Having just celebrated New Years, many of us have resolutions on our mind. Maybe you have resolved to exercise more, eat a little healthier, or potentially make 2020 the year you quit smoking. These small lifestyle changes could actually improve your quality of life and reduce your risk of developing diseases like diabetes, heart disease, or stroke. Those improvements could not only bring your better quality of life but also positively impact your life insurance. Let’s take a look at the details in today’s blog.
Calculating Life Insurance Premiums
Life insurance premiums are mostly calculated based upon your life expectancy. Insurance companies are charged with the task of calculating the risk category of each policyholder before determining premiums and costs. For example, does the policyholder smoke or have a history of drug use? These will be some of the questions about lifestyle habits that can affect the overall cost of life insurance.
The lower your risk category of mortality, the lower your premiums. Conversely, the higher your risk, the higher your premiums are likely to be.
What Lifestyle Habits Could Raise Your Premiums?
In addition to asking questions regarding your health history, an insurance company may require that you complete a life insurance medical exam as part of the life insurance application process. Insurance companies routinely conduct these exams on prospective policyholders in order to determine insurability and to establish premium rates.
There are particular risks that could negatively impact your insurance and thus, raise your premiums. Here are a few:
- Smoking & Drinking – The number of cigarettes one smokes in a day and the units of alcohol one drinks in a day or a week can be used to determine the level of risk on a policyholder’s health. The more you smoke or drink will make you cause higher insurance premiums due to the risk of getting ill or death is high.
- High Risk Sports or Hobbies – Policyholders who regularly race cars, sky dive, or play sports classified as “high risk” could also see high premiums as well.
- Drug Use – When applying for insurance, you will have to pass a pre-medical test that will help your life insurance provider determine whether or not you take drugs. Drug testing could eventually lead to a denial of an application for life insurance.
- BMI & Weight – Medical experts have long surmised that height and weight play a key role in life expectancy and vulnerability to diseases. If medical tests and body mass indicator calculations show that the policyholder is obese the premiums will also increase.
Insurance companies point out that if there is a change to your overall health and especially the risk factors used to calculate your premiums, you should inform your agent. For instance, if you have started a weight loss program, smoking cessation program, or have changed your risk category in anyway, you could see your premiums improve. A medical exam may be required but it’s worth it to see a reduction in your premiums.
As you start on your New Year’s journey to get healthier and change your lifestyle habits, consider contacting your insurance agent to discuss a review of your policy. Call us at 978-774-4338, or contact us through our website with questions.