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Insurance is all about
managing risks. Insurance companies avoid taking any risks when they are
setting the rates for a product. They want to take precautions to ensure
that you won't die prematurely, causing them to pay out a lot more than
you paid in with your insurance premiums.
What sort of risks are
they interested in? Pretty much the same health risks doctors, medical
researchers and health-conscious people are concerned about. These are the
same subjects you hear about over and over again if you listen to medical
reports on TV or radio: tobacco use, cholesterol, being overweight,
diabetes, and other conditions linked to poor health and early death.
To account for these
risks, insurers will designate your status (using a title such as super
preferred, preferred, regular or standard) based on age, gender and
health, and that will determine how much you pay for a given amount of
insurance.
There are some risk
factors you can't control, such as gender or age. "Women live longer than
men, so women have lower rates on insurance.
National Underwriting Studies show that because men tend to have
shorter life spans, they pay a lower rate on an annuity and a higher rate
for life insurance. Your age also affects the premium. Younger people, who
have that much longer to pay premiums before they are likely to die, pay a
lower rate than an older person would be quoted. Your family medical
history, your lifestyle (do you have dangerous hobbies or travel
frequently to locations where you could be exposed to disease or danger?)
and your physical condition also come into play.
To
determine your health status,
the insurance company will ask about your medical history and most likely
require you to undergo some sort of physical exam.
For most people buying
most policies, the insurer will ask you to undergo a physical exam.
A visiting medical practitioner, paid for by
the insurance company, will check your weight, blood pressure and other
vital signs, and perhaps take a blood and/or urine sample. In some cases,
more extensive tests, such as an X-ray or EKG, might be required. Your
blood and urine samples will be tested for any sign of disease, including
the presence of the HIV virus, cholesterol level, and any indications of
disorders such as diabetes, kidney problems, hepatitis and other problems.
The samples will also be screened for the presence of nicotine and certain
medications as well as for illegal drugs.
Each
insurance company sets its own insurance premium rates and determines what
constitutes a preferred-plus buyer, a substandard buyer or any category in
between. What if you know you have a risk factor? In the first
place, alert our company of the problem when you first talk about life
insurance policies. We realize that some insurers charge higher rates for
that risk factor than others, and we can look for a company that doesn't
hike its premiums a lot for that particular condition. If it's a
controllable risk factor, you can also do what your doctor or spouse might
be urging you to do. Eliminate the risk factor: Quit smoking. Lose some
weight. Take your blood pressure medication regularly. Get healthy.
If
you substantially improve your health, you can alert the insurance company
and see if it will lower your insurance premium rates. There's no
danger in doing this, because "an insurance company will never increase
the insurance premium during the guarantee term period, but it will
decrease the insurance premium when people give evidence of improved
health."
Some insurance companies
will also improve an individual's rating, and lower the insurance premium,
for risk factors that decrease over time.
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