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Home > Life Insurance > Life Insurance Guides > Family medical history and life insurance premiums

Family medical history and life insurance premiums

Life insurance is part and parcel to any comprehensive financial plan, especially for those with families to think of. Though we never want to think about something terrible happening, it is vital to expect the unexpected so as to help ensure one’s families financial security – no matter what. This type of coverage is available in a wide range of coverage amounts and types, allowing for personally tailored plans for a families individualised needs. Shopping for life insurance sounds simple, however, when one starts to research, they often find it to be confusing and hard to understand. Choosing quality life insurance with coverage amounts that suit the needs of one’s family does not have to be a headache inducing experience.

It helps to know what type of information will factor into the cost of a life insurance policy. Being armed with all the right information helps make the process of purchasing a suitable life insurance plan as simple and straight forward as possible. There are many factors that play into the end cost of a life insurance plan and some of the factors that play a role in determining said cost may come as a bit of a surprise.

What factors effect life insurance premiums?

Typical factors that are pretty obvious include age and the general health of the person seeking the life insurance policy. However, other factors also play a significant role in the cost of the plan. They want to know about lifestyle factors such as a person’s weight and if they partake in risky activities such as drinking and smoking. Some insurers may also inquire into whether one participates in extreme sports as a hobby. These factors are used to determine whether or not a potential client will, well, pass during the term of their life insurance policy. The more likely this is to be the case (i.e. the more risky behaviours one partakes in and other risk factors one possesses), the higher one can expect their premiums to be.

Certain disorders and chronic illnesses may have a direct effect on one’s ability to obtain coverage or the price of said coverage. If one has, for example, suffered from cancer, many companies will not extend coverage unless one has been cancer free for five years. Individuals who suffer from diabetes are likely to find coverage to be more than twice as expensive.

These factors, however, are not the only contributing factors that insurance companies consider, many also consider one’s family medical history when determining overall risk in extending insurance coverage to an individual.

Use of family medical history in determining coverage risks

Many insurance companies will also factor in things like one’s family medical history when considering the risk, and thus the cost of insuring a particular individual. Family medical history is a good way for the insurance company to get a general idea of potential claims that they could face by insuring someone. A person with a family history of cancer, for example, even if perfectly healthy, may likely cost more to insure than a counterpart without said family history.

While the specifics of how family medical history is used does vary from company to company, most insurance companies only consider medical history from your family while they were 65 or under. If your family is at high risk for certain ailments, the insurance company may charge a higher premium, or they may exclude said ailment from coverage eligibility.

Many common, costly and sadly, fatal diseases are hereditary. Insurance companies are just that, businesses. While they provide a vital service, they are required to turn a profit. If they did not use these factors to determine risk and base one’s policy cost on said risk, there would be but one fiscally reasonable option. That would be for everyone to pay the same for insurance and for many healthy people, that would mean significantly overpaying for their own health insurance to offset the cost incurred by those with chronic health conditions or a multitude of risk factors.

Life insurance is a vital and important financial planning tool to have, particularly for those with families. Many different factors determine the cost of life insurance premiums – some obvious, others, not so much. Factors such as age, health and lifestyle choices are obvious areas that directly factor into the risk of extending life insurance to a person. Insurers also use factors such as family medical history as a means to determine the risk insuring a particular person entails – this, in turn, effects the price of one’s insurance premiums. It is helpful to know all this when looking for life insurance premiums. A perfectly healthy individual with a strong family history of certain ailments may find themselves confused when their premiums are higher than they think they should be. When one accounts for the added risk family history entails, the price discrepancy makes far more sense.

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