How Your Insurance Premiums Are Calculated
When it comes to insurance, it is all about managing risks.
That is why insurance companies do not take any risks when it comes to setting rates for premiums.
After all no company would want to pay out more death benefits than what an insured has paid.
This usually happens if an insured dies prematurely.
Therefore, it is important to know how insurance premiums are calculated.
The risks that insurance companies are interested in are health risks.
They are looking at tobacco use, cholesterol, overweight, diabetes and many other conditions that are linked to poor health and early death.
Insurance companies account for these risks by designating your status as preferred or standard.
This designation takes place based on your age, gender, and health.
And, ultimately it is that determines how much you will end up paying.
To figure out how healthy you are, insurance companies will ask you for your medical history.
Most insurance companies also insist that the insured undergoes a physical examination.
When you are filling out a health questionnaire supplied by the insurance company, it is imperative that you are honest and truthful.
In case you are caught lying, the insurance company can cancel your policy.
There have been instances when people have lied and insurance companies have found out after the death of the insured; resulting in denial of death benefits to the beneficiaries.
There are certain risk factors where you have no control over.
For example, your age and gender.
Women tend to live longer than men and this means women will have lower premium rates.
If you are young, it is assumed that you will die later so your premiums will be lower compared to an older person.
In addition, your lifestyle, physical condition and family medical history is also taken into consideration when calculating your insurance premiums.
If you know you have a particular health condition that can be construed as a risk, alert your agent.
Your agent will then try and look for an insurance company who will does not quote a very high rate for that particular condition.
Now that you know how insurance premiums are calculated, you are in a better position to negotiate on premium rates.
You can also work towards eliminating risk factors like reducing weight, taking your blood pressure medication and generally getting healthy.
You can inform your insurance company about your improved health to see whether they will recalculate your premiums to give you a lower rate.
That is why insurance companies do not take any risks when it comes to setting rates for premiums.
After all no company would want to pay out more death benefits than what an insured has paid.
This usually happens if an insured dies prematurely.
Therefore, it is important to know how insurance premiums are calculated.
The risks that insurance companies are interested in are health risks.
They are looking at tobacco use, cholesterol, overweight, diabetes and many other conditions that are linked to poor health and early death.
Insurance companies account for these risks by designating your status as preferred or standard.
This designation takes place based on your age, gender, and health.
And, ultimately it is that determines how much you will end up paying.
To figure out how healthy you are, insurance companies will ask you for your medical history.
Most insurance companies also insist that the insured undergoes a physical examination.
When you are filling out a health questionnaire supplied by the insurance company, it is imperative that you are honest and truthful.
In case you are caught lying, the insurance company can cancel your policy.
There have been instances when people have lied and insurance companies have found out after the death of the insured; resulting in denial of death benefits to the beneficiaries.
There are certain risk factors where you have no control over.
For example, your age and gender.
Women tend to live longer than men and this means women will have lower premium rates.
If you are young, it is assumed that you will die later so your premiums will be lower compared to an older person.
In addition, your lifestyle, physical condition and family medical history is also taken into consideration when calculating your insurance premiums.
If you know you have a particular health condition that can be construed as a risk, alert your agent.
Your agent will then try and look for an insurance company who will does not quote a very high rate for that particular condition.
Now that you know how insurance premiums are calculated, you are in a better position to negotiate on premium rates.
You can also work towards eliminating risk factors like reducing weight, taking your blood pressure medication and generally getting healthy.
You can inform your insurance company about your improved health to see whether they will recalculate your premiums to give you a lower rate.
