Introduction
Your daily lifestyle choices, from diet and exercise to whether you smoke or engage in activities like vaping, significantly affect your life insurance premiums. Insurers carefully evaluate these habits because they provide insights into your overall health, potential health risks, and estimated life expectancy, which are key factors in assessing an individual’s risk profile. This risk assessment directly influences how much you pay for life insurance cover.
While factors like age and medical history play a role, many lifestyle factors are within your control, offering opportunities to influence your insurance premium. This guide explains the key lifestyle choices insurers consider, how they assess the increased risk associated with certain habits, and provides strategies to potentially achieve a lower premium. Understanding this connection empowers you to make informed decisions and navigate the life insurance process more effectively.
Why Your Lifestyle Matters for Your Life Insurance Premium
Life insurance premiums are fundamentally based on risk assessment, a process known as underwriting. Insurers undertake this evaluation to estimate your life expectancy, which directly relates to the probability they will need to pay out a claim.
Your lifestyle choices are a significant focus during underwriting because they offer valuable insights into your potential future health and susceptibility to accidents. Insurers carefully examine several key behaviors that are statistically linked to mortality risk, including:
- Smoking or nicotine use
- Alcohol consumption levels
- Participation in hazardous hobbies or occupations
- Your driving record
By analyzing this information, insurers build a comprehensive risk profile for each applicant. This detailed assessment allows them to set fair life insurance premiums that accurately reflect the specific level of risk associated with insuring you.
Individuals demonstrating healthier, lower-risk lifestyles generally benefit from lower premiums, as they are statistically expected to live longer. This creates a direct financial incentive for maintaining healthier habits.
The assessment process is holistic, meaning insurers consider your overall lifestyle alongside your diagnosed medical conditions. Sometimes, lifestyle factors can influence your insurance premium even more than your baseline health status. For instance, someone in good health but with a high-risk hobby like skydiving or recent driving violations might face higher premiums than an individual with a well-managed chronic condition but a safer lifestyle.
Key Lifestyle Factors That Can Affect Your Insurance Premium
Smoking and Nicotine Use Impact on Life Cover Costs
Using tobacco or nicotine products is one of the most significant lifestyle factors that can lead to higher life insurance premiums. Insurers view smoking cigarettes, vaping, using e-cigarettes, cigars, pipes, or chewing tobacco as major health risks because they are strongly linked to serious conditions like cancer, heart disease, and respiratory illnesses, which reduce life expectancy.
Consequently, individuals classified as smokers typically face much higher premiums, often two to four times more than non-smokers for similar life insurance cover. Most insurers define “smoker” broadly, including various forms of nicotine use. Even occasional use, such as infrequent cigar smoking or vaping, might place you in the smoker category.
To qualify for lower non-smoker rates, you generally need to be completely free from all nicotine products, including:
- Vaping devices
- Nicotine patches or gum
- Any tobacco products
This abstinence must typically last for at least 12 consecutive months. However, some insurers may require longer periods, potentially three to five years, to access the best preferred non-smoker rates.
Alcohol Consumption and Insurance Premiums
Your alcohol consumption habits can also influence your life insurance premiums. While moderate or social drinking, typically within recommended health guidelines, usually has minimal impact on your insurance premium, excessive alcohol consumption is viewed differently.
Heavy drinking patterns or a history of alcohol abuse raise concerns for insurers due to:
- Increased risk of health problems such as liver disease, certain cancers, and heart issues
- Higher likelihood of accidents
These increased health risks associated with excessive alcohol consumption can lead to higher premiums or even make it difficult to obtain cover. If you have a history of alcohol dependency but are now in recovery, insurers will often require a documented period of continuous sobriety, potentially ranging from three to ten years or more, before offering standard or preferred rates.
Always be honest about your alcohol use on your application, as insurers may verify this information.
Diet Exercise and Weight Influence on Premiums
Your diet, exercise habits, and body weight play a role in determining your life insurance costs. Insurers assess these factors because they are closely linked to your overall health and the risk of developing chronic diseases like heart disease, type 2 diabetes, and high blood pressure.
Your Body Mass Index (BMI) is a common measure used; being significantly overweight or obese often results in higher premiums due to the associated health risks. Maintaining a healthy lifestyle, including a balanced diet and regular physical activity, can positively influence your assessment.
While insurers may not directly ask about your exercise routine, the positive outcomes can help you qualify for better health classifications and potentially a lower premium. These positive outcomes include:
- A healthy BMI
- Controlled blood pressure
- Healthy cholesterol levels
Some insurers may even offer wellness programs or discounts for demonstrating healthy habits.
High Risk Hobbies and Occupations Effect on Life Insurance
Engaging in certain hobbies or working in specific occupations can increase your life insurance premiums due to the higher chances of accidents or injury. Insurers consider activities like skydiving, motorsports, scuba diving, rock climbing, or private piloting as high-risk hobbies. Participating regularly in these activities often leads to increased costs, typically through a “flat extra” fee – an additional fixed amount charged per thousand dollars of insurance cover.
Similarly, working in hazardous occupations can result in higher premiums. These occupations include:
- Mining
- Construction (especially working at heights)
- Logging
- Commercial fishing
- Operating heavy machinery
The insurer assesses the specific risks associated with your job duties and work environment. If you have a dangerous hobby or job, it’s important to disclose this information accurately during the application process.
Driving Record Considerations for Your Life Insurer
Your driving history is another factor that life insurers consider when setting your premium. A poor driving record, particularly with recent serious violations, signals potentially risky behaviour to the insurer. This increased risk perception can lead to significantly higher life insurance premiums.
Serious driving violations that impact premiums include:
- Driving Under the Influence (DUI) convictions
- Reckless driving charges
- Multiple speeding tickets within the last three to five years
Insurers access your Motor Vehicle Report (MVR) to verify your driving history. While older violations generally have less impact, recent infractions carry more weight. Maintaining a clean driving record over time is beneficial, as the negative impact of past violations typically diminishes after about three to five years, potentially allowing you to qualify for better rates in the future.
Other Health and Lifestyle Choices Affecting Your Policy
Beyond the major factors, insurers may also take other health and lifestyle choices into account when assessing your application and determining your premium. These can include:
- Managing pre-existing health conditions: Proactively managing conditions like diabetes or high blood pressure through medication and lifestyle changes can be viewed favourably.
- Drug use history: Current use of illicit drugs typically leads to application denial, while past use, especially if recent, can result in higher premiums or denial. Marijuana use is assessed variably depending on the insurer, frequency, and legality.
- Mental wellbeing: A history of severe or untreated mental health conditions may influence premiums, particularly if linked to risky behaviours or physical health complications. Demonstrating stability and ongoing management is important.
- High-risk travel plans: Frequent or planned travel to destinations considered dangerous due to political instability, conflict, or disease may affect your rates or policy terms.
How Life Insurers Assess Your Lifestyle Choices
The Application and Medical Examination Process
Life insurers begin assessing your lifestyle choices through the application form. This document requires you to provide self-reported details about:
- Your health and family medical history
- Occupation and income
- Habits like smoking or drinking
- Any high-risk hobbies or travel plans
It is crucial that you provide accurate and complete information at this stage.
For many life insurance policies, particularly those with higher coverage amounts or for older applicants, a medical examination, often called a paramedical exam, is required. This exam typically includes measuring your height, weight, and blood pressure, recording your pulse, and collecting blood and urine samples.
These samples are tested for various health indicators, including:
- Nicotine and drug use
- Cholesterol levels and blood sugar
- Liver and kidney function
- Certain infectious diseases
Depending on your age and health history, additional tests like an electrocardiogram (EKG) might be necessary. While some insurers offer “no-exam” policies, these often rely more heavily on other data checks and may have limitations on the amount of cover available or result in higher premiums.
Data Verification Through MVR MIB and Prescription Checks
Insurers use several external data sources to verify the information you provide on your application and during the medical exam. This cross-referencing helps ensure an accurate assessment of your risk profile.
Key verification methods include:
- Motor Vehicle Report (MVR): Insurers obtain your official driving record from the relevant state authority. This report details your driving history, including traffic violations, accidents, DUI/DWI convictions, and the status of your license.
- MIB (Medical Information Bureau) Report: The MIB maintains a secure database of coded information shared among member insurance companies. Insurers check this database to verify information provided on current and past applications regarding diagnosed conditions, hazardous activities, or driving records. While an MIB report alone cannot be the basis for denial or higher rates, it can prompt further investigation into discrepancies.
- Prescription Database Check (Rx Check): With your consent, insurers access databases that track your history of filled prescriptions, typically over the last five to seven years. This helps verify reported medical conditions, as the medications prescribed often indicate specific health issues being managed.
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Understanding Health Classifications and Premium Impacts
Health Classes From Preferred Plus to Standard Smoker
After gathering and verifying your information, the life insurance underwriter assigns you to a health classification, also known as a risk class. This classification reflects the insurer’s assessment of your mortality risk based on several factors:
- Your health
- Family history
- Build (height/weight ratio, often using BMI)
- Lifestyle factors such as smoking or vaping
The class you are assigned directly determines the base life insurance premium for your policy, with lower-risk classes receiving a lower premium.
While the specific names and criteria can differ slightly between insurance companies, the typical hierarchy for non-smokers includes several tiers:
- Preferred Plus (or Super Preferred/Preferred Elite): This top tier is for individuals in excellent health with ideal height/weight, no significant personal or family medical history issues, and clean lifestyle habits. It offers the absolute lowest premium rates.
- Preferred: Applicants in this category are in very good health but might have minor, well-controlled issues (like slightly elevated cholesterol managed with medication) or fall just outside the ideal build for Preferred Plus. Premiums are very low, second only to the top tier.
- Standard Plus: This category is for those in good overall health who don’t qualify for Preferred tiers, perhaps due to being moderately overweight, having well-controlled but more notable health conditions, or certain family history factors. Premiums are generally average or slightly better.
- Standard: Considered the average risk class, applicants may be overweight, have treated health conditions, or a relevant family history. They have a normal life expectancy but don’t meet the stricter criteria of higher tiers.
Separate classifications exist for tobacco or nicotine users, usually called Preferred Smoker and Standard Smoker. Even if your health profile otherwise qualifies for Preferred or Standard, current or recent tobacco use (including vaping) places you in the corresponding smoker category. These categories carry significantly higher premiums, often two to three times more than the equivalent non-smoker class, reflecting the increased risk associated with smoking.
The specific thresholds for factors like BMI, cholesterol, blood pressure, and family history look-back periods vary between insurers. This means you might qualify for Standard Plus with one insurer but only Standard with another, highlighting the importance of comparing quotes.
Table Ratings and Flat Extras for Higher Risk Insurance Cover
When an applicant’s assessed risk is higher than the Standard classification allows, insurers often use specific pricing tools instead of declining the application outright. These tools enable individuals with more significant health issues or higher-risk lifestyle factors to obtain life insurance cover, although at an increased cost.
Two common methods are:
- Table Ratings (Substandard Ratings): These are typically used when health conditions such as diabetes, past heart issues, cancer history, or significant obesity are the main reason for the increased risk. Insurers use a table system, often with letters (e.g., Table A-J) or numbers (e.g., Table 1-10), where each step down the table represents a percentage increase added to the Standard premium. For many insurers, each step adds a 25% surcharge (for example, Table B = Standard + 50%, Table D = Standard + 100%).
- Flat Extras: This involves adding a fixed dollar amount per $1,000 of insurance cover each year (e.g., $2.50, $5.00, or $7.50 per thousand). Flat extras are most commonly applied for risks linked to specific activities like skydiving, private piloting, scuba diving, or hazardous occupations such as mining or construction work. They can also be applied due to a poor driving record. Flat extras may be temporary (for a set number of years) or permanent.
It’s possible to receive a standard health classification but still have a flat extra added due to a risky hobby or job. However, table ratings usually replace the standard health class when health is the primary driver of the higher premium.
The way insurers apply these ratings varies significantly. For example, one insurer might offer a Table C rating for a specific condition, while another offers Table E or applies a flat extra. This variability makes comparison shopping essential for anyone anticipating a higher premium due to health or lifestyle factors, as finding the most favourable insurer can lead to substantial savings on your life insurance premium.
Strategies to Make Your Lifestyle Work For Your Life Insurance Cover
Adopt Healthy Habits and Manage Health Conditions Proactively
Adopting and maintaining a healthy lifestyle is a fundamental strategy for potentially securing more favourable life insurance premiums. Insurers often reward individuals who demonstrate lower mortality risk through healthy habits.
Key practices that contribute positively include:
- Maintaining a healthy weight: Achieving a weight within healthy ranges, often assessed using Body Mass Index (BMI) or insurer-specific build charts, reduces the risk associated with obesity.
- Eating a balanced diet: Consuming nutritious foods like fruits, vegetables, and whole grains while limiting processed items, sugar, salt, and unhealthy fats helps manage health markers like cholesterol and blood sugar.
- Engaging in regular physical activity: Consistent exercise, such as aiming for 150 minutes of moderate activity weekly, improves overall health and fitness, contributing to a better risk profile.
- Managing existing health conditions: Proactively managing conditions like diabetes or high blood pressure by following medical advice and treatment plans demonstrates responsibility and can be viewed favourably by insurers, potentially mitigating the impact of the condition on your premium.
Quit Smoking or Reduce Alcohol Intake for Better Premiums
Quitting tobacco and nicotine use is one of the most significant lifestyle changes you can make to potentially lower your life insurance costs. Insurers charge smokers considerably higher premiums due to the associated health risks.
Consider these points regarding smoking and alcohol:
- Waiting period for non-smoker rates: To qualify for lower non-smoker premiums, you typically need to be completely free from all nicotine products (including cigarettes, vaping, patches, and gum) for at least 12 consecutive months. Some insurers require longer periods, potentially three to five years, for the best preferred rates.
- Impact of alcohol: While moderate alcohol consumption generally has minimal impact, reducing excessive intake lowers health risks associated with liver disease and accidents. If you have a history of alcohol abuse, demonstrating sustained sobriety (often requiring 3-10 years depending on the desired rate class) is necessary to qualify for better premiums.
Improve Your Driving Record Over Time
Your driving history is a factor insurers consider, as it can indicate risky behaviour. A poor record with recent serious violations like DUIs or multiple speeding tickets can lead to higher life insurance premiums.
The good news is that the negative impact of past driving infractions typically diminishes over time. Insurers usually focus on the last three to five years of your driving record. Maintaining a clean driving record consistently allows older violations to carry less weight, potentially leading to better rates in the future.
Request a Policy Review or Reconsideration After Improvements
Life insurance premiums are not always fixed for the policy’s duration. Many insurers offer a process for policyholders to request a review or reconsideration if their risk profile has significantly improved since the policy was issued.
You might be eligible for a premium reduction if you have:
- Successfully quit smoking or using nicotine for the required period (usually 12 months or more).
- Achieved significant weight loss and maintained it for at least a year.
- Ceased participation in a high-risk hobby or changed from a hazardous occupation to a safer one (often requiring a year in the safer status).
- Demonstrated improved control over a chronic health condition through documented medical management.
Contacting your insurer to provide evidence of these positive changes can lead to a re-evaluation and potentially a lower premium going forward.
The Importance of Honesty and Shopping Around for Life Insurance Policies
Why Full Disclosure During Application is Crucial
Providing complete and truthful information when applying for life insurance is essential. This principle, known as utmost good faith, requires you to disclose all relevant details about your health, lifestyle choices, medical history, occupation, and hobbies.
Attempting to conceal factors like smoking, vaping, risky activities such as skydiving, or adverse health conditions is a serious error. Insurers employ extensive verification methods to confirm the accuracy of your application.
These verification tools include:
- Medical Examinations: Including blood and urine tests to detect nicotine, drugs, and various health markers.
- MIB (Medical Information Bureau) Reports: Checking a shared database for information reported on previous insurance applications.
- Prescription Database Checks (Rx Checks): Reviewing your history of filled prescriptions to verify medical conditions.
- Motor Vehicle Reports (MVRs): Obtaining your official driving record to check for violations like DUIs.
- Attending Physician Statements (APS): Requesting detailed medical records directly from your doctors.
If an insurer discovers a significant misrepresentation or omission, especially during the policy’s contestability period (typically the first two years), they have the right to take serious action. This could involve cancelling the insurance cover entirely or, most critically, denying a death claim when your beneficiaries need the financial support.
Ensuring honesty from the outset guarantees the validity of your life insurance policy and protects your loved ones.
Comparing Different Insurers to Find the Best Fit and Premium
Life insurance companies do not all assess risk in the same way. Underwriting guidelines, risk tolerance, and pricing models can vary significantly from one insurer to another.
This variability applies to how they view numerous factors, including:
- Smoking definitions (cigarettes vs. vaping vs. cigars)
- Alcohol consumption levels
- Specific high-risk hobbies or occupations
- Criteria for health classifications (e.g., BMI ranges, cholesterol levels)
- How they apply table ratings or flat extras for specific medical conditions
- Leniency towards driving records or recovery from substance abuse
Because of these differences, comparison shopping is vital to finding the most suitable life insurance cover at the best possible insurance premium. An applicant who might receive higher premiums or even a denial from one insurer could potentially qualify for standard rates or a lower surcharge from another company with different guidelines.
Obtaining quotes from multiple insurance providers allows you to see how different insurers evaluate your specific circumstances. Working with an independent insurance agent or broker, who represents several companies, can be particularly helpful.
They often understand the nuances of various insurers’ underwriting approaches and can guide you towards those most likely to offer favourable terms for your individual health and lifestyle profile. This expertise helps you make informed decisions and secure the cover you need. Always read the relevant product disclosure statement (PDS) before choosing a policy.
Conclusion
Your lifestyle choices, including smoking, alcohol consumption, diet, exercise, hobbies, and driving record, significantly influence your life insurance premiums as insurers assess these factors to determine risk. By making positive changes, managing health conditions, and understanding how insurers evaluate risk, you can potentially secure more favourable insurance cover and lower your premium.
To navigate these complexities and find the life insurance policy best suited to your financial situation and lifestyle, contact Money Path in Adelaide today. Our experienced team offers trusted expertise in financial planning and insurance, providing tailored advice to help you secure the cover you need.
