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8 factors that affect your life cover premium

Wednesday, January 27, 2016

If you have children, a bond, or a long-term partner, chances are, you’ve taken out life cover or, at the very least, considered it. If you’re thinking about getting life insurance, it’s a good idea to first understand how much you need and what factors affect your monthly premiums. 

How much do you need?

There is no hard-and-fast rule about how much life cover you need, but your financial obligations and dependants are the major contributing factors. Ideally, you want at least as much to cover what you owe on your debts, such as your home and car loan. But there might be other aspects to consider, depending on your circumstances. For example, if you are the sole provider for your family, you’ll want to increase your cover so that your loved ones can continue to live on an amount similar to your monthly income. Also consider the future needs of your family, such as university tuition for your children or the retirement of your spouse.

Once you’ve figured out how much cover you need, it’s time to get life insurance quotes, and your insurance company will calculate your premiums based on a number of factors. Some of these include:

1. Your habits

Because insurance is all about calculating risks, habits such as smoking and excessive drinking will affect your premiums as well as the cover amount that you qualify for. These kinds of behaviours make you more likely to suffer an early death or illness and so hike up your monthly payments.[1]

2. Your weight

According to the World Health Organization, being overweight has serious effects on your health, such as higher risk of heart disease, stroke, type 2 diabetes, cancer and more.[2] If you’re overweight, all of these risks are taken into account when calculating your premium.

3. Family history

As certain conditions are hereditary, your family history is important to insurers. If your parents suffered from the likes of cardiovascular disease and diabetes, there is a higher chance that you too could suffer from these diseases.[3]

4. Your physical health

In addition to the health of your immediate family, your own health issues will affect your life cover premium. If you suffer from diabetes, asthma, and other chronic illnesses, your life expectancy is reduced, driving up your risk.[4]

5. Your mental health

Just as your physical well-being is taken into account, so is your mental health. If you are on medication for a mental condition and it’s under control, it may still influence the premiums you pay.[5]

6. Your job

If you’ve got a safe desk job, your career is probably not going to affect your insurance premium, although you may feel sometimes that the pressure of your work is a health risk. But if you engage in an occupation that involves danger, you can expect to pay a little more. These include jobs like piloting and even occupations where you spend a lot of time driving, because statistically, you’re more likely to be involved in an accident.[6]

7. Your hobbies

If you have a fairly safe job, that doesn’t mean you’re off the hook. If you’re an adrenalin junkie and love spending your weekends jumping out of planes or doing motor cross, you’ll need to tell your insurance company about it, and it will most likely raise your premiums.

8. Your age

Your premiums are likely to be higher the older you get, as you are considered to be a greater risk as you age.

As you can see, a lot goes into determining your life cover. At Dialdirect, it’s important that we provide our clients with life insurance quotes that reflect their lifestyles and that will protect their loved ones when they’re gone.


Long-term insurance policies are underwritten by 1Life Insurance Ltd an authorised financial services provider (FSP licence number: 24769).

[1] http://www.confused.com/life-insurance/guides/does-smoking-affect-my-life-insurance-premium

[2] http://www.who.int/features/qa/49/en/

[3] http://www.learnvest.com/knowledge-center/things-make-life-insurance-more-costly/2/

[4] http://www.learnvest.com/knowledge-center/things-make-life-insurance-more-costly/2/

[5] http://www.learnvest.com/knowledge-center/things-make-life-insurance-more-costly/2/

[6] http://www.mcmha.org/hazardous-occupations-affect-life-insurance/