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Risk determination plays a big role in life insurance costs

Risk determination is a key when assessing the cost of life insurance. When insurance company evaluates the risk it is taking, several factors are considered.
Risk determination plays a big role in life insurance costs

For example, the younger and healthier the person, the lower is the risk of insurance event and the lower is the cost of insurance.

Some professions or certain types of activities may be associated with greater risks influencing the cost of insurance. Dangerous hobbies or lifestyle (drinking alcohol, smoking) can also affect the risk of insured event.

A complicated medical history or the presence of hereditary diseases can increase the risk of insurance event and build up the cost of insurance.

The cost of the policy is also affected by the insurance amount and indemnity period. The higher the sum insured and the longer the insurance period, the higher the cost of insurance may be.

Risk determination plays a huge role in price formation of life insurance. The lower the risk for insurance company, the lower is the cost of insurance.

Source: https://www.fedweek.com/retirement-financial-planning/risk-determinations-play-a-big-role-in-life-insurance-costs/

Photos are from open sources.

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