat ratio, and other variables that could increase a person's weight without contributing to poor health. The calculation doesn't even differentiate between men and women. In short, it's a flawed measure of health. Still, a life insurance policyholder needs to pay attention to their BMI if they want to pay the lowest premium payment possible.
For a man of average height, which in the United States is about 5 feet 10 inches, the healthy weight range, as determined by the BMI calculation, is 132 pounds to 173 pounds. Painting a quick mental picture of that adult male who weighs 132 pounds and then deems the BMI metric healthy provides a good indication of why he is flawed. Again, insurance companies use BMI despite its flaws, which means anyone looking to save on premiums should take this into account.
Be Safe Behind the Wheel
It's common knowledge that moving injuries and accidental traffic crashes lead to higher self-insurance rates. However, many people do not know that a poor driving record can also increase a person's life insurance rates.
Not unlike smoking and carrying excess weight, charging traffic tickets and showing a propensity to get into fender-benders are risk factors for an insurance company. A policyholder who is careless behind the wheel is statistically more likely to be in a serious car accident than someone who drives defensively and carefully. Since some car accidents are fatal, life insurers take this into account when setting premiums.
Obeying speed limits and all traffic laws, looking for other drivers and keeping a clean driving record, or MVR, can save a lot of money on life insurance premiums.
Lock it In Early
Life expectancy in the U.S. is 79 years in 2015. The closer a person is to that age when they buy life insurance, the higher their premiums will be. It's simple math: when an older person buys a policy, the life insurance company expects to have fewer years to collect premiums before it has to pay a death benefit. Life insurance that covers a limited number of years is also cheaper at a young age. It's because a person is statistically less likely to die in their 30s than in their 50s.
Young people often act as if they will live forever, and they tend not to consider their own mortality. For these reasons, many neglect to purchase life insurance at an early age, while premiums are still cheap. It's a mistake. The younger someone is when they buy life insurance, the less they pay in premiums for the life of the policy.
Life insurance for life insurance
Life insurance comes in two categories: Term life insurance and whole life insurance. Their names describe them very accurately. Life insurance covers a person for a fixed term, usually 10 or 20 years, although some companies offer a one-year policy term of three to 30 years. Whole life insurance, on the other hand, covers coverage from the day a person takes out the policy until the day he or she dies.
Because most life insurance policies never pay a death benefit, since the policyholder is usually still alive when the term ends, the insurance company can charge much lower premiums and remain profitable. A young person who maintains a healthy weight and doesn't smoke or skydive can often get 500 for a monthly premium of under $50.000 US dollars or more in term life insurance received.