Five Causes Of Rising Life Insurance Premiums
September 9, 2008
Have you been wondering why your life insurance premiums have been getting more expensive? There are actually a number of reasons or factors that can contribute to premium cost increases. In most cases, if you are in reasonably decent health and you live a low risk lifestyle, you can expect to have low cost life insurance coverage. If either of these two conditions changes your insurance premiums could go up. Since there are genuine factors that should be taken into account when it comes to life insurance coverage, it may be instructive to list them. You should know how they affect your premiums and whether you can do anything to control these affects.
According to a number of independent reports, the typical cost of term life insurance has been lowering over the last ten years or so. These figures include both men and women who are non-smokers. Moreover, the lowered costs are said to be a consequence of longer average life spans from both genders throughout the same timeframe. What could be the reasons for this decrease?
Life insurance companies have certain criteria with which they determine the amount the premiums they charge customers. They focus their attention on the levels of your relative risks, which can seem like a contrived or arbitrary condition to those who do not see the whole picture.
You should consider matters in this way: When a company evaluates your relative health and lifestyle, they are going to looks for reasons to believe that you may die sooner or within the limits of your policy so they will charge you more for coverage. In these internal deliberations, a prospective client’s age, health, and lifestyle are all potential causes for higher life insurance premiums.
Women will pay less for coverage because their life expectancy is longer than a man’s is. Premiums do increase as you age, so the sooner you get coverage the less you will have to pay for your life insurance coverage.
Conditions such as hypertension, diabetes, obesity, and having high cholesterol influence how much you will pay for coverage. Smoking and obesity in particular are expensive in insurance terms. Obese people can expect to pay about 50% more for life insurance and a 35 year old male smoker can expect to pay around $26 to $30 a month for coverage. All of the above conditions translate into a higher level of risk for the insurance companies, because they reduce life expectancy.
Your own health and your family’s medical history both help determine the premium costs. Conditions such as diabetes, heart disease, or cancer will cause the costs to rise. It does not matter whether or not if it is in your family or if you are the one who has it, the risk factor is still considered the same.
The price of your life coverage will be higher if your occupation is risky, such as a high-rise window washer, or if you have any high-risk hobbies such as mountaineering or motorcycle racing.
Your unique combination of health and lifestyle factors will determine the price you pay for life insurance premiums. If your lifestyle and occupation are low-risk, your health will be the most important factor that determines how much you pay.
It is also extremely important to be thoroughly honest about your health and lifestyle when applying for insurance. While factors such as smoking or a family history of diabetes or heart disease will increase your costs, false information will invalidate your policy.
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You mentioned term rates have been decreasing for 10 years, in general. However, due to the current economic conditions, many life insurance carriers are finally increasing their term life prices. This includes Anico life, West Coast Life, Protective Life, and now we’re looking at big increases by Reliastar (ING), whose products are due to increase on April 27th, 2009, and American General.
Part of the problem is the life settlement market. This is the sale of a senior’s life insurance policy to a 3rd party investor, like Life Partners Holdings or Coventry. In the past, the insurance carriers could count on 90% of all their UL policies to lapse. Now, however, the carriers must account for owners potentially selling their policies. The investor pays the premiums until the insured dies, and the carriers now have to pay out on a higher percentage of death claims.