When you are buying life insurance, you are committing to paying premiums for a long period. Therefore, it is important to choose an amount that you can conveniently pay. When the insurance company calculates your premiums, there are several factors they take into consideration. Sometimes, the quote that you receive from the insurance company can baffle you. You might wonder why you are paying more than others for the same insurance.
Here are some reasons you may have to pay high premiums than others-
The insurance premiums for women are usually less than that of men. There is no particular reason, but it is simply because women usually live longer than men. Several studies show women live five to seven years longer than men.
Age of purchase
Your age plays a major role in determining your premium. As you age, your premium increases. Hence, if you have bought life insurance at a higher age, your premiums would be higher than individuals younger than you. The reason behind the higher premium is that as you age, your health usually declines.
The purchase is offline instead of online
There are several companies out there providing life insurance and the competition is cut-throat. Several companies allow you to buy a life insurance policy easily. Also, online policies usually have a lower premium than offline policies. They can afford to do as costs like administrative paper cost and commission of the insurance agent are erased in the online process. While, when you buy offline from an agent, you pay more because theygets a commission, and the administrative cost increases.
There are some lifestyle factors that directly affect your lifespan. There is a direct link between smoking and several diseases. This further signifies that smokers may have a short lifespan compared to non-smokers. Also, regular consumption of alcohol is associated with several ailments of the liver. Hence, if you have a habit of smoking or drinking alcohol, you may have to pay higher premiums on your life cover. This is because these habits deteriorate the quality of your life.
Declarations on your proposal form
When you buy a life insurance policy, the insurance company asks you to fill out a proposal form. Based on the details that you mention in it, they may give you a counteroffer where your premium would be higher than what they agreed upon earlier. This happens when –
- There is risk associated at work- There are some occupations that have risks involved that most regular 9-5 jobs do not have. Professions like soldiers, mine workers, firefighters, construction workers, or gas industry-related workers usually have their lives at much higher risk than most people. Hence, because of the risk associated with the job, the life cover of your policy premium might be higher than others.
- Hobbies- There are some hobbies that are much more exposed to risks than others. For example, if your hobbies include trekking mountains professionally or racing cars, it might raise a concern for the insurance companies. As these hobbies have a higher than usual risk associated with them, and hence, you may have to pay a higher premium.
- Traveling habits – The insurance company does not get into details about where you go for vacations. However, if you travel often because of your business, there is a higher risk associated with your life. This might lead to the insurance companies charging higher premiums. Also, your premiums are affected if you travel to countries that are more exposed to tropical diseases, HIV cases, or are simply unsafe.
Based on your medical examination
Your health directly affects your lifespan. Hence, any red flags regarding your health may lead to the insurance companies increasing your premiums. If you are severely obese, you may have to pay a higher premium than someone who has a healthy weight. This is because there are several chronic conditions that are directly linked to obesity. Also, if you have an existing chronic health condition, your premiums might be higher. This is because, with existing chronic conditions, there is more risk associated with your life. Maybe you are in perfect health, however, your family may have a concerning history of hereditary illnesses. The insurance companies may find this concerning and would re-evaluate your premiums.
Above are some reasons you may pay more than others for your life insurance. As buying a policy is a huge decision and directly affects your loved ones in your absence, it is always good to compare different policies and use the life insurance calculator before purchasing life insurance.