WHAT IMPACTS THE COST OF INSURANCE?

Different types of insurance coverage’s will look at different qualifying criteria and the costs of the coverage will also be impacted.  In general, the greater the risk or likelihood of claim, the greater the cost.  Of the main types of insurance coverage – Life, Critical Illness and Disability: Life insurance tends to be the least expensive and Disability being more costly with Critical Illness falling somewhere in between.

Three items will always impact the cost of insurance:  Age, Smoking Status and amount of coverage.  As we get older, the costs will increase.  Smokers will pay higher costs than non-smokers.  To be considered a non-smoker, you have to not have smoked anything (cigarettes, e-cigarettes, cigars, etc) for one year or longer.  The more coverage you want, the more costly it will be (although insurance companies will offer rate discounts at certain levels so the unit cost could be less).

In addition to these three things, your overall health and lifestyle can affect the cost.  Those who have health issues or below average health may pay higher premiums.  Likewise, those with better than average health may be eligible for discounts.

Disability insurance (because it pays an income stream and can pay out more than once) also factors in three other variables.  The nature of one’s work will impact cost.  The riskier the job, the greater the cost.  Because Disability Insurance pays a monthly income, how soon you want the payments to start and how long you want the payments to last will also impact the cost of Disability Insurance.

In almost all cases, however, the cost of insurance is less than what the policy will actually payout.  So you’re purchasing a payout amount at a discount.  The younger and healthier you are, the bigger the discount.