Life insurance is based on how likely a person is going to die over a period of time. This is judged by actuaries using a number of factors which they then average through actuary statistics and work out the probability that the person will die within the time that they are trying to be insured.
Many of the things on the actuary tables are things that a person can do very little about – for example age and sex are two very important factors when judging whether a person is a good life insurance risk. There are also previous health problems that can increase premiums, but there is little that can be done to change them.
However there are a number of things that can be done to cut down risk, and so to cut down premiums. These are known as lifestyle factors.
The most important lifestyle factor for most people will be smoking. Smoking is one of the biggest causes of premature death. It is also one of the easiest ways for an insurance company to be able to tell if someone is likely to live throughout the term of the insurance. Giving up smoking can save thousands on insurance.
Smoking is also one of the best indicators as to whether a person is likely to have other lifestyle factors that are less easy to judge. This may be due to the fact that they are hard to ask, such as what the diet is, or hard to answer such as the use of illegal drugs. By giving up smoking a policy holder moves to a different insurance pool from smokers. This will ensure lower premiums.
The relationship of weight to height is another method that is used by insurance companies to judge risk. Although the Body Mass Index is not a perfect predictor of bad health, it is used because it can see when people are overweight.
Other measures that insurance companies will use are cholesterol levels and blood pressure. These are good proxies for diet and exercise regimes.
As well as a number of statistical areas like smoking that lead to self-diagnosis, many life insurance companies will insist on a visit to a doctor in order to see if there are any serious health issues. The doctor will also advise on, and usually note, what lifestyle issues should be addressed and these may affect insurance.