The cost of your life insurance

When it comes to any type of insurance, the premium that you are charged is calculated based on the likelihood of you making a claim. So your vehicle insurance premium, for example, will be based on the type of car you drive, the area in which you live, your age and your driving history. Similarly, your home and contents insurance premium will depend on where you live, your security measures and the construction materials of your house “”“ as well as the sum insured.

With life insurance “”“ encompassing term life, trauma, total and permanent disability (TPD) and income protection “”“ what factors can influence your premium? The amount of insurance you require, the terms of your policy and the need for the insurance company to cover their costs plus make a small profit will all play a part, of course, but beyond these variables, here are five of the more common personal traits that will influence the cost of your life insurance:

Your current health and health history:

As mentioned, the cost of insurance is based in part of the likelihood of your needing to make a claim, so your medical history and current state of health is a crucial part of this calculation. Your weight and mental health will be an important determinant, as will the results of a current medical check, your personal medical history and potentially your family history in relation to genetic diseases. As a general rule, the healthier you are and the less complex your medical history, the cheaper your premiums will be.

Your occupation:

Your occupation “”“ and the potential risks of injury, death or illness associated with that role “”“ will partially determine your insurance premiums. As an example, CANSTAR research has found that childcare workers pay a higher per-dollar cost, on average, for their income protection insurance than university lecturers. Similarly, a paramedic can pay more than twice as much, on average, per dollar of income protection than a medical specialist. Click here for more information.

Your hobbies:

Do you indulge in skydiving? Scuba diving? Jetskiing or motor racing? There are a host of leisure activities that can raise the cost of your insurance cover “”“ or alternatively, spark an exclusion.

Your smoking status:

There is no excuse for being unaware of the health risks associated with smoking. And in addition to the costs of tobacco, the increased cost of insurance will also be a hit to your finances “”“ smokers face premiums that are potentially double those of their non-smoking counterpart.

The good news is that if you kick the habit, you can apply to have your premiums lowered. Be aware though that to be classed as a non-smoker you must not have smoked anything at all for a period of twelve months. Even one cigarette over that twelve-month period will see you classed as a smoker for insurance purposes.

Your gender and age:

Really this goes without saying, that the older you are, the higher your mortality risk. Your gender will also play a part in determining your insurance premiums, with the comparative cost of premiums differing according to the cover chosen. As an example, life insurance tends to be cheaper for females due to their longer life expectancy. On the other hand, income protection insurance can be more expensive for females, due to a statistically higher claims incidence.

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