Calculating your Insurance Premiums
July 19th, 2009 by MilesVickstrom
Insurance is all about managing risks, any insurance companies will not take any risks when rates are set, which are paid by you as premium. They would take precautions to make sure that you wonât die prematurely; it may cause them to pay out more than the amount paid by you. The risk here referred is the pretty much the same health risks such as, tobacco use, cholesterol, diabetes, over weight or fat, and many other conditions related to poor health and early death. To account for these risks, insurance company would designate your status based on age, gender and health, and that would further determine how much you pay for a given amount of insurance.
The insurance company would ask you about your medical history and may want you to take some sort of physical exam as well. While filling up the health questionnaire you need to be faithful, in case you lie the company will find out and your policy would be canceled. And if in case your sick and were to die and then the company found out you lied earlier, for instance, you said you were a non-smoker but ended up dying of lung cancer from a smoking habit, they could deny the death benefits.
Some of the risk factors cannot be controlled, such as age and gender. âWomen live longer than menâ, so normally women have the benefit of lower rates on insurance. And as men tend to have shorter life spans, they have the benefit of paying lower rate on annuity. Same your age also have an affect on premium. Younger people, who have much longer to pay premiums before they die, pays a lower rate compared to the older people. Your life style, your family medical history and your mental, physical condition as well matters while calculating premiums.
Most of the insurance company will ask you to undergo a physical exam, a medical doctor would check your weight, blood pressure and other vital signs, and may take a blood and urine sample. Some cases may also require extensive tests such as X-ray or EKG. Your blood and urine samples would be tested for sign of disease such as HIV virus, cholesterol level, diabetes, kidney problem, hepatitis and any other problem as well. The samples would be then screened for the findings of nicotine and some medications as well as for illegal drugs.
Some insurance companies would even improve an individual’s rating, and adjust the premium, for risk factors, which reduces over time. For example someone who purchased life insurance shortly after about with his cancer, that person would possibly be paying high-risk rates because of his health history. But, because the risk of the cancer returning reduces over the years, that individual may contact the insurer after being cancer-free for five years and may get a lower rate.
Divyasena
http://www.articlesbase.com/insurance-articles/calculating-your-insurance-premiums-94196.html
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Posted in insurance | 8 Comments »
July 19th, 2009 at 10:58 am
How are car insurance premiums calculated?
I am not looking for actual numbers necessarily, just a typical formula. e.g.
base_price_for_vehicle plus price_for_vehicle_modifications multiplied by percentage_for_owner_age multiplied by percentage_for_postal_code multiplied by percentage_for NCD
July 19th, 2009 at 4:00 pm
by an eejit
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July 19th, 2009 at 4:02 pm
There isnt a formula as such, but each answer you give either raises the figure or lowers it (occasionally).
For example, age=17 wil increase your premium by a few hundred pounds.
Vehicle = Land Rover will bring it down a little.
Postcdes have a significant effect.
Quotes can vary depending on the day or time of the month. Try it, it really does work
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July 19th, 2009 at 4:04 pm
Your formula is pretty accurate. There could be other factors. Assigned risk (under 25, male vs female, past accidents or tickets), amount of coverage.
Distance travelled to work is one factor I know goes into it.
Also post codes are assigned "risk" values based on number of accidents or claims for that post code.
Also how long you’ve been with the company could be a factor and I know if you haven’t had insurce in recents times that’s also a factor, as they assume you were driving without insurance.
Type of vehicle also. Sports cars get higher rates.
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July 19th, 2009 at 4:06 pm
In addition to the above, they ask if your car will be kept in a garage or on the street, so I guess this makes a difference. Your occupation my also make a difference – people in the entertainment industry are charged higher premiums for some reason.
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July 19th, 2009 at 4:08 pm
I wish I could give you a formula. The best I can do is list the factors that have an affect:
Age of driver
Gender of driver if under age 25
Driving history
Veh specifics (yr make model)
Cost to repair or replace said vehicle
Damage said vehicle likely to cause
Safety features of vehicle (alarms/airbags/daytime running lamps)
Territory (where vehicle is kept when not driven)
Purpose/Use of vehicle
Insurance credit score if over 19 in most states
Whether or not you have an established history with an insurance company
Hope this helps
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Licensed agent for 48 states and DC
July 19th, 2009 at 4:10 pm
Holy cow, it’s based on SO MUCH STUFF!
The VIN #, sex of driver, age, driving record, location, and sometimes credit… I’m sure there’s more…
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July 19th, 2009 at 4:12 pm
Here is a list of some of the variables that an auto insurance underwriter considers when determining your auto insurance rate:
Location the vehicle is garaged
Type and model of vehicle
Value of the vehicle
Coverages provided and limits of coverage
Deductible
Age of Vehicle
Your age
Your Gender
Your driving record
Vehicle theft rates for your type of vehicle in your territory/area
Number of miles you drive the vehicle per year
The auto insurance companies loss experience for that type of vehicle and drivers in your age and gender group
If your vehicle has any anti-theft devices
If the vehicle is used for commercial/business purposes, what are those, and how often.
These are a few of the factors used to develop your auto insurance premium. Having been an underwriter for an insurance company I can tell you each insurer has their own set of guidelines on how they price auto insurance.
I hope that helps.
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