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If you have looked around for life cover and have applied for term insurance quotes, you may have noticed that they may differ among the providers. So how do the providers reach their figures? Does the provider of the insurance just make a haphazard guess and choose the first figure that comes into heads? In actual fact there are many factors taken into account that go towards determining how much you pay for insurance.

Factors that may count towards your quotes

Typically when taking out an insurance policy you are asked briefly about your health, sex and your age. However if you are interested in the quote, the insurance provider typically then goes into deeper detail and wants to know a great deal more about you, so they can charge your premiums based on how much of a ‘risk’ there is of you dying!

The factors below may be considered when you apply for your insurance:

• your family’s health background may be looked into as some illnesses and diseases are often hereditary and so you may be a bigger risk to the insurance provider. Illnesses that may be considered a risk by the provider include heart attack, asthma and diabetes;
• if you are overweight or considered to be obese for your height then this may also mean your insurance quotes are higher. This is generally due to the fact that an unhealthy diet and lack of exercise typically puts you at a higher risk of developing heart disease;
• what you do for a living may be a consideration that determines how much the provider states for your term insurance quotes. If you are a window cleaner and clean high-rise tower blocks from platforms, then you may be considered as being a bigger risk than if you have an office job;
• any sports that you take part in or hobbies which are seen to be extreme, may mean you pay more for your life insurance. For instance snowboarding is typically more dangerous than playing chess as there is more chance of you suffering an accident snowboarding;
• generally if you smoke or drink your insurance premiums may be higher than someone who is teetotal. The insurance provider may ask you how much tobacco you smoke per month or how many units of alcohol you drink each day Sometimes, the higher the amount, the more you pay in premiums. While these vices boost up your premiums, it is important not to lie when taking out the cover. If for example you were to die due to lung cancer or liver disease and you smoked or drank excessively, but said that you did not on your original life insurance application, the provider may not pay out on your policy.

Any of the reasons states above may contribute towards the cost of your cover. Of course, the sum of money you choose to insure yourself for (the ‘sum insured’) is a big factor that determines the cost of the insurance. Typically the more you choose to insure your life for the more you pay in insurance premiums. With this in mind you may want to consider this amount carefully to make sure that you do not over-insure (ie take out more insurance than you need) yet do not under-insure (ie not take out enough)!