If you have ever applied for a life insurance policy then you know that your initial rate quote comes from the list of rates that the insurance company creates based on the age, gender and smoking status of the applicant. But there is more to the actual premium you are charged than just this simple formula. Here are some of the other factors used to determine your final life insurance premium.
The Proposed Insured’s Health
When you think of risk in terms of a life insurance policy, the first thing you consider is the health of the applicant. There are many different things to consider when looking at a life insurance applicant’s health.
These include:
1.) Medications – The medications you take show both existing diagnoses you have received and potential future health complications that require preventative treatment. For instance, you may not have had a heart attack yet, but if you’ve been prescribed a blood thinner and a cholesterol reducing medication then it is likely your physician thinks you are at risk for one and is trying to prevent it through medications.
2.) Chronic conditions – Chronic conditions like muscular dystrophy, heart disease and diabetes can shorten your life span and increase your risk as a life insurance applicant. Other chronic conditions, like high blood pressure, when not combined with other heart or circulatory issues may be less risky but still affect your overall risk.
3.)Potential future conditions – Over time, seemingly unrelated conditions and diseases can work together to create dangerous health consequences. For instance, diabetes and high cholesterol are not necessarily related (although they can be). But diabetics with high cholesterol might be more likely to have a hardening of the arteries, making stents harder (or impossible) to place in arteries, and therefore making bypass surgery necessary after a cardiac incident. Underwriters must look at all these unrelated factors and determine how they might come together to impact the applicant’s health in the future.
4.) Paramedical exam – A paramedical exam, when required by the insurance company, can give even more indication of an individual’s health and may show potential problems that the individual isn’t even aware of. During a paramedical exam, the proposed insured has his or her weight, blood pressure and sometimes urine and blood checked. Someone who hasn’t been to the doctor in years may seem healthy because they have no prescriptions or medical records indicating compromised health, but if the paramedical exam shows a problem then the underwriter knows his or her lack of a health history does not equal a diagnosis of good health.
5.) Age – While your age doesn’t necessarily have anything to do with your health, it does indicate a statistical life span.
6.) Weight – Individuals who exceed standard life insurance company weight charts may not have been diagnosed with any of the problems or diseases that can strike the obese (like diabetes, high blood pressure and heart disease) but their weight indicates a higher likelihood that they will in the future.
7.) Medical Information Bureau – The Medical Information Bureau (MIB) keeps track of all your health issues that are reported by other insurance companies. Insurance companies pull your MIB report when you apply for insurance and the codes on this report will list all the reported health issues found during other application processes. This information may not lead directly to higher premiums, but it can cause an underwriter to delve deeper into your history, request more supporting materials and documents or even decline your application. The Proposed
Insured’s Gender
Because of differences in life expectancy among genders, your policy premium will be affected by whether you check the Male box or the Female box on your application for life insurance.
The Proposed Insured’s Lifestyle
The way you live your life will have a great effect on the life insurance premiums you are charged. From dangerous careers to death defying hobbies to questionable moral turpitude, every aspect of your life may be examined by the underwriters, depending on the amount of insurance you apply for. Each of these items will be analyzed to determine how much more risky it makes insuring you.
You may be asked to fill out supplementary questionnaires depending on your occupation and hobbies or the insurance company may ask to contact friends or business associates in order to ask them a set of questions about you during a telephone interview.
Driving History
Your underwriter may or may not request a Motor Vehicle Report (MVR) to see what accidents and tickets you’ve had over the past few years. This report can indicate how careful you are as a driver, what risks there may be of your having a fatal car accident, and your propensity to abide by posted speed limit and other traffic laws. As you might have already guessed, there is almost no stone that goes unturned when you are applying for a life insurance policy. This gives the insurance company greater control over the risks they undertake.
The Death Benefit
Your death benefit is the amount of money that the insurance company promises to pay your beneficiaries. The larger that amount is, the greater your premiums will be.
Riders
Additional coverage options such as spouse and child riders, accidental death benefits, benefit acceleration and return of premium riders (among others) add additional cost to your premium because they provide greater benefits and risk. Keep in mind, as people are living longer, rates are getting better. Also, if you have lost a significant amount of weight or have quit smoking, you may be elgible for a better rate on life insurance, depending on what your needs are.
If you would like to inquire more about what life insurance would best fit you and your families needs, please call at (888) 565-2212 or email us at info@bryanagency.com . We are now proudly offering excellent Term policies through William Penn!
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