Every life insurance policy comes with a premium. The amount will often seem mysterious, but if you look at the way premiums are calculated, you will understand exactly what you are paying for. Fundamentally, you are paying a premium so that in the event of your death the Life Company will pay to your dependents the amount you are insured for. They will assess the risk of you dying and the amount they will have to pay out and will set your premium accordingly. It is as blunt as that.
To arrive at your premium, the main factors they use are common sense, but deserve some explanation. All premiums are developed based on actuarial tables which suggest the risk for a certain person dying:
- The first factor considered is age. Statistically speaking, if asked to insure a 70-year-old man or a 30-year-old man, who would you choose? The 30-year-old man would be the answer most everyone would choose, as he is far less likely to die.
- Secondly, do you smoke? If you do, you are statistically a much worse bet for the insurance company as you are likely to suffer a host of life-ending ailments in the coming years.
- Thirdly, how much cover do you want? The larger the amount the insurer will have to pay out, the larger you can expect to pay in.
- Fourthly, what is your health history and current health? (Some life insurance plans will require you to have a medical exam.) Do you have a history of heart problems or other issues the insurance company fears will come back to haunt you? If so, expect to pay higher life insurance premiums
- Next, .what is your lifestyle? If you are a fit person who exercises frequently, you will likely pay lower rates than an overweight, sedentary customer.
- Finally, a personâs job is factored into the premium calculation. A secretary who works in an office all day will probably fare better in this category than will someone who works with power lines or does other things that may create more danger to life. This factor will be determined in large part based on studies of on-the-job deaths of others in your profession.
Your premium will therefore be a combination of the above main factor. If you want to ascertain what your premium is likely to be then get a free no obligation quote. You should fill out our form and one of our Calm Protect team will provide a range of quotes from all the major Life Insurance companies.