Factors that Influence Your Life Cover Monthly Premiums

Life cover, also known as life insurance, is a way of ensuring that your family or other beneficiaries whom you nominate are not left destitute should you die. This is especially important if they rely on your income to cover living expenses. And even if you are not the sole breadwinner, a monthly income that suddenly no longer exists can still have huge repercussions to those left behind. 

While the lump sum amount paid out by life insurance is there to give you peace of mind, what then is a premium, and how is it that not everyone ends up paying the same amount? 

What is a premium?

Somewhat similar to financing a car, where you have to pay monthly instalments, 

when signing up for a life insurance policy, you are charged a monthly premium on an ongoing basis – failure to pay a premium means loss of coverage. 

How much insurance cover do I need?

First, you have to determine how much life cover is adequate for your and your family’s needs. Calculate your current and future debts, such as your home and car expenses and your children’s education as they grow. Consider:

• Home loan or rental payments

• Home and household insurance

• Rates and taxes, water and electricity

• Car finance instalments

• Car insurances

• Other monthly essentials such as food, phone, data, and fuel costs

How are premiums calculated?

Once you have a good idea of how much insurance cover you need, together with the insurance company you’re able to work out how much you’ll need to pay every month. The final price of life cover depends on several factors:

Age

It’s a simple fact of life that younger people have a better chance of living longer than older people. In South Africa, the average life expectancy in 2020 is 64.12 years. Older people are also more prone to serious illnesses and disease. As a person is considered a higher risk as they age, their premiums also become higher. Therefore, taking out life cover sooner in life even before getting married and having children will help lock in lower premiums. 

Gender

Because statistical evidence shows that women have a longer life expectancy than men and are therefore lower risk, their life cover premiums are generally lower. 

Smoking

According to the World health organisation, tobacco smoking is the single leading preventable cause of death across the world today and kills 5.4 million people a year.

It’s no wonder then smokers, vapers included, could pay as high as four times more on their premiums than non-smokers. If you’re thinking of kicking the habit for the sake of lowering insurance premiums, you’ll have to be off smoking and tobacco-free for no less than 12 months.

Body Mass Index 

A BMI score is typically used to categorise a person into one of four weight groups:

• Underweight

• Normal weight

• Overweight

• Obese

While not entirely the most accurate way of assessment, it does provide a quick indication of your overall health and possible health issues. Being overweight puts you at risk of serious health conditions such as heart disease, stroke, cancer, and type 2 diabetes. 

Health

Better health equals lower premiums. While you can’t control what may be hereditary, it pays to look after your health. Insurance premiums consider these factors:

• Genetics – to a certain extent, family medical history can play a part in your own health.

• Physical health – any chronic disease puts you in the high-risk category

• Mental health – mental illness, whether in the form of anxiety, depression or any other diagnosis is seen as high risk

Occupation

High-risk occupations are those that pose a risk to your health and safety, and include:

• Airline pilot

• Construction worker

• Driver

• Offshore fisherman

• Miner

• Firefighter

• Logger

• Police officer

Lifestyle

If you’re addicted to adrenalin and your favourite pastime could easily end your life, no matter how adept or skillful you are, be prepared to pay high premiums.

High-risk activities include:

• Skydiving

• Scuba diving

• Motor racing

• Paragliding

• Motocross

• Motorbike racing

• Mountain climbing

• Hunting

• Boating

Find a life insurance policy that comes with quality benefits. The last thing you want to be thinking and worrying about is funeral expenses. Our Comprehensive Pure Life Insurance provides assistance by paying out R50,000 within 48 hours of death.