Insurance and legal

If you have looked around for life protection and have applied for term insurance quotes, you may have noticed that they may differ among the providers. So how do the providers reach their figures? Does the provider of the insurance just make a haphazard guess and choose the first figure that comes into heads? In actual fact there are many factors taken into account that go towards determining how much you pay for insurance.

Factors that may go towards your quotes

Usually when applying for term life insurance you are given a general quote based on your age, sex and general health. However if you are interested in the quote, the insurance provider typically then goes into further detail and wants to know a great deal more about you, so they can charge your premiums based on how much of a ‘risk’ there is of you dying!

The factors below may be considered when you apply for your insurance:

• your family’s health background may be considered by the provider as some illnesses and diseases are often hereditary and so you may be a bigger risk to the insurance provider. Illnesses that may be considered a risk by the provider include heart attack, asthma and diabetes;
• if you are overweight or considered to be obese for your height then this may also mean your insurance quotes are higher. Typically this is down to the fact that you are seen as being a bigger risk if you are overweight;
• what you do for a living may be a consideration that determines how much you pay for your term insurance quotes. Of course if you have a job such as windown cleaner then the insurance company may consider you a higher risk;
• any sports that you take part in or hobbies which are seen to be dangerous may mean you pay more for your life insurance. If you like to go parachuting, snowboarding or skiing in your spare time you may pay more than someone whose hobby is chess or who reads in their spare time;
• generally if you smoke or drink your insurance premiums may be higher than someone who is teetotal. The insurance provider may ask you how much tobacco you smoke per month or how many units of alcohol you drink each month. Sometimes, the higher the amount, the more you pay in premiums. While these vices boost up your premiums, it is important not to lie when applying for your insurance. If for example you were to die due to lung cancer or liver disease and you smoked or drank excessively, but said that you did not on your original life insurance application, the provider may not pay out on your policy.

Any of the above may affect your term insurance quotes. Of course, the sum you choose to insure yourself for (the ‘sum insured’) is a big factor that determines the cost of the insurance. The more insurance you need, the more you pay in premiums. With this in mind you may want to consider this amount very carefully to ensure that you do not over-insure (ie take out more insurance than you need) yet do not under-insure (ie not take out enough)!