7 Factors that Can Affect your Life Assurance Premiums
Life Insurance allows you to financially protect your families’ future if the worst was to happen. There are various types of cover including:
- Level Term Insurance
- Relevant Life Cover
- Family Income Benefit
- Critical Illness Cover
- Whole of Life Insurance
To find out more about the different types of life cover you may be interested to read our fact sheet. At KDW, we believe it is important to understand how much money you would need to meet your financial commitments and provide a realistic level of income.
How much cover do you need?
When deciding how much cover you require there are two concerns which will ultimately affect your decision:
- Your Financial Obligations
- Your Financial Dependants
The minimum amount of cover you will require will need to be enough to cover off your outstanding financial commitments; such as your mortgage or car loan. The other consideration for you is the level of income your family will need to continue the same quality of life and any additional funds for future expenses; such as tuition fees.
For example, if you have 3 children and £200,000 outstanding on your mortgage you are going to require a higher amount of cover than if you have no children and £50,000 outstanding on your mortgage.
A financial planner will be able to discuss this with you and help you to decide the amount of cover necessary for you and your family
There isn’t a one price for all as a monthly life insurance premium can be affected by 7 variables:
Personal Habits
Habits such as smoking or excessive drinking can impact upon your health and mean that you are more likely to be diagnosed with an illness or suffer an early death. As a result, your monthly payments will be affected.
Fitness
Being overweight can seriously damage your health, overweight people are more at risk for developing type 2 diabetes, heart disease and cancer, they are also at greater risk of having a stroke. Therefore, an overweight person is seen to carry more risks which in turn bumps up their premium.
Medical History
An insurer will be interested in your families’ medical history as some conditions such as heart disease can be hereditary. If a close member of your family has or has had a serious medical condition which is genetic then the insurance company will deem you to be at a higher risk of also being diagnosed with that condition, which in turn increases your premium.
Your Health
The premium you pay for life insurance can be influenced by your own physical and/or mental health condition. The severity of your condition and the way in which it impacts your life expectancy will be used by the insurance provider when calculating your monthly premium.
Occupation
If your career involves you sitting at a desk 9-5 then your insurance premium isn’t likely to be affected. However, if your job involves an element of danger, from driving a lorry to working on a construction site then you are statistically more likely to be involved in an accident, which means your insurance premium is likely to increase.
Hobbies
Adrenalin junkies who enjoy activities such as skydiving will need to inform their insurance company of their hobby as this will most likely raise their premium.
Age
As you get older your premiums are likely to rise, which is why young people are often encouraged to take out life insurance whilst the premium is lower.
If you are interested in discussing your options for Life Insurance then please do not hesitate to contact us.
T: 01727 85 22 99
E: mail@kdw.co.uk