Reasons for High Life Insurance Premiums

signing a contract image by William Berry from Fotolia.com Life insurance premiums can be high for several reasons. Term life insurance gives beneficiaries predetermined death benefits if the policyholder dies within a certain time period, such as 10 or 20 years. The annual premiums, or money paid into the policy, depend on classifications made by the insurance industry and individual insurance companies. The more risk a policyholder represents, the higher the premium will be. There are several factors that can affect the cost of insurance premiums, including the policyholder’s health, occupation and leisure time activities.

Weight

Life insurance premiums can be affected by the weight of the policy holder. Slightly overweight adults may have slightly higher premiums. However, adults suffering from obesity may have to face much higher premiums than their average-weight counterparts. Among insurance companies, premiums are typically calculated according to the policyholder’s body mass index (BMI), which uses weight and height to determine body mass. On the other hand, insurance companies also use BMI to determine if a potential customer is underweight. Those with BMIs that are considered too low for their frames can be charged higher premiums as well.

The health of an individual can affect the cost of insurance premiums. A policyholder is often required to seek medical testing before a policy is approved or underwritten. Individuals who have high blood pressure, diabetes or cholesterol can pay higher rates than those who don’t.

Smoking can cause life insurance premiums to rise, even if the policyholder is only an occasional smoker. Depending on the terms of the insurance, some customers can expect to pay premiums that are at least 5 percent higher than those of the general population.

Travel habits can also affect the cost of term life insurance. Policyholders who choose to travel to countries on the United States’ current travel warnings list can pay higher rates. Countries that make the list are considered dangerous or unstable; an updated list can be found on the U.S. State Department’s website. Rates can be high regardless of whether or not the travel is related to the policyholder’s occupation.

Risky hobbies, sports and occupations can cause higher than average insurance premiums. Risky hobbies or sports include mountaineering, mountain climbing, motor sports, scuba diving, parachuting and flying small planes. Other dangerous activities include skiing, boxing, hang gliding, wrestling, surfing, bungee jumping, boat racing and spelunking. High-risk occupations include high-rise window washers, race car drivers, fishermen, pilots, offshore gas and oil jobs and armed forces positions.

The age of an insurance applicant or policyholder can also affect the cost of the premium. Premiums increase as a person ages.