Term life is one of the best deals in life insurance. This is because you can receive a great deal of coverage for a relatively small amount of money. Term life insurance covers you for only a set term. If you die before the term is out, then your beneficiaries receive a payout. However, if you live until the term of the insurance expires, you do not get any of your premiums back. The cost of term life is generally so cheap, though, that for many the peace of mind it purchases is worth it.
Term life insurance isn't always inexpensive, however. Like all insurance, term life premiums are based on risk factors. There are some things that you do that can result in higher insurance rates, even when it comes to the cheaper option of term life insurance:
1. Put on Some Weight
One of the biggest risk factors that insurance companies look at is your weight. Many people find it offensive that weight is starting to play such a big role in our society, but the fact of the matter is that your weight can have an impact on your health. Obesity is related to a number of health conditions, from diabetes to heart disease to cancer, which can shorten your lifespan.
Life insurance companies make their money by being able to invest your premiums long enough to make some money so that your death is not as big a financial blow. If it looks as though your weight could be a contributing factor to a possible premature death, you will be charged higher premiums. You can keep your premiums lower by controlling your weight through healthy means related to diet and exercise.
2. Suffer from a Chronic Disease
Because life insurance companies base your premium on the likelihood that you will die before the term ends, you will see higher premiums if you suffer from a chronic disease. Chronic diseases, and life-threatening illnesses, increase the chances that companies will have to make a payout upon your death, affecting your life insurance premium as well as your health insurance premium. If you are taking prescribed medications, and following the protocols for keeping your condition under control, you might be able to reduce the premium by a small amount. However, you'll still pay more than a person without the condition does.
3. Have a Few Decades on You
Some have said that age is the ultimate chronic illness. It is no surprise that the older you are, the more it costs to insure your life - even with term insurance. As you age, you are more susceptible to accidents and disease, some of which could lead to a death that is earlier than expected. Many life insurance companies will not offer the option of 20 and 30-year policies to senior citizens. You may be forced to accept a 10-year term life policy, which generally costs more because the company does not have as long to invest your premiums.
You can save money on term life insurance by planning ahead and buying a policy when you are relatively young. You can find policies that last as much as 40 years when you are under the age of 30, and you might still be able to purchase a reasonably priced 30-year policy under the age of 40. Shop around, looking for a policy that will at least cover you until any children are out of the house and ready to retire.
Smokers are setting up themselves up for more expensive term life insurance. Smoking has been linked to cancer, stroke and heart disease. All of these are health problems that can result in death before the term of the insurance policy expires. Former smokers also see increases in insurance premiums. While someone who has quit smoking is likely to see lower insurance premiums than a current smoker, he or she is still probably going to pay a higher premium than someone who has never smoked.
5. Live Dangerously
There are those who enjoy taking risks. The thrill of climbing the highest mountains in the world, or BASE jumping, might provide you with the ingredients of an exciting life, but it could also result in higher life insurance premiums. Dangerous hobbies that involve the risk of severe injury and death significantly increase the risk you present to life insurance companies. As a result of this increased risk, those who live dangerously, enjoying adventure travel or motorcycling, can expect to pay more for term life insurance.
However, it's not just the thrill-seekers that see higher insurance premiums. Those engaged in dangerous lines of work can also see higher term life rates. Law enforcement officers and fire fighters may be heroes in the community, and may find their jobs rewarding, but they also have to pay a price for choosing work that could potentially lead to their deaths in the line of duty. Military personnel, construction workers, ranchers and truck drivers are some of the others that can expect to pay more for term life insurance.
6. Falsify Information on Your Application
Applications for term life insurance are fairly straightforward. However, you are still asked specific questions, and there might be an interview that goes along with a health exam that is not particularly invasive. After considering how the "wrong" answers on your term life application might result in higher premiums, it might be tempting to tweak your information.
This, however, is usually a bad idea. Your life insurance company might not finish following up on everything before awarding the policy, but further investigation might take place after you begin paying premiums. Life insurance companies include provisions in their policy terms that allow them to raise premiums - or even revoke - your term life policy if it turns out that information you have provided is false. Indeed, you could pay premiums for years before your dishonesty is discovered. You won't get your money back if the policy is voided, and you'll be left without coverage.
It's much better to be upfront in your application. Be honest, even if it means a higher term life premium. Once it becomes known that your policy is denied or revoked due to a falsified application, you may find it impossible to get a new policy with a different company.