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Get cheap life insurance by staying in control

One of the problems when you start to think about insuring your life is uncertainty about how the insurance companies set the premiums. So here’s a simple guide. The key element is an estimate of your life expectancy. Let’s say you are currently in your twenties. All things being equal, you should live into your seventies (if not beyond). To keep this example running, we will assume you have fifty years. Now we ask what minimum guaranteed amount you want paid at the end of your life. If this is $100,000, the premium would be $166 a month. Except, of course, no one can predict the exact date on which you will die, so you have to build in an element to provide against the possibility you die after only twenty years. Then the insurer wants to cover its administrative overheads and make a profit. And you want to provide against inflation. The idea of $100,000 may sound reasonably now but, in fifty years time, this could be pennies. So you want the value of the policy to increase over time to provide against the fall in the value of the dollar. We will stop here. It gets more complicated after this.

Once you realize it all comes down to an estimate of your life expectancy, it brings all the main factors into focus. We start with your age now. This is not something you can control, but it’s always worth buying some coverage while you are young and healthy. If your weight is already rising, do something about it. There’s clear medical evidence linking excess body weight to life-threatening diseases and disorders. This is very bad news if you hope to get life coverage at low premium rates. Start with the basics. If you smoke, quit. If you drink too much alcohol, get moderate. Now eat smaller portions of more healthy food. And exercise! Remember insurance companies will schedule a medical examination for larger policies. You want the doctor to see you at your best. That way, you get a policy. If you turn up overweight with a cigarette in your hand, you will probably be refused cover.

Just two quick points to finish on. Insurers have noticed people manage to kill themselves when they play "dangerous" games or have exciting hobbies. You will probably be asked a high premium if you participate in X-game type activities or go hang-gliding. If there is a risk of serious injury or death, this will be factored into the premium. The same applies to jobs with higher risks of injury. So, when you are mapping out your career, try to avoid working on a deep-sea oil drilling platform or in a mine. Life insurance quotes come back lowest for young healthy people who work at a desk, living only a short drive away. The further you commute to work, the greater the risk of a traffic accident. The more dangerous the work environment, the higher the premium. Not all of this is under your control, but do your best and you will be rewarded with lower life insurance premiums.

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