Getting life insurance isn’t a process anybody relishes. Like buying a fire alarm or a smoke detector, it’s money you spend in the hope that you’ll never actually make a return on it – because if it becomes useful to you, it means something has gone wrong. It’s not the most exciting topic in the world, but for many people, it’s a necessity.
Whether it’s life insurance or health insurance you’re looking for, it’s not a simple case of just paying a set price for a set amount of cover. Buying insurance isn’t like walking into a shop and buying your groceries; there are various nuances that can affect the price you pay. That’s why you and your best friend might pay completely different prices for the same level of cover, even though you’re roughly the same age, and have broadly similar lives.
Insurers have the same mindset as you when it comes to your purchase of life insurance, but the other way around. You hope you never have to use it. They hope you’re never going to claim on it! Offering large sums of insurance cover is a gamble to them. If they have to pay out, it will almost certainly cost them more than you ever paid in, so they make a loss. It’s like playing mobile slots in reverse. If you’ve ever played online slots, you’ll know that success depends on putting money in again and again until you land a winner. Mobile slots websites make their profit forecasts based on a formula that estimates how much more money they’ll take in profit than they pay out in winnings. Insurance companies do the same, but they calculate how much more they’ll take in monthly payments than they’ll pay out in claims. That doesn’t mean that they won’t pay out a valid claim, though. It just means that some policies cost more to own.
A lack of understanding of why life and health insurance costs the amount it does can cause a lot of people to hold off on buying it. That isn’t a good thing. We already know that not enough Americans have life insurance, and the same is true of many developed European nations. With that in mind, we want to explain a few of the factors that you probably didn’t know affected your cover.
Your Waist Size
This always catches people by surprise! When you’re filling out a life insurance application, it’s increasingly common that you’ll be asked for your waist size. It feels like a personal question, and it can be hard to understand why it’s relevant. The answer is that a person’s body mass index isn’t always an accurate picture of whether or not they’re overweight.
Someone who is overweight is statistically more likely to suffer from heart problems, along with other health conditions. That means they’ll pay more for their insurance because they present a larger risk to the insurer. Someone with a lot of muscle isn’t necessarily overweight but might appear, so if all you know about them is their height and their weight. That makes waist size relevant. The information tells the insurer whether you’re carrying too much weight around your middle for your height. If you are, you can expect to pay more for your cover.
Your Leisure Activities
What you do in your spare time doesn’t immediately appear to be any of your insurer’s business. When you stop and think about it, though, it is. You’d probably expect to pay more for your insurance if you worked in a dangerous job. If you work with hazardous chemicals, for example, you’re at greater risk of having a serious accident than someone who works in an office.
Information about your occupation only covers what you do during business hours, though. You might work in an office Monday to Friday, but go mountaineering on weekends. Again, that puts you at risk. If you also want coverage for health conditions or accidents, even tamer activities like playing contact sports can become a factor. You’re more likely to break your leg playing sport than you are sitting on the sofa at home. That increased likelihood of misadventure will be reflected in your costs.
The Health Of Your Family
So, you’ve reached the end of the insurance application form. You’ve been asked every question you could imagine about your health and lifestyle, and a few more that you hadn’t imagined. Why are you now being asked about your family’s health background? The unfortunate truth is that even if you’re completely fit and healthy, a history of health problems among your immediate family suggests that you’re more at risk than the average person.
Some illnesses are considered to be hereditary. Heart attacks, strokes, some forms of cancer, and some neurological conditions can be passed down from generation to generation – even if you’ve shown no sign of having the illness. It may feel a little unfair, but having a family history of poor health can increase the price of your insurance even if you haven’t been to see a doctor in years. That’s just the way the industry works. The (relatively good news) is that the majority of insurers only take your immediate family into account with this question. That’s parents, brothers, and sisters only. Illnesses that affect half-siblings, grandparents, aunties, and uncles aren’t taken into account.
There are other factors that might change the cost of your insurance, too. If you used to smoke five years ago but have since given up, you’ll still pay an increased rate with some insurers on the grounds that you’re a former smoker. Other insurers will only concern themselves with people who have smoked within the past twelve months. That’s an excellent reason to always seek the advice of a professional before taking any insurance policies out. Not all insurers are the same – each of them has their own philosophy on health conditions and lifestyle choices, and those philosophies are reflected in their costs. An experienced adviser will know which of those insurers will make the best option for you based on your circumstances – so take advantage of that knowledge.