5 Factors that Impact on Life Insurance Premiums

These days, getting a life insurance policy is no longer a luxury—it's a practical option. Far too many families have suffered unexpected and irreparable monetary losses due to the death of a loved one. That's why more and more people choose to be prepared for their demise one day. By taking out an insurance policy on their life, they ensure that those who will be left behind shall be adequately compensated for their loss.

Insurance can never bring back a dead person. It cannot protect the insured from harm, nor can it answer for the family's needs indefinitely after the payout. But having insurance gives you peace of mind knowing that no matter what happens, your family will receive some sort of support in their time of great need. It means that you will still be able to provide for your loved ones even after you have passed on.

Life insurance pros and cons

A few decades ago, life insurance policies were not exactly the most palatable of conversation topics. People always assumed that you were just being morbid or that you were trying to sell them a policy once you start talking about life insurance.

Today, death is still not a very welcome idea for most people, but at least they are more open-minded with regards to preparing themselves and their family members for this eventuality. The marked increase of the types of life insurance policies available on the market over the years shows a growing interest among consumers that this is indeed a worthwhile investment.

Other people are not keen on shelling out their money today for something that they think will not happen anytime soon. They would rather buy a new Mac computer or a home entertainment system than put their money on insurance premiums. However, the practicalities of having an insurance policy far outweigh the inconvenience of putting aside a little money to pay for premiums.

Factors to consider

Before you call your insurance agent and book a meeting with him, you also have to review your current life status in order to find out what kind of life insurance policy is best for you. Here are five of the most important elements that go into how much premium an insurance company is likely to charge you :

• Age : Age brackets are the classic peg for most life and health insurance packages. Your insurance agent will determine your life expectancy based on your age at the time of application based on current mortality data that have been specifically gathered for this purpose. Most of the time, the older you are, the higher the premium you have to pay because the insurer also has higher chances of having to pay out soon.

• Occupation : Certain jobs merit higher premiums, such as miners, cops, professional stunt experts and race car drivers. This is because there are more risk factors that are also taken into consideration because of the markedly higher chances of the risk happening. In contrast, white collar jobs are give lower premium rates. Your monthly salary can also play a part in the amount of premium you have to pay.

• Health condition : Pre-existing medical conditions are usually excluded from the coverage of a life insurance policy because the insurer would not want to continue paying for your treatment or eventual demise related to such condition. Insurance companies usually ask their policyholders to undergo a mandatory medical exam before signing them on and regularly thereafter to determine the appropriate package for their health needs. If you want to have your current condition covered in the policy, you will have to pay additional premium.

• Type of policy : Group policies tend to be cheaper than individual life insurance packages because the risk is borne by a greater number of people through their premium payments. Thus, the insurer has lesser chances of loss in terms of payout.

• Lifestyle : Do you use recreational drugs, smoke cigarettes obsessively or drink alcohol very frequently? Do you usually go on trips abroad? Does your occupation require you to face risky situations on a regular basis? These and other factors are taken into consideration in computing how much premium your insurer should charge you.

Big risk

There are many life insurance products being offered today that cater to every imaginable eventuality, profession and risk. Buying one policy doesn't mean that you have to stick with it for the years to come, although there are certain benefits that come with renewing policies year after year such as qualifying for lower rates or opting for premium rollover.

As you check out different life insurance companies and the products they offer you, try to evaluate each one fairly by using the same set of criteria and coverage level that you want. This is the only way for you to ensure that you're getting the best insurance there is based on your current needs.