How are life insurance premiums calculated?
If you are thinking about purchasing a life insurance policy, you may be wondering how much your policy is going to cost you and how that amount will be decided by the insurance provider. There are several factors that are taken into consideration when an insurance provider is creating a policy for a customer. Your age, health, standard of living, family history, income, career and many other factors are considered. The assessment of all of these factors combined helps the insurer to decide on a reasonable amount to charge a customer for a policy.
The reason you purchase a life insurance policy is to protect you from an uncontrollable risk. When you are given a policy, the insurance company is telling you that they believe that you are unlikely enough to pass away that they are willing to pay you money if you do. It is a gamble for the company and therefore they must be cautious when decided on a premium amount to charge. If you live a high risk lifestyle, you are more likely to pass away, and you are a higher risk to the insurance company. Therefore, your premiums will be much higher. If you live a conservative lifestyle, are in good health, live in a good city, you are a lower risk overall and your premiums will be much less.
It is important to shop around when looking for a life insurance policy, because each company will charge different premium fees and offer different amounts of coverage. If you would like to get a quote on a life insurance policy today, fill out our form and speak to a specialist who can help you find the best rate on the perfect policy for you!