Life insurance is one of the most important policies you can have. It's used to keep your loved ones financially safe in the event of your death. While it's not a pleasant topic, unexpected death can happen. However, life policies aren't as cut and dry as you may think. There are certain factors and information that you may not be aware of. Here are three factors that can affect your life insurance.
Your General Health
We'll start off by talking about the second most important factor, your health. Before receiving a final quote, you will be asked to present your medical information. And in some cases, they may even ask you to undergo a medical exam. For example, if you're a cardiac patient, you may be asked to have an EKG, or electrocardiogram. This information doesn't impact the overall value of the policy itself. What it does affect is the premiums you have to pay. If you're someone who has more than their fair share of health problems, you could be classified as high-risk to the insurer.
Your Bad Habits
Your bad habits can also have a negative impact on your life insurance. If you smoke or drink, the insurer will know after you provide them with your medical history. Not only is smoking and drinking detrimental to your health, but these bad habits can also dramatically raise your monthly premium. However, you can potentially lower them if you decide to quit these bad habits and live a healthier lifestyle moving forward.
Your Age
The most prominent factor in any life insurance policy is your age. Aging is one of those things that's unavoidable in life. If this is your first time getting a life insurance policy, you may be wondering how this affects your policy. While people of all ages can get life insurance, it's best to get it while you're still young. That's not to say you can't wait until you're an elder to get coverage. However, starting off young gives you the opportunity to increase the value of the policy ten-fold.
There are many ways to increase your policy's value. Aside from responsibly paying your premiums, you can boost the value by taking out a loan with a lower than usual APR and paying extra on the premiums. This process can be slower, but it's more than worth it, especially if you cash out early by selling your policy through a life settlement. A life settlement is when a third-party buyer buys your policy while simultaneously giving you a percentage of it.
You may find this a bit confusing, so here's an example. Imagine your policy was worth $150,000 and it's bought by a third-party buyer. They would immediately become the new beneficiary of the death benefits attached to the insurance. At the same time, you get a percentage, which is usually 20 to 30 percent of your policy. While this sounds tempting, you do need to thoroughly understand the pros and cons of selling your policy before making a final decision.
