5 Factors that Affect Insurance Premium Pricing
One of the principles of insurance is that the risks to insure someone or something should not be higher than the payment to be made in the future to the insured or his/her beneficiaries. As such, bancassurance insurers consider a wide variety of factors when pricing premiums. Here are some of the most important.
Arguably, age is the most critical factor in determining your insurance premium. Getting an insurance policy while you’re young means paying lower premiums because the assumption is that you’re still several years away from claiming benefits. During your young adult years, you’re most likely to be in the prime of your health, which can lower your insurance cost.
Women may be offered lower life insurance premiums than men because, statistically speaking, women tend to outlive men by five years on average; thus, they pay premiums for a longer time.
When it comes to medical insurance, it’s the other way around—women are considered riskier to insure than men because they usually incur more doctor visits, not to mention that they may require maternity benefits on top of their medical insurance.
Your lifestyle also plays a vital role in getting you affordable premium rates. In this category, everything from your hobbies to your daily routine and health habits are added into the equation to help your insurer determine your risk level as a policyholder.
For example, if you’re into extreme sports, you can expect to pay higher premiums than if you’re an enthusiast of less dangerous sports. Being a smoker or non-smoker is also a major concern to your insurance provider, so consider avoiding the habit to fetch the best rates for your premium.
4. Family medical history
Aside from your health being dependent on your lifestyle choices, genetics may also determine how healthy you are or otherwise. If genetic medical conditions are present within the family, it could mean that you’re also prone to these ailments.
For example, if you’re a woman whose mother or female sibling has had breast cancer, you may also be at risk even if you’re generally conscious about your health and lifestyle. For males, having a history of critical illnesses such as heart attack or prostate cancer is considered a risk factor, too.
Consequently, these health issues can affect the insurance premium your provider will collect from you.
If your job entails working in service-oriented industries with a lot of customer-facing interactions or operating heavy machinery as an overseas Filipino worker (OFW), the level of stress or danger you get exposed to may bring up some red flags for your insurance provider.
Your application can be approved, but you have to be ready to pay higher premiums than those working in less stressful or risky conditions.