When taking out a life insurance policy, you are seeking cover for unexpected situations that might be brought about by the different risks you face. On their part, insurance providers offer a solution to these risks, but for a price. Life insurance rates are therefore determined by the amount of risk you face based on the underwriting guidelines of a particular insurer. Generally, the lower your risk, the lower your premiums will be. Other pricing factors include your policy amount and the length of the cover.
Your lifestyle and health are the vital components that life insurance providers assess when determining the premium rates. In most cases, a questionnaire is given to you when you apply for cover; in the questionnaire, the insurer wants to know almost everything about you, your health status and lifestyle. The underwriting and calculation will largely be based on the answers you provide. Some of the common high risk factors in life insurance include pre-existing medical conditions, high risk sports and adventures and occupational hazards. In fact, certain factors may cause you to have a difficult time getting cover.
If you have been receiving treatment for a medical condition for a prolonged period of time, such as that for diabetes, this could increase your life insurance rates. Conditions that exist in your family, including cancer and high blood pressure, are also considered high risk factors. Your insurer may ask you to undergo a complete medical or physical check-up to ensure no condition has been overlooked. However, meeting your doctor regularly for checkups and taking your medication as prescribed may improve your chances of better premiums.
Duty of disclosure
Regardless of the higher premiums you might have to pay due to the risk factors in your life, it is critical to be completely truthful when disclosing information that will be used for your life insurance policy. Insurance contracts are under a special category of contracts based on the principle of ‘utmost good faith’. You may even be required to give further information to the insurer if the answers provided initially were insufficient.
In case you learn about a certain risk factor, including genetic information, after the contract has been entered into, you will not be required to disclose this information to your insurer. However, depending on your policy, you may need to renew it periodically, and all relevant information will need to be disclosed at every renewal click here for more details. It is worth noting that withholding or failing to disclose pertinent information might make you ineligible in case you make a future claim.
Fortunately, a growing number or insurers are beginning to cater to individuals in high risk situations. An additional premium loading may be required or certain exclusions placed on your policy. A life insurance consultant would be helpful in helping you find an insurer willing to provide cover at a reasonable rate.