Factors that increase premiums

There are many lifestyle factors that can adversely affect your term life insurance. Insurance agencies are technically allowed to discriminate against these lifestyle choices as long as they do so uniformly. This means that if the insurance company is going to increase rates for one person within a risk category, they must do so with all people who fall within the scope of the category.

The most obvious risk factor is whether the proposed insured is a tobacco user. Because tobacco is proven to cause cancer, and thus poses a greater health risk, insurance companies now will charge a higher rate for tobacco users. With most companies, this factor is built in; in fact, many companies have specific policies for tobacco users. Standard: Tobacco User, or Preferred: Tobacco User are two common policy sub-classes. Preferred-Plus policies, or other top-tier policies, are generally not available to tobacco users.

Your employment status is also a point of contention. High-risk jobs can lead to higher premiums. Average employees will pay less for the same face value in this situation. Oil rig workers and miners may be included within this category. Your hobbies can also lead to an increase in premiums. Mountain climbing, white water rafting, and skydivers all will be penalized, either with higher premiums or complete rejection from the policy they have applied for.

One final thing to take into account is that the insurance agent you meet with is not the person who will decide which sub-class you fall into. They will use their best judgment to place you within a specific policy and collect that premium from you, but it is the underwriter assigned to your application that makes the final decision. Of course, the underwriting process is different from company to company. The rate at which the proposed insured is penalized will then vary depending on which company you look at. If one company’s decision seems unfair to you, it may be worthwhile to pursue a policy with a different company.

Matthew G Young – TermLifeInsurance.org Expert is a New York State licensed Life, Accident, and Health Insurance agent. He is also the author of The Complete Guide to Investing in Annuities: How to Earn High Rates of Return—Safely. Matthew currently resides in Western New York with his wife and family.