Factors Affecting the Magnitude of Life Insurance Premiums
Everyone who uses insurance must know the term premium. Premium is the amount of money paid each month or every year that is used as security deposit. Life insurance premiums paid by the insured to the insurer amount varies depending on many factors. In life insurance, premium prices are influenced by internal and external factors.
Factors Affecting Life Insurance Premium: Internal
Factors affecting the large-small amount of the first premium is the internal factors or factors that come from the insurer (life insurance companies) not from the insured (life insurance customers). This is what determines the calculation of life insurance premiums that must be paid by the customer later. These factors are:
- Investment Result of the Company; If a life insurance company gets a high investment return on the funds it has managed, then the cost of premium payments to be paid by customers will be cheaper, and vice versa. No wonder most cheap premiums come from big insurance companies and have good management
- Calculated Expenses on Expenses, Taxes, Income, and Other: The cost of insurance premiums is determined by taking into account the expenses incurred by the insurer. If the possibility of spending a lot, then the premium will also be raised the price. Vice versa.
- Benefits of Protection: The insurance premium is of course determined by the product you choose. Different products definitely different benefits and guarantees offered. Because different benefits that, then the price of the premium was different. The wider the coverage you want, the greater the premium you have to pay.
Factors Affecting Life Insurance Premium: External
In addition to internal factors of the company, the price of a pure life insurance premium is also determined by factors sourced from the insured. The higher the risk of a prospective customer, the premiums charged will be greater. Several factors that affect the premium price that comes from the insurance customers are:
- Age: The younger the life of the insured, the easier it will be accepted by a life insurance company and the premium is cheaper. Because the risk of death and the disease is smaller than the elderly. The cheapest life insurance premium is usually reserved for people who are likely to die a little.
- Gender: Usually the client of the female sex will be charged a premium that is more expensive than male customers. That's because women are more susceptible to disease both physically and psychologically.
- Height and Weight: The higher and the weight of a person, the risk of death will be higher, because someone with weight above the average will be more susceptible to illness. Therefore, usually bigger customers will be charged a higher premium cost than those who are small.
- Occupation: Job type factor of course affects the determination of premium price. Insured who work outdoors the risk of death is higher than the customers who work indoors.
- Lifestyle and Hobbies: Lifestyle like smoking can certainly make the premium price becomes more expensive, or even not accepted by the insurer. In addition, having a dangerous hobby will also make the risk of death increases which is accompanied by an increase in premium prices as well.
- Health: Customers who have diseased offspring or have experience of disease, then the cost of premium will be more expensive.
After knowing several factors that affect the size of the premium above, then you can assess the price of life insurance premiums charged to you have been worth your risk. Insurance companies certainly consider many things before deciding the premium you have to pay.