How Life Insurance Premiums Are Calculated?

Ever wondered how the insurance companies calculate your life insurance premium? The simply answer is life insurance premium are dependent on your mortality. But how is mortality measured?

Measuring the mortality

Mortality is determined by personal information on one's past, current and genetic health situation. If one's current health status is indicative of future health risks, an insurance company may request a medical examination to better calculate your health status and subsequent mortality.

The health information gleaned by the insurance company is compared with a mortality rating system. This system is based on statistical mortality rates that essentially group individuals into mortality classes using a numerical rating system.

Health factors are considered individually and can affect one's mortality in either a positive or negative way. Depending on the value of one's final health rating, the cost of a life insurance premium may be higher or lower.

It's important to remember that everyone's health status and risks are different. So, if you're considering taking out life insurance, feel free to contact one of our friendly insurance advisers today. They can further explain the ranking system and determine the right sort of cover for you.

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Published on September 9-rd, 2010 in Life Insurance
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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