LSM Insurance Quoted in the Toronto Star

Summary

LSM Insurance insights were quoted today in the Toronto Star in an article about how to save money on life insurance. The Star quotes her regarding the possibility to save money on life insurance policy even after it was purchased.

In the article, LSM Insurance explains the probable procedure of insurance companies in case of re-evaluating the life insurance premium rates and other ways of influencing the costs of life insurance. The article itself deals with the ways of reducing the money spent on a life insurance policy by changing lifestyle factors like smoking, drinking, weight, or driving record.

Full Article

“Purchasing a life insurance policy is an important way you can financially protect your family in the case of your premature death, but life insurance premiums can take a chunk out of your budget. But there are ways to keep the cost down.

Your insurance premiums are generally based on the type and amount of insurance you buy and your chance of death based on your age, your medical conditions and your family health history. However, lifestyle factors under your control like smoking, drinking, your weight and your driving record also significantly impact the cost of life insurance.

You may be surprised to learn that even after you have purchased a life insurance policy if you can show that you have eliminated certain risk factors for a year, your insurance company will re-calculate your premiums, saving you considerable money over the life of the policy.

“In these circumstances the life insurance company would likely investigate and send a nurse out to do a new medical examination before reducing the premium rates,” say insurance experts from LSM Insurance.

Here are some examples of factors that influence the cost of life insurance and the impact on your premiums that can result from lifestyle and other changes.

1. Smoking: If you are a smoker, your premium will be twice as high as a non-smoker. Therefore a 35-year old non-smoker who purchases $500,000 of term insurance will pay about $40/month. A smoker of the same age will pay more than twice that amount. If you stop smoking for over 12 months you can apply to the insurance company to have your premiums reduced to non-smoker rates.
2. Excessive drinking: A person who has 3-4 drinks a day will be considered an excessive drinker. In these circumstances, premiums can be up to 50 per cent higher. Rates can also be subsequently reduced for people who reduce or eliminate their alcohol intake entirely for over a year.
3. Weight: One factor insurance companies use to assess risk factors when you apply for life insurance is your Body Mass Index (BMI) – a number calculated based on your weight and height. A BMI of over 30 is considered obese.
   For example, a man who is six feet tall and weighs 265 pounds has a BMI of 35.9. If this individual reduces his weight to 180 lbs. (normal BMI of 24.4) and keeps the weight off for a year, he too can ask for a recalculation of premiums. The reduction will differ from case to case, but if weight loss results in lower blood pressure, cholesterol and/or blood sugar the reassessment will take these factors into consideration.
4. Your driving record: Life insurance companies, like automobile insurers will punish you for a poor driving record. Your premiums may be 25-50 per cent higher depending on your record. Convictions for serious offences like drunk driving, careless driving and speeding will have a greater impact than a handful of parking tickets. The typical time for minor driving offences to be expunged from your record is three years, and you can ask for a rate review at that time.
5. Age: Standard life insurance premiums are calculated based on your age. Therefore if you apply at for life insurance age 35, the annual premium quoted will be higher than if you purchased the policy a year or two earlier. It may be to your advantage to have the policy backdated to an earlier age. You will have to pay a lump sum to cover the premiums for the backdated period but all future premiums will be at the lower rate.

“If you pay off your mortgage or your children become self-supporting you may want to reduce the face value of the policy for the balance of the term,” says LSM insurance.