Most people know age has an impact on how much life insurance costs. The older we are, the more we're likely to pay. But birthdays aren't the only factor that can increase the cost of life insurance premiums -- lifestyle can also play a big role. Here are five lifestyle factors that can cause life insurance premiums to rise and tips on how you can lower them.
1. Your driving record.
Those speeding tickets you've amassed may cost you more than the fines. If you have many points on your license or you've been cited multiple times for driving recklessly, a life insurance company may assume that you’re more likely to die in an automobile accident. As a result, you may be deemed riskier to insure. Some insurance companies will also charge you more -- or in some cases decline your application for life insurance entirely -- if you have multiple DUI citations (driving under the influence of drugs or alcohol), says Michelle Oliver, a financial adviser who educates consumers about life insurance with Virginia Asset Management.
The number of years your driving record covers depends on your state. For example, in New York, accidents and convictions are removed from your driving record after three years while DUIs stay on for 10 years. In Virginia, insurers can request up to five years of your driving history. No matter where you live, if you're planning to buy life insurance in the near future, keep your speed – and driving habits -- in check.
2. Your smoking habit.
There are many health reasons why you might want to quit smoking. But if you're in the market for life insurance, there's a financial reason, too. If you smoke, you're typically charged higher rates than a nonsmoker even if you only smoke a cigarette or two a day. You may be able to lower your rate by quitting, but you most likely can't quit today and qualify for a lower rate tomorrow. Typically, you'll have to show you've been abstinent from smoking for a specified period of time, according to the Massachusetts Office of Consumer Affairs & Business Regulation.
3. How much alcohol you drink.
Drinking is another activity that life insurance companies may ask about. An occasional glass of wine is typically not a problem, but if you're consuming several drinks a day, you will likely be charged a higher rate. And you can't simply omit describing your daily alcohol habit on your life insurance application. Insurers often require medical tests, which can identify signs of heavy alcohol use, such as increased levels of liver enzymes, Oliver points out. If you’ve been thinking about cutting back on your alcohol intake or even getting professional help, your wallet may benefit along with your health.
4. Your hobbies.
Some people may be surprised to find out their insurers want to know what they do in their spare time. When applying for life insurance, you may be asked about whether you engage in activities such as rock climbing, motorcycle riding or sky diving. The Massachusetts Office of Consumer Affairs & Business Regulation says insurers often charge higher premiums when you take part in dangerous activities on a regular basis. Of course you can lie on your life insurance application but you’d be taking a big risk. Life insurance companies have a contestability period of typically two years in which they can investigate everything you claimed in your application. If you die during that period and there is evidence that you lied or omitted relevant information, the life insurance claim could be denied.
5. Your health background.
The more health problems you have and the more serious they are, the more at risk you are of dying at an earlier age, from a life insurer's standpoint. It's not just major diseases such as diabetes that can cause premiums to skyrocket. You may also be quoted a higher premium for conditions you can control such as obesity, high cholesterol and high blood pressure.
If you're planning to apply for life insurance in the future, be proactive and shed some pounds if you're overweight – you may qualify for less expensive premiums. (Find out if you’re at a normal weight by checking the National Institutes of Health Body Mass Index calculator.) Also be willing to shop around, suggests Tony Steuer, consumer advocate and the director of financial preparedness for United Policyholders. Steuer says one insurer may consider being 5 pounds overweight to be a big deal while another company might shrug it off.
Many life insurance companies require applicants to take a paramedical exam -- a medical exam used to determine an insurance applicant’s health risk -- which may include blood and urine samples as well as other tests. John Hancock Insurance offers the following tips for getting the best results that lead to the lowest premium rates:
- Get a good night's sleep before the exam.
- Avoid heavy exercise the day before the exam.
- Avoid caffeine and alcohol for several hours before the exam.
- If possible, fast for 12 hours unless a medical condition makes that impossible.