Reply To: life Insurance product pricing
Vanshika Gupta
The cost of life insurance is dependent on many factors. The main factors that heavily affect the pricing include the type of life insurance you buy, your age, and your health. Life insurance pricing is determined by your level of risk. The life insurance underwriters give you a risk class when evaluating your application. Basically, the lower your risk of death, the better your risk class will be. The better your risk class, the lower your premium payments. If insurance companies didn’t assign risk classes, then healthy individuals would pay the same price as their less healthy counterparts. This doesn’t make sense for you and it doesn’t make sense for the life insurance industry.
People in excellent health without any big risk factors for coverage will most likely be given Preferred Plus—also giving them the lowest possible premium payment. Those with health problems will often be approved at a higher risk class, meaning a higher cost of coverage. If you are a cigarette smoker, you will receive a tobacco risk class. Smokers and tobacco users have their own set of prices due to the effect smoking has on a person’s health. For people who have quit smoking, the amount of time that has passed since you quit will determine which non tobacco risk classes will be available to you. Being substandard means that there are certain factors that place you outside the normal range of risk the insurance company typically insures. If you’re substandard, the insurance company will table rate you or add a flat extra to your premium