Welcome to DhanGuard. Can I help you?

10 Factors That Will Affect Your Life Insurance Premium

By Sakshi Srivastava - 29 Nov 2021 Last Updated: 11 Aug 2022
10 Factors That Will Affect Your Life Insurance Premium

As a sole earning member of the family, it is your responsibility to keep your loved ones’ future financially secure. A life insurance policy ensures that your family members can maintain their standard of living and meet all of their financial needs even if you are no longer able to do so.

Purchasing a Life Insurance policy is one of the most important financial decisions you will make. The future is uncertain, and many people die prematurely each year as a result of accidents or critical illnesses. Have you ever considered how your family members would fare if you were to face such a calamitous event?

What is Life Insurance?

Life insurance is an agreement between a policyholder and an insurance provider in which the insurer (insurance company) guarantees to pay a certain amount of a death benefit to the beneficiary in the event of the policyholder's untimely death during the term of the policy.

The premium rates for life insurance in UAE vary by policy and are determined by the applicant's age, medical history, sum assured, income, and a number of other factors. Applicants, on the other hand, can easily obtain the best life insurance coverage at the best price.

How Do UAE Life Insurance Companies Determine Premiums?

Setting life insurance policy premiums can be a complicated process involving a variety of factors. Because no two individuals are the same, their financial and life situations are bound to differ. As a result, their policy premiums will differ depending on a number of factors. Starting with the premium setting process, also known as the underwriting process, is a good place to start if you want to gain a better understanding of the life insurance process. Here is a summary of some of the most important factors considered by insurers when determining premiums for your life insurance policy.

Life insurance companies in the UAE will consider your medical history, health and lifestyle factors that may affect your life expectancy, and financial history to determine whether you are likely to meet your premium payments in the long run. Mathematical calculations and statistics on how much these factors may reduce or lengthen your lifespan on average, or your ability to pay premiums, all play a role in the insurance company's decision on whether to grant life insurance at all, and the premium you would need to pay if they do.

Here is a summary of some of the most important factors considered by insurers when determining premiums for your life insurance policy.

Age of the applicant

One of the most important factors influencing your insurance premiums is your age. According to experts, the best time to purchase insurance is when you are young. This is because younger age is associated with lower health-related risks, lowering the applicant's risk.

Health status at the present time

The applicant's medical condition at the time of application is also very important in the underwriting process. In most cases, insurers will require the applicant to undergo a medical exam to determine their current medical condition. If the person has a critical or serious illness or condition, the premiums will be higher, and the application may be rejected. Individuals who are in better health may benefit from lower premiums.

Medical history of the applicant

Your previous medical history is also important in the underwriting process and can affect premium rates. If a person has a poor medical history marked by recurring illnesses or a critical disease, they may face higher premiums as a result of the increased risk. Someone with a relatively clean medical history has a better chance of receiving lower premiums.

Occupation

Certain occupations are regarded as riskier than others, which raises the risk factor for the insurer. For example, if you are a fisherman, miner, adventure sports instructor, or other high-risk occupation, you may be denied coverage by an insurer. Sedentary occupations, such as desk jobs, involve much lower risk and thus provide the applicant with the benefit of lower premiums.

Smoking use/alcohol consumption

The health risks of smoking and alcohol consumption are well known and can result in complex, life-threatening medical problems. As a result, insurers charge higher premiums to applicants who smoke or drink heavily. On average, smokers may be quoted life insurance premium rates that are nearly double those of non-smokers. If you have resigned, you can petition for a revision of the underwriting process and ask for lower premiums.

Gender

It is also not uncommon for women to outlive men. As a result, insurers will typically offer women lower premium rates than men.

Recreational activities

Are you a fan of adventure sports such as paragliding, scuba diving, or bungee jumping? Because insurers associate these activities with high risk, your chances of obtaining life insurance may be slim to none. Insurers who do provide coverage may charge exorbitant premiums.

Driving record

Your driving history is also important in the underwriting process. If you have a track record of being a safe driver, you may be eligible for a discount on your life insurance premiums. However, if you have a driving record that is littered with parking tickets or speeding tickets, your premiums will skyrocket.

Criminal background

 Those with a criminal record or who are on probation will be flatly denied coverage by an insurance company.

Your Policy's Duration

The longer the term of your life insurance policy, the greater the total outflow of premiums. This is due to the fact that the shorter the term, the lower the risk of death. A 30-year policy term is more likely to result in death than a 10-year policy term.

Medical history of the family

When it comes to providing coverage, insurers want to be as thorough as possible in terms of the risk they must cover. As a result, your family's medical history is considered during the underwriting process. If someone in your family has or is suffering from a serious illness, you are automatically at risk of contracting it, increasing your risk.

Understanding the factors that influence life insurance premiums and making changes such as losing weight, quitting smoking, or adopting a healthy lifestyle to lower your blood pressure and cholesterol with Dhanguard our team can assist you in obtaining the right policy at the right price.

Conclusion

It can be both confusing and depressing to sort through the various factors that govern your premium levels and understand why they have such an impact on what you have to pay. It may even make you believe that it is not worth the effort.

However, you do not have to go through the process alone. Dhanguard team can assist you in comparing the best life insurance deals from top insurers in the UAE, finding the policy that is tailored to your needs, and making the right decision.

Investment is made simple and hassle-free with Dhanguard in Dubai, UAE. We provide you various investment options like Index Fund, Gold, Mutual Fund, Stocks, SIPs, Bonds, life insurance, Sukuks with the minimum possible trouble including paperwork & payments.

By Sakshi Srivastava

29-Nov, 2021

Life Insurance Related FAQ

Frequently Asked Questions

Get Instant Advice