What is a Life Insurance policy?
It is a protection against any nancial loss resulting due to the death of the insured; it provides the nancial security to the dependents of insured. The insurer provides this death benet in exchange for the Life Insurance premium paid by the insured.
What is a Life Insurance premium?
It is the money which you pay to the Insurance Company for the coverage of the risk associated with your life. The premium amount varies based on multiple factors.
How is Life Insurance premium calculated?
Life Insurance premium is calculated through the Underwriting process. In this process, the mathematical and statistical calculations are done by the underwriting team of the insurers. The process also involves analysis of any hereditary diseases, medical reports of the insured, etc. Once the information is collected and analysed by the underwriting team, it is further analysed by the statisticians hired by the Insurance companies. These statisticians are referred to as “actuaries”. Actuaries after analysing the data, try to predict the probability of claim of the policy. If the probability of the claim is high, the premium amount is likely to be high for the associated risk. Actuaries also try to predict the probable losses due to sickness or death of the insured through mortality and sickness tables. These tables are used to assign the probability on the likelihood of getting sick or dying with respect to age and gender of the insured. Based on the data analysis from the mortality and sickness table, premium amount is calculated.
Factors inuencing your Life Insurance premium
Including the basic factors such as age and gender, several other factors inuence your Life Insurance premium and are listed below:
1. Age: It is the rst factor which comes into the picture before a Life Insurance company decides the premium. A person at a young age is at a low risk of getting life-threatening diseases. Also, a young person will be paying more number of premiums as compared to someone older. Therefore, the premium amount will be low if you are buying a Life Insurance policy at a young age and you have to pay a high premium if you buy a policy at an older age as the risk of getting life-threatening diseases or death increases.
2. Gender: Study says that women on an average live ve years longer than men. As a result, the number of premiums women would be paying is usually more than men. Hence, the Life Insurance companies charge less premium amount for women as compared to men.
3. Medical History of the Family: Family’s medical history plays a vital role in the determination of the premium amount. If in the past, there have been any instances of serious illnesses such as heart attack, stroke, cancer or any other major disease in your family; it increases the chance of contracting such diseases from heredity perspective. Hence, the Life Insurance companies will charge a higher premium.
4. Smoking and Drinking Habit: Smoking and drinking can cause a major setback to your health thereby increasing the risk of life-threatening diseases or in certain conditions even death. Life Insurance companies before deciding the premium amount checks with the insurer about such habits. A person who consumes alcohol or smoke will have to pay a premium two or three times higher than the one who doesn’t
5. Your health history: Insurance companies consider your past health status in the determination of the premium amount. So if you are healthy and t and have not come across any chronic disease or any other fatal health issue in the past, the premium charged will be low and vice-versa .
6. Your current health status: Insurance companies also carry out underwriting process and ask you to undergo some medical tests such as checking your cholesterol level, blood sugar level, blood pressure, etc. before assigning the policy for the determination of your current health status and decide on the premium amount. So, if you are medically t, the premium will be low.
7. Your lifestyle: If you love to take a risk or involve yourself in risk-taking activities such as skydiving, mountain climbing, car racing, hot air ballooning, sea diving, etc. then the premium charged by the insurer will be high.
8. Your Profession: If you are into a profession such as shipping, transport, mining, piloting aircraft, sheries, oil and gas, etc. the risk of accidental death would be high, as a result the premium charged by the insurer will be much higher compared to someone who is in a profession where the risk to life is minimal such as a desk job.
9. Policy Tenure and Death Benet: The policy itself plays a crucial role in the determination of the premium. The longer the tenure, the higher the death benet amount and hence higher the premium. In other words, long-term policy is more expensive than the policy availed for a shorter duration. Also, a Term Life Insurance policy is cheaper than the whole life Insurance policy.
10. Mode of buying a policy: If you are buying a policy oine through an agent, it will include costs such as the commission of the agent, administrative cost, distribution channel cost, etc. On the other hand, if you are purchasing a policy online directly from the company, the cost will be low as it eliminates the intermediary costs.
11. Mode of Premium Payment: You can make the payment of your premium on the monthly, quarterly, half-yearly or annual basis. However, the Insurance companies charge a higher premium for the payments made on a frequent basis such as monthly or quarterly as the cost of servicing i.e. collection, administrative and processing costs for such premiums will be high for the company. On the other hand, the premium paid on an annual basis will be low as the company will have the amount available with them for the entire year.
12. Obesity: A person, who is obese in excess, carries a higher risk of illnesses such as blood pressure, diabetes, heart problem, stroke, etc. As a result, the premium amount will be high.
Final Words All the above factors carry dierent weights and vary based on multiple factors. You can do a comparative analysis of various Life Insurance policies available in the market and opt for the one that suits your requirement. Also, you can look at factors like reputation of the insurer, customer service, claim settlement, etc. before choosing one insurance product over the other.
Workers' compensation insurance pay benefits to employees for injuries incurred on the job. It is a mandatory coverage in a majority of states. Thus, most businesses that employ workers are obligated by law to purchase workers' compensation coverage.
Origin of Workers' Compensation Laws
Before workers' compensation laws were enacted, U.S. workers faced a multitude of employment-related hazards. Many toiled in dirty factories, dusty mines or fire-prone offices.
Numerous workers suffered serious injuries or were killed on the job.
Injured workers (or their survivors) who wanted compensation for their injuries had only one option: suing their employer. Few employees took this step. For one thing, lawsuits were expensive and most employees lacked the needed funds. Secondly, employers could defeat most employee lawsuits by using one of the three defenses listed below. These defenses are often called the "unholy trinity" because they were so difficult for injured workers to overcome:
Contributory Negligence: The employee's own negligence contributed to the injury.
Assumption of Risk: The worker assumed the risks of the job when he or she agreed to employment.
Fellow Employee Negligence: The worker's injury was caused by the negligence of a fellow employee
By the early 20th century, the American public had become sympathetic to the injured workers' plight and demanded reforms. In 1911, Wisconsin passed the first workers' compensation law in the U.S. Other states quickly followed, and by 1920 a majority of states had passed a workers' compensation law. The last state was Mississippi, which passed its law in 1948.