You have a family and they rely on you for so many things, including financial security. You wonder what will happen to your loved ones in the event of your death. Will they be able to survive without your financial contribution? Will they be able to continuing paying the mortgage and other monthly and day-to-day expenses?
There is a way that you can protect your family from financial hardship in the event of your passing: Life insurance. Life insurance is the best way to safeguard your loved ones who are financially dependent on you. Should you die, your life insurance policy will pay out a lump sum to the person or people you have listed as the beneficiary or beneficiaries. With a life insurance policy, you and your family can have peace of mind knowing that financial hardship won’t add to the hardship of your passing away.
If you haven’t purchased a life insurance policy, you may be wondering what types of factors life insurance providers take into consideration when determining your monthly premiums; the amount you will pay for your coverage each month. There are actually several factors that impact the premiums you will pay, but is your income one of them?
Does Income Impact Life Insurance Premiums?
You have a high-paying job and you worry that a life insurance company will take advantage of the amount of money you make by charging you higher premiums because your salary; or, your job doesn’t pay a lot, and you are curious if you will get a reduced rate because of that.
Your question is this: “Does your income affect your life insurance policy?”
The answer to this is no: Life insurance premiums are not based on your income. If your income is substantial, this might be good news; however, if your income is on the lower end, you may find this information to be a bummer. Either way, the fact of the matter is that the amount of money that you make holds no bearing on your life insurance premiums, which is actually a good thing. It means that life insurance companies aren’t biased and they won’t take advantage of a something that is not concrete, like the amount of money you make.
Though income isn’t a factor that is taken into consideration when a life insurance provider determines your premiums, there are several other, more concrete, factors that do have an effect on the amount you will pay for your coverage each month.
Factors that Effect Life Insurance
The following are some of the biggest factors that life insurance providers take into consideration when pricing out a policy. Though you may not be able to control some of these criteria, there are several that you can. The factors that you can control, if you do control them, can actually save you a good bit of money on your monthly premiums.
This is the number one factor that life insurance companies take into consideration when calculating your monthly premiums. Why? – Because you will likely be paying your insurer for years before they ever have to worry about paying out your policy coverage. Also, most people are in better health when they are young, and some insurance policies, like term coverage, will expire before you pass away.
Consequently, the older you are, the more your premiums will be. Older people are more prone to certain conditions that can affect their health and that could, quite frankly, lead to their death. And, it’s no secret that as people age, they come closer to the end of their life. As a result, there is a greater chance that the life insurance provider will have to pay out your coverage to your family. To cover themselves, providers charge a higher rate for people who purchase policies at an older age.
Of course, your age isn’t a factor that you can control; but, you can control when you purchase your life insurance. Purchase your coverage at a young age and you will see significant savings.
Next to your age, your gender is the biggest factor that will determine the cost of your life insurance. On average, women live five years longer than men, which means that they will pay premiums for a longer time than men. As a result, ladies usually receive lower rates than men when it comes to life insurance. This is a factor that you can’t control, and there is nothing you can do to change that. It’s just the way that it is.
Whether or Not You Smoke
Smoking is another huge factor that insurance carriers take into consideration when calculating premiums. Smoking puts you at an increased risk of some serious health conditions, including cancer and emphysema, two things that can seriously lower your life span. Because there is an increased chance that you will pass away at a younger age if you smoke, insurance carriers see smoking as a huge red flag. In fact, smokers can actually pay as much as twice the amount that non-smokers pay for the same type of coverage.
Smoking is something that you can control. If you do smoke, kick the habit and you will pay less for your life insurance.
You will likely have to undergo a medical exam before you receive a quote from a life insurance carrier. This medical exam will assess you height, weight, blood pressure, cholesterol and several other key metrics that play an important part in determining your overall health. If your medical exam illustrates that you have a serious health condition, such as high cholesterol, you will likely end up paying a higher premium.
The riskier your lifestyle is, the more you will pay for your life insurance. If you love driving race cars, or jumping from airplanes, your risk of being in an accident is far greater than someone who enjoys passing their time reading. Of course, this means that there is a greater chance that your life insurance provider will have to pay out sooner, so you will pay more.