Insurance premiums can be affected by many factors including:
- type and amount of risk
- size of deductible
- amount of coverage
- age of the applicant
- applicant's medical history
- applicant's past and current lifestyle
Insurance policies can be issued at the group or individual level. When group insurance is issued, minimal underwriting is required and the group as a whole is afforded insurance coverage based on a relatively average premium rate determined by the class of people being covered. When individual policies are issued, the insurance company evaluates the individual to determine coverage risk. The process of evaluation, or underwriting, can include the evaluation of many of the factors mentioned above. Upon completion of the underwriting process, the insurer uses a rating table to match the amount of assumed risk with the premium required to implement coverage.
Automobile, homeowner and health insurance policies can be issued at higher deductible levels in order to keep premiums affordable for the insured. Lower deductibles have the reverse effect and cause premium amounts to run higher. Some factors that can affect the size of premium payments for life, health, disability or long-term care insurance include age, smoker or non-smoker status, gender and medical history. Obtaining insurance for these types of policies at a young age will generally lock in lower premiums. Waiting until later in life to take out such policies can almost guarantee higher premiums. Premiums can also be made more affordable by reducing the coverage amount.
This question was answered by Steven Merkel.
Find out what causes adverse selection in the insurance market and why it drives up premiums for all policyholders.
Find out what an insurance policy means when it has a clause stating pro rata condition of average for damage claims when ...
Learn what life insurance companies and retirement plan accounts require from you to change your contingent beneficiary designations.
Find out how a collateralized mortgage obligation (CMO) is similar to a collateralized debt obligation (CDO), as well as ...
A set of risks that property insurance underwriters review when ...
An insurance policy provision that allows the insurer to deduct ...
An insurance policy which provides coverage for all medical expenses ...
The individual who is the beneficiary of a trust or insurance ...
Insurance that provides liability and property coverage of aircraft.
An insurance policy that provides coverage for individuals who ...