Buying life insurance is one of the best decisions that a person can make. Life insurance is a valuable asset that provides individuals with the peace of mind of knowing that if death were to occur, a financial benefit will be made available to allow those left behind (i.e. loved ones and other beneficiaries) to continue and maintain their lifestyles.
When making the decision to buy life insurance, a person should have an understanding of the factors that are considered before the insurance policy is issued. The less risk you present to an insurance company, the lower the premium rate you will pay for the coverage you want. Here are some tips and things that you need to understand about how insurance is priced and what you can do to lower your rate.
Factors That Go Into Rating Life Insurance Policies
First you make an application for a life insurance policy and pay the initial policy premium. The application is then reviewed by the company’s underwriting policy, the area of an insurance company that is responsible for assessing risk and making a determination about your relative health and the potential risk you may pose if your death were to occur before it is expected. The insurance policy application contains a section known as Part II, which is the area of the application that asks for basic and specific medical information.
An insurance company wants to know if you visit a doctor on a regular basis, what your height is relative to your weight, whether you smoke or drink alcohol on a regular basis, and if you engage in certain risk behaviors like driving too fast. All of these factors, when weighed together, will result in you being classified as a premium, standard, or sub-standard risk. Individuals who are rated premium pay the lowest for their life insurance while those at a sub-standard risk pay the most for a comparable level of coverage.
Which Type of Insurance Should I Buy?
One of the ways in which a person can save on their life insurance initially is through the purchase of a lower-cost term life insurance policy. Term, unlike more expensive types of permanent life insurance, provides the same level of benefit for a term of years (typically until age 65). Usually this type of protection can be converted into a permanent plan, providing you with a way to get insurance initially at a lower cost, lower your risk rating, and resubmit through conversion for a cash-value permanent life insurance plan.
There are also blended policies that combine term and permanent life insurance coverage into one policy. These plans can be customized to give you the life insurance protection you desire at a cost that is more in line with your budget.
Ways to Reduce Level of Risk for Life Insurance
It is helpful for a life insurance policy applicant to present the best case for insurance that they can. What this means is that efforts to manage certain risk factors—such as diabetes (weight) or cancer (smoking)—can help mitigate the receipt of a higher rate for an insurance policy. A person who switches to a low-fat, low-sodium diet, as an example, is looked upon more favorably than an individual who eats unhealthy meals. A person who walks or runs, joins a fitness center, and exercises on a regular basis can also present a case that their risk to a life insurance company is lower than that of a similar individual who does not engage in healthy activities.
Jonathan Harrisburg writes on finance, insurance, business, investing and other related topics. Mobile phone owners looking for additional protection should consider Protect Your Bubble iPhone insurance.
Image credit goes to prov1112004.
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