Life insurance has become indispensable with growing uncertainty in lives. The ongoing pandemic and many health issues lurching, life insurance has become the savior for many Canadian families. But the impending premiums each month may be a matter of worry for many premium payers.
Many factors can result in an increase in the life insurance premiums in Canada. These factors may cause an increase or decrease in the insurance premium.
Enlisted below are the top factors affecting the life insurance premiums in Canada.
1. Age matters in life insurance
Age does majorly affect life insurance premiums borne by the policyholder. It is one of the major factors to decide the insurance premium during the issuance of a life insurance policy.
A younger individual who signs a life insurance program pays a lower premium than an individual who signs at the later stage of life. The younger the age, the lower will be the premium.
2. The criminal history in the life of the buyer
The insurance issuer will do a complete background check of the prospect. A background check reveals if the life insurance prospect is engaged in any criminality or prosecuted for or having a criminal record.
The event of any crimes committed by the buyer affects the premium. If you hide criminal records and if it gets disclosed after the policy issuance may cause the exclusion from the coverage.
3. Credit history check for life insurance policy
Many Insurers verify the credit score of the life insurance policy buyer. The credit score history may determine the premiums. The higher the credit score, the lesser would be the premium rate. High creditworthiness implies that the policyholder will not default in paying premiums.
4. A driving history of a life insurance applicant
Life insurance companies can easily access the driving records of any prospect. They check the driving history to determine the risk associated with the life of the buyer.
A clean driving record with no major accident or damage reports may give access to better premiums. A clean driving history implies the individual is not a reckless driver, and the risk of life is low.
5. Hobbies and interests
Do you know that even the hobbies of an individual affect the premiums? An individual who engages in hobbies like mountaineering or para-gliding may pay a higher premium.
The reason being life insurance companies consider these activities highly risky and threat-prone, making rates go higher.
6. Depression in life insurance application
Suffering from mental illnesses like depression can increase your premium. In insurance, a history of depression can have your life insurance premiums rise.
Life Insurance underwriters consider depression as a risk factor and thus increase the premium. Depression can cause lunatics or suicidal tendencies and can be life-threatening.
Life insurance policies demand high premiums because of many factors. We have covered the critical above-listed factors that can affect the life insurance premium in Canada.