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What affects life insurance costs and eligibility?

Life Insurance and Annuities
by Scott Morrow
What affects life insurance costs and eligibility?
What affects life insurance costs and eligibility?

Many Americans have likely considered the benefits of obtaining a life insurance policy that can protect their loved ones financially for years to come. However, what they may not have thought about is the ways in which their lifestyles might affect their chances of finding the best possible deal on a policy.

For instance, many people likely know full well that, if they smoke or drink alcohol regularly, they're likely to pay more for their life insurance coverage because of the long-term health risk factors associated with these factors. But according to financial advisor Mary Fox Luquette, writing for the Lafayette Daily Advertiser, there are plenty of other behaviors that might be seen as similarly risky, especially as people age.

What to look out for
Other risk factors that could be involved in determining a person's life insurance premiums include their jobs (such as whether they work with chemicals or in otherwise potentially hazardous work environments) and hobbies, the report said. For instance, people who pilot small aircraft or climb mountains tend to have higher premiums than people whose hobbies are a little less dangerous.

To that end, it's also worth noting that the younger people are when they first get life insurance, the more likely they will be to get a low premium, particularly if they are healthy as well, the report said. Even a longer term life insurance policy will tend to come with low premiums if consumers obtain them at a relatively young age and carry few other risk factors insurers might worry about.

A good life insurance plan can go a long way for any family.A good life insurance plan can go a long way for any family.

Other issues that affect life premiums
Meanwhile, there are some things well outside a person's immediate control that would likewise impact their premiums, according to Quotacy. This includes their family health history, which can often be a good long-term indicator of risk. For instance, a person whose grandfather and father have both had heart-related health scares will likely find that insurers think they're at higher risk for suffering similar afflictions.

Furthermore, it's important for consumers to keep in mind that women will tend to have an easier time finding the lowest-cost life insurance because they tend to live longer than men - in part because they're less prone to some of the "risky" behavior as outlined above, and are more likely to see a doctor on a regular basis, the report said.

What about the policy itself?
Finally, it's important for consumers to keep in mind that the kind of policies they're looking to obtain will dramatically affect what they end up paying for the coverage, according to Farm Bureau Financial Services. For example, one of the big reasons many young people tend to say they're not that interested in life insurance is because of how much they think it will cost, but they often overestimate those premiums significantly. This is because they conflate coverage like permanent or whole life insurance with far more affordable term policies that will only last for a shorter amount of time.

While some life insurers are doing away with requirements for medical exams, it can nonetheless be important for those who are concerned about higher costs to keep a close eye on anything they might be able to do to keep their premiums down. Talking with an insurance agent or broker may help them find the best possible path forward when it comes to finding coverage that makes sense based on their financial needs and other factors.

However, because of people's tendency to shy away from life insurance - despite their understanding how valuable it can be - it's vital for those on the business side to make sure they are doing more to get the word out about affordability and other issues that could be areas of concern for people who might have a need for such coverage. Coming together to find solutions that work could help insurers and consumers forge mutually beneficial relationships that last for decades to come.

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