Insurance premiums are a cost area that people should pay attention to. With all things being equal, being able to pay less is always better than having to pay more.

 

Given that insurance policies are typically bought, and paid for, over a long-term, a lower premium each year can amount to substantial savings when added up over the years.

 

For example, if your 20-year term insurance premium cost $100 less each year, you would be able to save a total of $2,000 by the end of the coverage period.

 

If you have you ever wondered what affects your insurance premium, here are four key areas that will impact how much you pay each year.

While you may not have any control over your age, it is one of the biggest factors determining how much you will be charged for an insurance policy. A 30-year old buying a 20-year term insurance policy will naturally pay less than a 50-year old buying the same 20-year term insurance policy.

 

The logic here is straightforward. Older people are risker to insure compared to younger folks. For this reason, the premium charged would be higher.

 

If you purchase a limited premium whole life policy such as the AIA Guaranteed Protect Plus (III), you will pay your premiums for either 12 or 20 years. Thereafter, you will continue enjoying coverage till age 100, well after you stop paying your premiums.

 

The younger you are when you buy insurance policies, the lower your premiums will likely be.

Studies have shown that smoking is linked to a higher probability of health diseases and premature death. These include lung cancer, heart diseases, stroke and other cardiovascular diseases.¹

 

As such, when it comes to buying an insurance policy, smokers usually have to pay a higher premium compared to non-smokers. For smokers, forking out higher premium over the years may add up to a substantial cost in the long term.

 

Hence, this is one way you can control your insurance premiums, consider kicking your smoking habit. Not only will it help you save money on your insurance premiums and save on pricey cigarettes, you would also be rewarded with better health in the long-term.

Before you buy any insurance policy, the insurer would normally require you to declare any pre-existing conditions you have. You may also be required to submit your medical report and history.

 

Based on your pre-existing conditions, the insurer may decide to reject your application entirely, exclude the pre-existing conditions from the coverage, or provide you with full coverage at a higher premium.

 

How insurers make their decisions will be based on the severity of your pre-existing condition(s) as well as the time period that has passed since your condition(s) was last treated. This will usually be reviewed on a case-by-case basis.