Life insurance is a great way to ensure that your family and dependants will be financially secure in case of your death. This is a very important step, especially when you are an earning member of the family, since you can never predict when your demise could occur. In case of an untimely death, your family would be left with no support if you do not have insurance.
An insurance cover will not be able to prevent anything from happening in your life, but will provide compensation to your nominees in case it does. The question always arises – What are the factors that affect the estimates you are given?
Factors that Affect Term Life Insurance Estimates
Insurance providers try to cover their own potential losses, so they will evaluate how risky you are as a candidate. The factors listed below help them assess, as far as possible, the chances that the policy holder might face death:
Age – As you get older, the estimates you are given will increase, since you will be considered as having a larger risk of age-related health issues or disorders or simply the end of an average natural lifespan.
Health – You will be given a medical examination with tests that will determine your current health before you are given an estimate. The better your health, the lower will be the estimate, since you are less likely to die of a disease or medical issue during the term of the policy.
Medical History – Along with your current health, past medical conditions and family medical history will also be taken into account. If you or a family member have had a life threatening disease or medical condition that may re-occur, you can expect a higher estimate for your policy payments.
Driving History – This is one of the lesser-known factors, but insurance companies always check your driving record before they decide whether you are a risky candidate. If you have been involved in accidents or drunk driving in the past, these could occur again, leading to an untimely death.
Occupation and Activity Risks – If your occupation is one that involves risks to your life or you indulge in hobbies that are dangerous, like adventure sports or car racing, the estimate will be higher. If you have a lot of experience or certification that shows you are not likely to be in danger, this may be helpful in lowering that quote.
Credit History – This is another factor that is not normally discussed, but your credibility with regular payments in the past will be used to assess the risk. If your credit history is good, the company will feel more secure with signing you on as a policy holder.
Even for people who are single or have no dependants, a life insurance policy works as an investment for the future, since they accumulate returns that are paid back to you. Other than the amount that is assured in case of death, a term life insurance policy works as a secondary form of investment as well!