Factors That Affect Insurance Rates
Specific factors that affect your insurance rates vary from one insurance category to the next. Generally speaking, insurance companies consider the various risks of assuming financial responsibility for covering you and come up with rates based on the relative risks to rewards of offering you coverage. Engaging in less-risky activities and behaviors and improving safety features are some general ways to better your insurance rates across most insurance products.
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Health and Dental
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When buying private insurance as an individual, your rates are more affected by your actual demographic makeup and behaviors. With employer group health and dental policies, premiums are established based on traits of the group as a whole and re-evaluated based on annual expenditures for the insurer. Age is an important consideration, as younger people are generally considered less risky to cover. Smoking has a negative impact on your premiums. You can lower your premium rates with higher deductible amounts for emergency care and other items.
Auto
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Unfortunately for younger drivers, car insurance premiums are largely established based on statistical breakdowns of certain demographic characteristics. No matter how responsible, a young driver has not had the time to establish a safe driving history to offset poor statistical data. Age, gender and marital status are three basic factors that affect rates. Young, male, unmarried drivers face high premiums based on statistical analysis of accidents and insurance payouts. Your geographical location also plays a role based on typical driving conditions. Over time, you can positively affect your premiums by driving safely, having advanced safety features and combining your auto with other insurance policies.
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Life
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Life insurance is typically bought as term life or whole life. Term life is coverage for a stated term that includes a lump sum payout if you die during the term. It is generally less expensive. Whole life is a combination of life insurance and savings. It provides a buildup of cash with a death benefit. Aside from product factors, life insurance premiums are based on the various risk factors for mortality. The website Go Insurance Rates notes that insurance providers use mortality tables to assess your risks based on factors including age, gender, profession, and other behaviors like smoking and drinking. As with health policies, group coverage can offset your individual risks and produce lower costs.
Homeowners
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Your home insurance premiums are based on the potential risk of payout on property damage, liability claims or theft of contents. The higher the value of your home and contents, the higher the premiums. Your location with regard to natural disaster tendencies and crime rates also plays a role. Riskier areas produce higher premiums. The safety factors of your home also play a role. Use of smoke alarms, carbon monoxide dictators, security alarms and other safety features is an advantage. You can often combine your home policy with your auto policy for a discount. Paying in full often offers a discount of around 10 percent as well.
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References
- Photo Credit Car driver sitting in his new car image by George Dolgikh from Fotolia.com
