Wednesday, 11 September 2013

How to reduce your Life Insurance Premium

family portrait, healthrisks, reduce life insurance premium
Copyright – By Eric Ward, via Wikimedia Commons

There are a number of motivations for buying life insurance: one of the biggest reasons is that it ensures a secure future to your dependents by replacing your income if you pass away before them. It will also cover medical bills and funeral costs up to a set amount, and cover or pay off a mortgage.

Various factors influence how your life insurance premium is calculated, such as age, occupation, financial information, health, family medical history and lifestyle habits. Although you don’t have any influence over the medical history of your immediate family, or your age, you do have direct control over your lifestyle choices. These could potentially have a large impact on your life insurance premium, so take note.

Stop smoking
The stark fact is that if you don’t smoke, you’ll be healthier and negate the risk of contracting more than 50 serious health conditions associated with smoking. In fact, smoking is one of the major causes of death and illness in the UK. A non-smoker is more likely to live longer (the NHS states that if you quit smoking before you turn 35 you're likely to have a full life expectancy; but for every year after 35 that you continue to smoke, you’ll lose an average of three months off your life.

Maintain a healthy weight
If you’re living a healthy lifestyle, eating well and getting regular exercise you should be able to maintain a good weight for your age and height. It’s no secret that being overweight can lead to severe health problems in the future, which means life expectancy is lowered. This suggests that the risk of the insurance provider having to make a pay out is seen to be higher, creating a higher premium for the customer.

Limit your alcohol intake
Similarly, those who drink more than the recommended intake of alcohol are likely to pay higher life insurance premiums. Alcohol also poses healthrisks which make you less desirable to insurance companies. Reduce your drinking and you reduce your premium.

Avoid high risk hobbies
This doesn’t mean the same as avoid fun. But the more activities you engage in which are deemed to be high risk (extreme sports, motor racing and so on), the more likely it is that your premiums will be higher. The insurer will gauge how the activity could potentially affect your health but will also consider any relevant qualification and experience doing the activity.

Be a careful driver
Drinking violations don’t just affect your car insurance quote. When applying for life insurance, your driving history plus any fines, convictions or points on your licence will be looked at. The cleaner your licence, the lower your premium.

Shop around
You want to make sure you get the best quote and premium to fit your medical history and lifestyle choices, so it’s important you evaluate insurers. By using a comparison website like Compare The Market, you’ll have access to some of the country’s leading providers of life insurance, all in one place.

Don’t lie!
Don’t try to pull the wool over the eyes of the insurers: you could potentially end up worse off if they find out. If you lie about a medical condition or any lifestyle factors, they could hike up your premium or cancel it altogether. You also run the risk of being “red-flagged” so that other insurers know you lied during your application, and your beneficiaries may be denied death benefit.

Disclosure: This guest post is brought to you by Compare the Market