Life insurance is something that about everybody thinks about, at one time or another. I mean, perhaps you have a family, need a business loan, or need to cover a mortgage.
There are 100’s of reasons why a person may consider life insurance. But oftentimes, people may not think about, how life insurance is priced by the insurance carriers.
Life insurance carriers are obviously in the business of making money. Thus, a person’s health profile and lifestyle help determine an individual’s life insurance premiums. The higher a risk you are viewed, the higher your premiums you are.
In this article, we’ll cover 5 lifestyle habits, that can have an impact on your life insurance premiums.
1. Smoking, Drinking, and Illegal Drug Usage
One of the very first questions that all life insurance companies will ask is, do you use tobacco. Being a tobacco user generally leads to 20% higher premiums on a policy. Companies know that smoking is linked to Cancer, and Lung Disease. If applying as a tobacco user, you’ll pay higher rates.
Another question that comes up is alcohol consumption when applying for life insurance. Consumption, in moderation, is not a major issue. However, if drinking daily, and in excess, companies can charge higher rates, or possibly decline you all together for coverage.
Illegal drug use is another question that companies will ask. If having a past history, companies will ask for details. Past drug use isn’t necessarily a ‘deal’ breaker. However, if currently using illegal drugs at the time of applications, companies will postpone for coverage.
2. Extreme Sports
One often overlook lifestyle habit, is your participation in ‘extreme sports’. This doesn’t include CrossFit or cycling, but rather those activities for people who have no fear of risk.
Some examples of extreme sports include Skydiving, Car Racking, Bull Riding, and Rock Climbing. If you engage in these activities, certain life insurance companies will not consider you for coverage.
Certain companies will gladly insure you, so don’t feel you can’t qualify for coverage. However, companies are going to charge higher rates and will have you explain how often you participate in these dangerous activities.
3. Use of Technology
NOW we know this sounds strange. As technology has evolved, so have insurance companies. People who use technology can actually save money on life insurance premiums.
FitBits, Apple Watches, and other monitoring devices are becoming more common. If you are willing to share your activity and data with an insurance carrier, you’d be eligible for a discount. Even if you’re one of the 30 plus million people with Diabetes, you can benefit from using a Controlled Glucose Monitoring device or an insulin pump. Life insurance with diabetes can be discounted if using diabetes-related technology.
People often think these 6% to 10% discounts are small. However, over the lifetime of a life insurance policy, these discounts could lead to thousands of dollars in savings.
Many people don’t realize that your occupation may have a direct impact on your life insurance rates. Why? The riskier your job, the higher your life insurance rates may be.
Some occupations that companies will charge higher premiums include being an airline pilot, coal miner, or maybe construction worker. These higher risk occupations will lead to ‘table ratings’ on a life insurance policy. The extra table ratings are generally 25% to 40% higher, compared to policies without table ratings.
Having life insurance is important, so don’t be discouraged if you fall into this category. Simply be prepared to pay higher premiums.
5. Foreign Travel
Many people don’t think about how their foreign travel, may impact life insurance rates. In some cases, your traveling could lead to a decline.
Life insurance companies will want to know where you are traveling, and how long you’ll be staying, in foreign countries. In addition, they’ll ask about where exactly, are you staying. Meaning are you staying in populated cities, or areas that are less secure.
Certain companies are viewed as ‘higher’ risks in this current political environment. Staying for extended periods of time in certain parts of the world will make life insurance companies nervous. If you do travel for extended amounts of time, be prepared to provide details to the insurance carriers, about your future plans.
Applying for life insurance is a little more complicated, than simply going to a website and inputting your date of birth. Many factors will come into play and will determine the final offers. It’s generally best to speak with an agent and let them help you navigate the life insurance market place. One company may charge you higher rates due to your lifestyle, while another company may not have any issues with it.