Life insurance is one of the best ways to provide financial protection for your family. While your auto insurance or health insurance plans provide coverage for you, your life insurance policy provides a death benefit to your family should the unexpected happen to you. The type of life insurance and the amount of coverage you need are two important factors to consider when looking for a policy. Other variables that relate to your specific circumstances will also have a bearing on your policy.
It is estimated that less than half of all Americans believe themselves to be knowledgeable about life insurance. This is particularly true when it comes to factors that impact premiums. Like all other types of insurance, your life insurance policy must go through the underwriting process before an offer of coverage is extended. During this process, the insurer will look at your specific profile and situation to determine your risk to the company. The insurer is basically considering how likely it is that they will have to pay out for your policy. Factors like your age and medical history play a major role when companies offer a quote for life insurance. Let’s take a look at some of the things that will impact your life insurance quote.
Type of policy
The first thing you will need to consider when looking for life insurance is the type of policy you need. Term life insurance only provides coverage for a specific period of time. These policies tend to be less expensive as they aren’t permanent and carry no cash value. Usually, individuals seeking to provide a death benefit financial protection to cover mortgages, child care, and other obligations consider a term life policy. When the policy expires, mortgages are usually paid off, and dependent children have grown up and moved away. Whole or permanent life insurance tends to be more expensive but will be valid as long you make monthly premium payments. These plans can also earn a cash value benefit over time and allow policyholders to borrow against the policy.
Amount of Coverage
The amount of life insurance you need will depend upon your goals for your plan. Most people consider life insurance when they are younger and have a spouse and children relying on their income. A death benefit could be used to pay off debts, provide for final expenses, or cover family financial obligations. The amount of insurance you need will determine your monthly premium and impact your life insurance quote.
Age and Medical History
As discussed, when considering a life insurance quote, insurers will examine the risk that you pose. Your potential longevity is what your premiums and coverage options will be based on. Insurers will consider your age and current medical condition as an indicator of how long you might live. The majority of insurance companies require that you undergo a medical exam before coverage can begin. Additionally, the insurer will also want access to your medical history to look for signs of previous illness and potential risks. When it comes to getting a life insurance quote, the healthier and younger than you are, the cheaper your premiums will be.
Your risk factors will also include your occupation, hobbies, and lifestyle choices. Insurers consider firefighters, miners, and fishermen, for example, to be in high-risk occupations. Additionally, hobbies such as mountain climbing or car racing will also throw you into a higher risk classification. Having jobs or hobbies that could increase the risk for injury or death will lead to inflated premiums. Smokers are also considered to be high-risk for specific health problems and will pay more for life insurance.
No matter your circumstance, life insurance policies are available for people in just about any situation. Understanding the factors that will impact your premium and shopping around for quotes will allow you to find the best rates and policies for your needs.