Life insurance companies are businesses just like any other. Therefore, they are in a business of making money and they make money by charging a premium that’s based on your life expectancy.
As a result, the premiums are determined by the risk category of the policyholder. It is important to understand that some lifestyle habits can affect the cost of your life insurance.
The cost of your life insurance is determined by the rate of mortality i.e. the higher the rate of mortality the higher the cost of your insurance. Some of the factors that determine your life expectancy can be under your control while others are beyond your control and you cannot do anything about them.
Here are 10 Lifestyle Habits that You Should be Aware of
1. Smoking and drinking
The risk of death affects the rate of insurance directly. Smoking is associated with a number of health risks e.g. cancer and other fatal illnesses.
As a result, you will end up paying more if you are a smoker and quitting smoking will help you pay lower life insurance premiums.
There is a significant difference between smokers/drinkers and non-smokers/non-drinkers because these habits affect your health and consequently your insurance premium. When an insurer is applying for insurance, there are certain questions he/she is asked especially if he is a smoker/drinker.
The number of cigarettes one smokes in a day and the units of alcohol one drinks in a day or a week to determine the level of risk on his/her health. The more you smoke or drink will make you pay higher insurance premiums because the risk of getting ill or death is high.
2. Adventurous Sports
If you engage in adventurous sports like sky diving, wrestling, and car racing, your insurance cost can be very high because these sports are classified as high risk.
Chances of sustaining injuries or dying are high and these are some of the reasons why your premium is usually high.
If you are looking to reduce your premium, you can either stop engaging in these sports or reduce the number of adventurous activities you engage in.
In addition, getting necessary training from a professional is advisable to boost your skills and level of experience when engaging in these sports to reduce the level of risk.
3. Occupation
Your current profile and job play a huge role when determining your insurance cost. For instance, if you are working in a mining job, as a pilot or any other high risky job, your professional hazard increases and so is your premium.
This means that policyholders who work in administrative jobs or occupations that are less risky are charged lesser premiums.
It is also important to understand that where you live or work in can determine your premium because the location can either increase or reduce the level of risk you are exposed to.
4. Taking Drugs
Taking illegal drugs like cocaine, marijuana and heroin can impact your life insurance cost.
When applying for insurance, you will have to pass a pre-medical test that will help your life insurance provider determine whether or not you take drugs.
During the drug test, you will either turn out to be a drug user or not and this will determine your premiums. If you test positive, you will have to produce more documents to prove that you don’t take drugs or your insurance application will be denied.
The reason why life insurance companies emphasize whether you take drugs or not is because consuming can affect your health and even cause death especially if you are addicted or you are taking the drugs irresponsibly.
When your application is rejected, you will have to explain the reason for rejection when applying again in the future. This is done to ensure that the same reason won’t bar you from getting insured again.
5. Your Lifestyle & Bobbies
Nowadays, people have adopted different lifestyles depending on where they live, their preferences and their financial capabilities. This has greatly affected the health of many people thus having an effect on the cost of their life insurance.
Working for long periods of hours, failing to have time to exercise, poor diets and eating junk foods are some lifestyles that are associated with poor health.
When applying for insurance, your insurer will evaluate specific factors e.g. your medical condition, height, and weight to determine your premium. If you are not found to be healthy or if your lifestyle affects your health, your cost of insurance goes up to compensate for the risk.
6. Lying When Applying for the Insurance
One of the principles of insurance is the doctrine of utmost good faith that requires insurance holders to disclose all the necessary information. The insured should inform the insurer if he/she has any terminal illnesses and whether he/she works in a high-risk area.
In case the insurance company finds out that you have lied about anything while you were applying, the insurance company will find out about it and you risk a possible rejection of the claim by the insurer.
Therefore, when applying, you are required to disclose all material fact and personal information.
7. Weight
When applying for insurance, your height and weight play a huge role because they affect your health. The insurance company will determine whether you are healthy by calculating your BMI i.e. Body Mass Index.
The BMI will show whether you are overweight or underweight and this affects your health directly. For instance, if you are obese, chances are high that you will have heart-related problems, diabetes, and hypertension.
Therefore, if you maintain your weight by eating healthy and exercising regularly, you will save more in the long run.
8. Foreign Travel
Your insurance cost is affected by the frequency, time, duration and destination of your foreign travel. Your destination affects your insurance because you might be traveling in a high-risk country or an area e.g. a destination affected by regular terrorist attacks.
Some countries are considered to be high-risk areas and you will end up paying more for your coverage depending on how often you travel or the amount of time you spend in these countries. Foreign travel is also associated with the risk of means of travel i.e. flying is considered as a high-risk means of travel making it one of the reasons why you will end up paying more for your insurance.
Traveling on a regular basis will make you pay more due to the inherent risk associated with your means of transport when traveling to or in these foreign countries.
9. Driving Record
Your driving record not only affects your auto insurance but also your life insurance. If you have several violations or you have been involved in a number of accidents, you are considered as a reckless driver and you will end up paying higher interest rates.
Your driving record not only affects your insurance rate but also your acceptability too because the record is evaluated by your insurance company before signing the contract.
If your driving history is bad, insurance companies tend to think that you are a high risk to insure and you will either end up being rejected or paying a lot of money.
10. Marital Status
Even though being married does not affect your life insurance rates directly, you can save a lot of money if you and your spouse purchase a life insurance policy together.
However, if one of the spouses is healthy while the other has significant medical problems, the best decision is to have two separate policies.
The healthy spouse can choose a low-cost plan that has more out-of-pocket costs. This will not only help the couple save money but also have the best insurance coverage for the family.
You Can Change Some Habits
It is evident that the cost of your life insurance is affected by a number of factors which you can try to change while others are out of your control.
If you can be able to change some of these factors, it is advisable you improve your health so that you can reduce the total cost of getting an insurance cost.
It is hard to change some of your behaviors or habits but you should try to change gradually. Here are some lifestyle changes you can try:
Improve your diet and exercise regularly
Eating healthy foods and exercising boosts your health because you lose weight and avoid certain medical conditions.
Quit smoking
If you are a smoker, you can try to quit smoking or reduce the number of cigarettes you smoke in a day to improve your health and finances. You will not only save the money you use to buy cigarettes but also your insurance costs. However, it is important to understand that there is a specified minimum period of time you need to quit smoking before lower premiums take effect.
Therefore, you will have to be willing and determined to quit smoking to benefit.
Moderate Drinking
Moderate drinking is recommended because it improves your health and helps you reduce your premiums.
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