Monday, September 23, 2013

Life Insurance Coverage Risks

Insurance is an important facet of finances that can help protect money and provide for families in when unexpected events occur. Life insurance pays money the beneficiaries of policyholders if they happen to pass away. The cost of life insurance is based the amount of coverage as well as a variety risk factors that insurance companies can use to estimate the likelihood that a person will die.


Age is one of the most important risk factors that affect the cost of life insurance. All else held equal, the holder a person is, the more likely they are to die within a given number of years. Therefore, life insurance policies tend to be less expensive for younger workers, especially if the term is short. For instance, a 20-year-old worker is not very likely to die within 10 years, so they could likely buy a 10 year life insurance policy at a good price.


Weight is an important health factor that can influence the cost of life insurance. Obesity is strongly correlated with a variety of serious health problems such as diabetes, heart disease and high cholesterol. The combination of health problems that can result from obesity cause life insurance translate to higher premiums for those who are overweight. According to SmartMoney, losing 35 pounds could amount to a $1,000 reduction in the annual cost of life insurance.


Smoking is a habit that is known to cause health problems and is an important risk factor that life insurance companies use to classify the risk level of policyholders. Smoking is liked to increased chances of suffering of life-threatening conditions such as throat cancer, lung cancer and heart attack. SmartMoney states that most insurance companies charge about twice as much to insure smokers as non-smokers.

Other Health Issues

Your personal health history and family health history are other factors that life insurance companies use to assess risk. If your family has a history of heart disease, cancer, or other serious health problems, especially at young ages, it may impact an insurance company's assessment of your fitness. According to Insure, any of the following conditions are health factors that could affect life insurance: high blood pressure, asthma, depression, sleep apnea and previous use of nicotine.

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