subject: How Are Term Life Insurance Rates Calculated? [print this page] Life insurance premiums vary between each insurer and you may ask the question why. One of the main reasons behind the differences is because each insurer will assess the risk of offering you cover differently.
Factors contributing to term life insurance rates
When calculating rates, an insurer will typically look at your age, gender, and smoking status to help determine your premium. The insurer may also factor in things like your body mass index (BMI), occupation, lifestyle, and medical history.
Generally speaking, males pay more than females; and smokers also pay more than non-smokers due solely on life expectancy. So the healthier you are, the lower your premiums usually are.
Are your term life insurance rates high?
If you believe your premiums are higher than the average person, some of the above reasons may apply - such as poor health or hazardous occupations and past-times
Another reason why your premiums could be higher than average, may be due to the company you bought the policy from. Ask yourself if your insurer asked you a lot of questions when applying for cover. If your insurer did not ask many questions when you applied for cover, then they have not assessed your level of risk very extensively, possibly resulting in a higher premium.
No matter what the cause of your higher premiums may be, you usually have the option of obtaining another quote from a different insurer.
Be sure to compare apples versus apples as there can be big changes in premiums costs by not comparing like with like.
Compare term life insurance rates
When comparing rates, be sure to obtain a number of quotes. Apart from the final premium, you may like to compare definitions outlined in the product disclosure statement (PDS). You may also like to compare any built-in or optional benefits that may suit your situation.
One particular benefit which many people have found useful is the funeral advancement benefit. There are also benefits and clauses which may be valuable depending on your occupation. Again, you should read and compare the PDS for each company.
Term life insurance in Australia
Premiums in Australia do vary, and it is certainly worth your while obtaining a few quotes and making a comparison. You can choose to do this yourself, or have an online comparator complete this task for you. You also have the option of speaking to a financial adviser who can help you make an informed decision.
by: Grant Main
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