Does where I live affect my life insurance premium?
[social_share]The life insurance premiums that people pay are influenced by a number of factors, which mainly revolve around whether they affect the applicant’s life expectancy. Many of these factors can be easily explained, such as whether a person has suffered from a disease such as cancer or whether they have an unhealthy habit such as drinking.
However, one surprising factor that should be considered is where the person lives. Not all life insurance companies include this factor when calculating the premium, and it’s usually the policies with the higher payouts that do. But where a person lives can be a proxy for a number of factors that are harder to measure, such as a person’s occupation and exercise habits.
As well, life expectancy can vary markedly according to where a person lives, independent of other factors, such as whether a person smokes or what’s their occupation. This can partly be because some areas are healthier than others, for example the area may have a lower background level of pollution or may have fewer facilities or shops within walking distance. There are also issues on the availability and quality of various health services.
Not all life insurance providers look at where a person lives before they start quoting on the premiums. Some life insurance providers believe that other factors actually give a more accurate view of life expectancy, which is particularly the case if they have a medical examination or fill out a very detailed medical questionnaire in the application process. If the payout is low or the person is relatively young, calculations may be less stringent and some factors may be overlooked.
It’s not just life insurance that can be affected by where a person lives but other types of insurance as well, such as car insurance, and home and contents insurance. The same happens with many annuities for pensions, which are in effect a rearranged version of life insurance. Credit can also be affected by where a person lives, although this has become less common due to controversy painting the practice as discriminating against poorer areas.
