Find out which four lifestyle choices can affect your life insurance policy and how you can avoid them.
If you've ever wondered what factors determine the cost of your life insurance premiums, you may be surprised to find out how your lifestyle choices can impact how much your insurance policy costs.
Life insurance carriers base annual policy premiums off of a variety of data points. The cost of any given policy can shift up or down, depending on an individual's age, gender, family medical history, and more, and is measured using statistics of other people who match a similar lifestyle profile.
Certain groups of people will usually be placed in a "high risk" pool because they have a statistically higher likelihood of dying at an earlier age than other groups. Their risky or unhealthy lifestyle choices can result in higher insurance costs since fewer annual premiums are likely to be paid in, as compared to low-risk individuals who can be expected to live longer.
The following factors can play a significant role in the rate offered for a life insurance policy:
You Work in a Risky Profession
Working in a high-risk industry can increase your life insurance rates significantly since your chances of an earlier death are often higher. According to Clark.com1, the five jobs most likely to incur a more costly annual policy premium have a mortality rate of 10 times or more the national average and include:
- Logger: The national average fatality rate across all professions is approximately three out of every hundred thousand workers. For loggers, that number jumps to nine out of every 10 thousand employed in the industry, with falls and chainsaw accidents as leading causes of death.
- Commercial Fisher: Approximately seven out of every ten thousand commercial fishermen die at sea due to exhaustion-related accidents or being swept overboard in heavy seas. No wonder the popular reality show is titled "Deadliest Catch."
- Aircraft Pilot/Flight Engineer: For most people, the chance of dying in a plane crash is statistically insignificant, but for pilots and engineers, the risk skyrockets. More than five out of 10 thousand die in transit every year, usually as a result of human error or bodily reaction caused by over-exhaustion and stress.
- Roofer: In the roofing industry, industry in which nearly five out of 10 thousand workers die every year, with most occurring from trips, slips, and falls that result in fatal injury.
- Refuse and Recyclable Collector: You might not think of garbage collecting being as a hazardous profession, but more than three out of 10 thousand workers every year die from chemical exposure or accidents while using heavy equipment.
If you work in a high-risk profession, you might want to consider term life insurance to help you manage your premiums.
Your Driving Record Isn't Great
Another factor that can instantly impact your life insurance rates is your driving record. According to a survey conducted by LexisNexis and reported by NerdWallet2, a driving history can accurately predict a driver's increased chance of death from any cause, making it easy for life insurance companies to use your driving record as an indicator of how likely you are to die in a car accident (or from any other cause). Here are some of the findings that might affect your life insurance policy:
- Drivers with serious violations — including DUI or DWI, driving at speeds 30 mph over the limit or higher, or reckless driving — have a 71% higher death rate than people of the same age who have only minor violations or none at all.
- The death rate for women doubled after just one serious violation while men's death rates increased by 61% after one serious violation.
- Death rates continued to climb in correlation to violations of any kind, with a 24% higher death rate associated with drivers who have two to five violations and a 79% higher rate associated with drivers who have six or more violations.
Since life insurance carriers use software to analyze motor vehicle records, a history of poor driving can affect your assigned premium. Cleaning up your driving record could help gradually lower your life insurance costs.
You Have Unhealthy Habits
Your life insurance agent will ask you questions about your health when you request a quote. These questions are designed to reveal how seriously you take your health to help calculate how much risk there is of you dying prematurely.
- According to the latest data3, obesity is a nationwide issue with anywhere from 22-38% of American adults suffering from excess weight. Obesity can worsen conditions like diabetes and increase your risk of early death by stroke or heart attack, which means a higher life insurance premium.
- Unhealthy habits like smoking — which increases cancer risk — or drinking to excess — which increases the risk of liver disease — can also result in higher premiums.
Achieving a healthy goal weight and cutting out unhealthy habits can help lower your perceived risk and minimize your health's negative impact on your life insurance costs.
You Have Dangerous Hobbies
Your leisure time may also affect how much your life insurance premiums are, especially if you enjoy adrenaline-laced activities. CheatSheet4 notes that the following hobbies are considered among the most dangerous and likely to end in sudden death:
- Bungee jumping
- Rock climbing
- Race car driving
- Hang gliding
If you enjoy one or more of these hobbies, be aware that your dangerous lifestyle could mean higher insurance rates. In addition, it could result in the exclusion of benefits if you die while engaging in risky behavior or make you ineligible for a life insurance policy completely.
Since information regarding your career, driving record, health habits, and hobbies help to determine your annual life insurance rate, over time, you could possibly adjust your lifestyle and receive a more favorable insurance premium. Quitting smoking, losing weight, improving your driving record, or even switching hobbies or careers can help you get out of high risk pools.
When you purchase life insurance through AIG Direct, you can benefit from term life insurance policies that allow you to "lock in" your life insurance premiums for 10-30 years, making coverage more affordable long term. Find out what the average cost for term life insurance might be for an individual like yourself, then contact us to obtain a tailored quote for a fixed-rate, term life insurance policy today.
This information is general in nature, may be subject to change, and does not constitute legal, tax or accounting advice from any company, its employees, financial professionals or other representatives. Applicable laws and regulations are complex and subject to change. Any tax statements in this material are not intended to suggest the avoidance of U.S. federal, state or local tax penalties. For advice concerning your individual circumstances, consult a professional attorney, tax advisor or accountant.