You may think your physical health is the main criteria when applying for life insurance. Think again. Numerous other factors could raise your premiums, at times significantly.
Life insurance companies, which payout when their clients pass away, try to identify people who are at the highest risk for death. Some of the ways they do so are obvious. For example, when assessing risk, most life insurance companies divide people into two groups: smokers and nonsmokers.
But it doesn’t stop there. Life insurance companies then further subdivide both smokers and nonsmokers into three risk categories. From lowest risk to highest, these are Preferred Plus, Preferred and Standard. Sometimes the category names are different, but the concept is the same.
And what a life insurance company considers “risky” may be surprising. Having high blood pressure is risky, but it can be managed with medication, so a life insurance company may consider the following activities even riskier: antidepressants or therapy (because after two years, most policies are required to pay if someone commits suicide); a poor driving record (for obvious reasons); and a poor credit history (because people who struggle financially might not pay their insurance premiums or might commit suicide due to financial stress).
Can’t you just lie on your application? Yes, but it’s a bad idea. If your death is related to something you lied about and the life insurance company finds out, it won’t pay your benefit.
A better way to keep your rates low is to shop around. Different life insurance companies view risk differently, and many change their risk criteria from year to year.
Let us help you navigate what’s best for you. Please call or email us if you want to better understand your life insurance stability and options.