Life insurers offer various types of insurance policies to protect against the financial risk of death or illness or injury. These include life cover (for death) and disability covers known as Income Protection, Trauma Insurance and Total And Permanent Disability cover which can protect against the financial risk of illness or injury.
There are many factors that an insurer will consider when preparing a quote for these covers. And each insurer will work differently. For life cover, some factors that insurers commonly allow for include, and are not limited to :
- The age of the insured
- Their gender
- Whether they smoke or not
- Their health status at the time of applying for cover
- Whether they engage in any hazardous pursuits or hobbies or if their occupation is a high risk
- How much cover they are applying for
- Whether the premiums will increase automatically as the insured gets older or whether the premiums will be “smoothed” in terms of age over time (referred to as level premiums)
- How frequently the policy owner will pay premiums (eg annually or monthly)
- Whether various policy options have been used or not
Over time, insurers may alter their prices. This could be caused by many factors, such as, and not limited to :
- The amount of claims they have been paying relative to past expectations
- The cost of what is known as “reinsurance” which is a technique where they share some of the risk of claims with another insurer
- The level of interest rates (and how much they earn based on the premiums they invest until needed to pay claims)
- Their operating costs
The cost of insurance, for any one person, will differ from insurer to insurer. That is why many people use a broker like Experien Insurance Services to arrange quotes from more than one insurer.
This is general information. If you would like to find out more about how life insurance works, and how much it will cost for you, feel free to contact us for a complimentary review. We can allow for your personal needs, obligations and financial circumstances to give you personal advice.
Life insurance and Financial Advice services are provided by Experien Insurance Services Pty Ltd (EIS) ABN 99 128 678 937 and Experien Financial Services Pty Ltd (EFS) ABN 32 631 346 757. EIS and EFS are a Corporate Authorised Representative (No. 320626 and No. 1274354) of Affinia Financial Advisers Limited ABN 13 085 335 397 AFSL No. 237857. See our website for our Financial Services Guide. Always read the Product Disclosure Statement issued by an Insurer before considering insurance
