How Your Insurance Premiums Are Calculated

Insurance is about risk management. And insurance companies do not take any risks when they are setting the fees paid by a policy. They want to take precautions to ensure that you will not die prematurely, causing to pay much more than they paid in.

What kind of risks are interested in them? Most of the same health risks doctors, medical researchers and health-conscious people are concerned about - the same themes that you hear again and again if you listen to the medical reports on television or Radio: the use of snuff, cholesterol, overweight, diabetes and other conditions related to poor health and premature death.

To take account of these risks, insurers will designate its state (with a title as the preferred or standard), based on age, gender and health, and that will determine how much to pay for a certain amount of insurance.

To determine their state of health, the insurance company will ask about your medical history and will most likely require you to undergo some type of physical examination. By filling out the health questionnaire “is important to be truthful,” said Jack Dolan, spokesman for the American Council of Life Insurance, an organization that represents many of the largest insurers. If you are discovered and the company can cancel the policy. And if you were to die, and then the company discovered that lied - if, for example, you said you were a non-smoker, but ended up dying of lung cancer from a two-pack a day habit - can deny the benefits death, he said.

There are some risk factors you can not control, such as gender or age. “Women live longer than men, so women have lower rates on insurance, Dolan noted. And because men tend to have shorter life cycles, they pay a lower rate in an annuity. His age also affects the premium. Young, who have much more time to pay premiums before they are likely to die, pay a rate less than an older person is cited. Your family medical history, your lifestyle (do you have hobbies Dangerous or travel frequently to places where they can be exposed to disease or danger?) and your physical condition also come into play.

For most people buy most of the policies, the insurer will ask you to undergo a physical examination. A doctor visit, paid by the insurance company, check their weight, blood pressure and other vital signs, and perhaps take a blood sample and / or urine sample. In some cases, more extensive tests, such as an x-ray or EKG, might be required. His blood and urine samples will be tested for any sign of illness, including the presence of the HIV virus, cholesterol level, and any indications of disorders such as diabetes, kidney problems, hepatitis and other problems. Samples also will be examined to detect the presence of nicotine and certain medications, as well as for illegal drugs.

Each insurance company sets its own rates and determines what constitutes a plus preferred buyer, a buyer of low or any category in the middle. What if you know you have a risk factor? First, his agent warning of the problem the first time that we talk about life insurance policies. It is likely that the agent knows that some insurers charge higher rates for risk factors than others, and he can find a company that does not increase your premiums much for that condition. If it is a controllable risk factor, you can also do what your doctor or your spouse might urge you to do. Eliminating risk factors: Stop smoking. Lose some weight. Take your blood pressure medication regularly. Get healthy.

If substantially improve their health, can alert the insurance company and see if it will reduce its price. There is no danger in this, Dolan said, because “an insurance premium increase ever, but the premium will be reduced when people give evidence of better health.”

Some insurance companies also improve a person qualification, and cut the premium for the risk factors that decrease over time. Dolan gave the example of someone who purchased a life insurance shortly after a bout with cancer. That person is probably paying high risk because the fees health history. But because the risk of the cancer returning diminishes with age, that person can contact the insurer after being cancer-free for five years and could get a lower rate, he said.

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