Life Insurance

Factors Impacting Your Life Insurance Policy

Learn about what influences the terms of your policy.

  • By Paddy Compare
  • 17 June 2023

Life insurance is a financial tool best described as a contract between you and your insurance provider. In return for premium payments at regular intervals, your insurance company provides financial security for your loved ones in the event of your death. It is a way to ensure peace of mind for you and your family, knowing you will be secure even if the worst happens.

There are several types of policy plans to choose from, each offering different features at various price ranges. It is important to clearly understand the terms of your policy plan so that you can pick one that is best suited for your needs.

With Paddy Compare, you can carefully assess various policy plans to discover one which is best suited to your specific needs.

With Paddy Compare, you get access to a range of life insurance options tailored to your specific needs.

Here are the types of life insurance policies:

Factors influencing your insurance policy

  • Health: Insurers often assess an applicant's health condition, including medical history, current health status, pre-existing conditions, and lifestyle choices (such as smoking or excessive drinking). Better health typically leads to lower premiums, while poor health or high-risk conditions may result in higher premiums or even a denial of coverage. Here are some ways in which your health affects your life insurance policy:
    • Insurers conduct medical underwriting to determine the terms of your policy, including the coverage amount and premium rates.
    • If you have health conditions, you will be considered a higher risk, which can lead to higher premiums or even a denial of coverage.
    • If you have pre-existing medical conditions, you may be offered coverage with exclusions related to those conditions.
    • If you have a family history of certain medical conditions, this may reflect on the terms and premiums of your policy.

  • Age: Insurance companies consider age as a significant risk factor for mortality, and it affects various aspects of your life insurance policy. Here are some ways in which it does:
    • Insurance premiums typically increase with age since younger individuals have a lower mortality risk.
    • Some policies, such as term life insurance, have maximum age limits for eligibility.
    • If you are older, it is more expensive to obtain term policies with extended coverage durations (10, 20, 30 years).
    • As you grow older, there is an increased likelihood of developing health conditions which makes you riskier to insure. So your premiums may be higher if you are older.
    • The ability to add certain riders or supplemental benefits to your policy may have age restrictions or higher associated costs.

  • Occupation: Insurance companies consider occupation as a risk factor when assessing your eligibility and determining premiums. Here's how your occupation can affect the terms of your life insurance policy:
    • If you work in a high-risk occupation (mining, aviation, firefighting, construction work, deep-sea diving) this can result in higher premiums.
    • If you work in a high-risk occupation you may be given a policy plan with exclusions for work-related deaths.
    • Some specialised occupations, such as military personnel, law enforcement officers, or professional athletes may have specialised policies that take into account the risks associated with their line of work.
    • Certain occupations may enable you to get group life insurance benefits through employers which typically have lower premiums and relaxed underwriting requirements.
    • Insurance companies may require additional information about the nature of your work and safety protocols followed in your profession.

  • Lifestyle: Insurance companies assess lifestyle factors to determine the risk associated with insuring you and to calculate appropriate premiums. Here's how your lifestyle can affect the terms of your life insurance policy:
    • Tobacco use, including smoking cigarettes or using other tobacco products, can result in higher premiums due to the increased risk of smoking-related health issues.
    • Excessive alcohol consumption or substance abuse can also result in higher premiums or policy exclusions.
    • A history of drug abuse means you have a higher chance of developing health issues. This will result in higher premiums or coverage limitations.
    • Engaging in high-risk hobbies such as skydiving, rock climbing, or extreme sports, can result in higher premiums or have exclusions for death resulting from such activities.
    • Your driving record, including any history of traffic violations, accidents, or DUI convictions, may lead to higher premiums or policy restrictions.
    • Maintaining a healthy lifestyle through regular exercise, a balanced diet, and overall good health may lead to lower premiums.

These factors are the primary basis of deciding two things. First, the cost of your life insurance policy and second, what your life insurance policy covers and what it doesn’t.

Also, it’s worth checking out a few tips on how to get cheap life insurance in Ireland to protect the financial future of you and your loved ones.

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