The Impact of Your Health on Your Life Insurance Premiums

Things like taking care of your health and practising a healthy lifestyle have many benefits, some of which may be experienced by the strength and energy you feel in your everyday life. As per the data published by World Health Organisation dated 29 April, 2020, a healthy diet can help protect against serious non communicable diseases such as cancer, diabetes, stroke, and heart ailments¹.

However, did you know that good health may also bring you financial advantages if you purchase life insurance? When a healthy individual buys a life insurance policy, the premium they pay may be lesser as compared to an unhealthy individual. This may make you wonder: how does your health exactly impact your life insurance premiums? Let's understand the details.

Health Factors Affecting Life Insurance Premiums

When a life insurance company initiates the process to calculate the premium of a buyer, there are several factors they take into consideration. One of the important factors life insurance companies consider is the health of the buyer. The reason behind it could be attributed to the direct impact or risk of health status of an individual on their life.

If a person is suffering from multiple illnesses, then they may have a higher mortality risk to their life. In such a case, the insurance company may have to bear more risk, which may impact the life insurance premiums.

To gauge the overall health condition of the buyer, the insurer looks at certain aspects, such as:

• Pre-Existing Conditions

If the individual is already diagnosed with/is suffering from certain health conditions, then those can be referred to as pre-existing diseases. This is one of the vital factors affecting life insurance premiums. Common pre-existing diseases includes diabetes, high blood pressure, obesity, heart ailments, and so on. The presence of these diseases may impact the premiums the individual has to pay.

• Smoking/Drinking habits

Smoking can substantially increase the risk of developing lung cancer and may lead to other health problems². It is one of the reasons, why, at times, you may be asked about your smoking habit when you use a life insurance premium calculator. Excessive drinking, has also been linked to liver and renal failure in addition to other health problems³. Thus, if an individual has a habit of smoking or drinking excessively, then the premiums they have to incur may be impacted.

• Family Medical History

Insurers may check the family medical history of the insured person/s so that they may get an idea of the genetic illnesses/health disorders, if any, that run through the family. If there is indeed such a genetic condition, the insurer may take a call on premium loading, if required.

• Medical Test Results

When looking at how your health impacts your life insurance premiums, consider the results of the medical test conducted for life insurance. While applying for life insurance, you may have to undergo a medical test. The results of the medical test help insurers get an idea of your underlying health conditions.

Usually, these medical tests may include CBC (complete blood count), fasting blood sugar levels, liver and kidney function, and so on⁴. If you have disclosed a certain illness or a genetic inclination towards it, additional tests may also be carried out.

These are some of the health factors that may affect your life insurance premiums.

One important concept that should be explained here is that of “utmost good faith”. The principle of “utmost good faith” states that both parties in an insurance contract (i.e., the insurer and the insured) must disclose all required facts truthfully before the policy is issued. Hiding or misrepresenting any crucial facts may be detrimental when a claim is raised. This applies not just to health conditions, but also to other relevant factors.

Other Factors Affecting Life Insurance Premiums

Now that you may have understood how your health may impact your life insurance premiums, it is also pertinent to look at other factors that come into the picture.

• Age

The age factor is somewhat related to the health factor, since younger people may be relatively healthier than their older counterparts. As people age and enter their 50s or 60s, they may become more vulnerable to illnesses. Hence, they may pay a higher premium for their life insurance policy.

A quick tip: Individuals may also benefit from enhancing their life insurance coverage by opting for riders like critical illness rider at nominal extra premium. In the event of the diagnosis of a covered critical illness, the rider provides a lump-sum pay-out, which may help the policyholder deal with the costs of medical treatment.

• Gender

When looking at how factors other than health may impact your life insurance premiums, the role of gender should not be overlooked.

As per reports and studies, women tend to live longer than men. This may be attributed to scientific and biological factors as well as certain lifestyle choices and cultural practices5. Regardless, the larger life expectancy for women means that they may bear a lower risk to their life within a certain period of time. This may lead to them receiving a lower premium quote as well.

• Occupation

What role you play professionally may also have an impact on your life insurance premiums. If you work in a domain/region where the risks to life are high, such as in the mining/oil/gas industry, or at a construction site, your life insurance premium may be affected. The underwriting principles of the life insurance company play a major role in determining the premiums. Additionally, the weightage of each factor in the premium calculation also depends on the insurer.

FAQs

1. Can smokers buy life insurance?

Yes, a smoker will be able to purchase a life insurance policy. However, the premium they have to pay may depend on their health condition as well as other relevant factors.

2. Are people with diabetes eligible for life insurance coverage?

Yes, people with diabetes are eligible for life insurance coverage. When a diabetic individual applies for a life insurance policy, the insurer may ask for information regarding the type of diabetes, any ongoing treatment, the date of diagnosis, and so on. Based on the data received, the insurer may draft an appropriate life insurance policy.

3. How to get affordable coverage under a life insurance policy?

While some factors affecting life insurance premiums may be out of your control (such as age, gender, or genetic inclination towards illness), some may be within your power. One of the way through which you may get affordable coverage is by considering practising a healthy lifestyle, avoiding harmful/unhealthy choices like smoking and drinking, exercising regularly, eating well, among others.

Ref:

¹ https://www.who.int/news-room/fact-sheets/detail/healthy-diet#:~:text=A%20healthy%20diet%20helps%20to%20protect%20against%20malnutrition%20in%20all%20its%20forms%2C%20as%20well%20as%20noncommunicable%20diseases%20(NCDs)%2C%20including%20diabetes%2C%20heart%20disease%2C%20stroke%20and%20cancer

² https://www.medicalnewstoday.com/articles/324644

³ https://www.metropolisindia.com/blog/preventive-healthcare/negative-effects-of-excessive-alcohol-use/#:~:text=Aside%20from%20liver%20and%20renal%20failure%2C

⁴ https://www.bajajallianzlife.com/life-insurance-guide/term/what-medical-tests-are-required-for-term-insurance.html

⁵ a. https://www.firstpost.com/health/three-reasons-women-live-longer-than-men-7727301.html

b.https://www.livemint.com/money/personal-finance/why-financial-planning-for-women-is-crucial-11659281674882.html#:~:text=As%20per%20the%20Economic%20Survey%202021%2D22%20tabled%20in%20Parliament%2C%20females%20are%20expected%20to%20live%20longer%20(70.7%20years)%20than%20males%20(68.2%20years)

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