Term life assurance: factors that affect your premiums

Term life insurance is a highly affordable type of life insurance and this is because it provides temporary cover and the risk of a claim during the term is smaller.

That said, there are still underwriting considerations when evaluating your policy application. And it will be good for us to know the things that could affect the premiums of our policy. Remember, the greater the risk you present, the higher the premiums will be. If a risk is deemed big enough, the insurance policy may even deny your application.

What if you are already sick?

If you say, “Yes, I have an existing medical condition”, there are a number of factors that are taken into consideration, along with your illness.

  • Age at diagnosis. Those who are diagnosed with certain illnesses at 40 years old and below may result in the application being denied or charged with heavy premium ratings.
  • Smoker status.
  • Family history.
  • Medical report, including frequency and severity of attacks, when applicable, as well as history of hospitalizations.
  • Results of diagnostic tests. This is to determine the severity of the illness.
  • Treatment provided. Underwriting will look into the medical procedures provided to treat the illness.
  • Lifestyle modifications. If the applicant made positive lifestyle modifications, this can be a plus for underwriting.
  • BMI. The higher the BMI, the higher the possible rating.
  • Occupation. One’s occupation may exacerbate an existing illness.
  • Alcohol consumption.

Here are some risks that the insurance company will look into:

Your Smoking Habit

Smokers have a considerably higher mortality rate than non-smokers. Smoking exposes you to more health risks – more cancers and other terminal diseases. If you disclose that you are a smoker, you should expect a higher premium rating. Now, you can always apply for reconsideration once your policy is issued. You just need to prove that you have not been smoking for at least a year. For more information on how smoking can affect your premiums, go here: Smoking and Term Life Insurance

Your Occupation

There are some occupations that are considered high-risk. Examples will be people who have a higher exposure to danger – those working at certain heights (construction workers, pilots, window cleaners), exposed to possible catastrophic accidents (those who directly work in the oil and gas rigs) and those whose job is intrinsically dangerous such as firemen, policemen and members of the Armed Forces.

Medical Condition

How healthy are you? Do you have an existing chronic illness? Chronic illnesses are illnesses that can only be managed and will not go away. The insurance company will also look into your vital health statistics – weight, height, blood pressure, etc.

Family History

Your propensity to acquire a certain illness can also be traced using your family history. This includes first-degree blood relatives such as your parents or siblings. When your term life insurance policy is evaluated, they will look at any diseases your family has been diagnosed with before the age of 60. Some diseases that post a red flag during an evaluation of family history include:

Based on Friends Life Underwriting, term life premiums may be applied with various ratings:

Disease Family History Rating
Heart disease or stroke 2 relatives diagnosed at ages 40 to 65 Light rating
Colon cancer 2 relatives diagnosed before age 60 Light rating

Hobbies and Dangerous Sports

Are you one in search for an adrenaline rush? People who indulge in dangerous sports and hobbies such as race care driving, motocross riding, scuba diving and horseback riding may be placed under the high risk category.

One word of advice: you should be honest in your policy application and make full disclosure based on the questions you see in the application. In most cases, there is a two-year contestability period. If you fail to make disclosure and something happens during the contestability period which relates to a disease, sport or occupation you failed to disclose, this may mean that the insurance company may deny your beneficiary’s claim.

Updated on: 04.06.2013

To secure your family's future, fill in the form on the right and get your term life insurance quote now.

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*Scottish Provident 2012 life cover claims paid report.