What influences your life insurance premium?

Life insurance premiums can vary significantly. So how do insurers work out what they will charge you for your life insurance cover?

Recent figures released by Public Health England revealed a shocking disparity between regions when it comes to life expectancy and premature deaths.%VIRTUAL-SkimlinksPromo%
According to the Longer Lives study, which ranks local authorities, if you live in Wokingham, Richmond Upon Thames or Dorset the chances of you dying early are relatively small (between 200 and 207 per 100,000). However, if you're in Manchester, Blackpool or Liverpool, it's a much gloomier picture. According to the figures in Manchester 455 in every 100,000 die prematurely, followed by 432 and 389 in Blackpool and Liverpool respectively.

The alarming figures have sparked a debate about how health can be improved in the worst affected regions and whether economics play a part.

However, they may also make a difference to your wallet. With people in the North West more likely to die early then the rest of the country, will they find their life insurance policies to be more expensive? Are insurers likely to hike their premiums because a customer lives in an area with a less than rosy outlook?

The good news is that currently providers don't consider postcodes when pricing life insurance (although they do when it comes to annuities and some other products) and none of those that we spoke to had any immediate plans to do so, despite agreeing with the figures. Most of the providers will ask that customers be based in the UK though.

So if your postcode isn't a factor, what does determine the price of your life insurance policy?

Obviously health plays a big part when it comes to pricing life insurance policies. Insurers will want to understand how healthy you are, and will ask about things like your height and weight, any existing medical conditions and treatment you may have had in the past.

Some insurers will also take family history into account, for example, if your parents passed away at an early age from illness, although typically this will be ignored where your policy finishes before you reach 50.

Smokers will pay a higher premium, but if you quit for at least 12 months you can bring down the costs.

If you like to while away your days knitting or reading, your life insurance policy is unlikely to be affected. However, if your pastimes are a little more adventurous they may be taken into account. The measure is whether or not they present "a significant level of risk". So rock climbing, mountaineering, car racing or skydiving could have an impact.

Similarly, if your job involves travelling to dangerous places (such as war zones) you could face a higher premium.

Relationship status
Yes, your marital status can have an affect on how much you pay for your life insurance. Why? Some insurers believe people who are married tend to live longer than single people.

Obviously, the younger you are the more years you have (in theory) to pay into a policy and as such the cheaper it will be.

What isn't taken into account?
Since December 2012 your sex will no longer be taken into account for any insurance product. As women, on average, live longer than men they were traditionally able to get cheaper policies (as they would pay more premiums throughout their lifetime). The EU Gender Directive, which came into effect on December 21st and prevents insurers from using gender when pricing products, put paid to this.

When won't you get cover?
Most insurers want to offer you cover and, as a result, there are very few circumstances in which you will be refused insurance.

If you have a life-threatening illness, a drug addiction or alcohol dependency you may be turned down. Furthermore if your job is deemed too high a risk you may be unable to take out a policy.

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Britain's most dangerous jobs
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What influences your life insurance premium?

By far the most dangerous job across most of the world is fishing. Apparently 103 in every 100,000 fishermen will die at sea - most of them by drowning, and according to Oxford University, those who work at sea are an incredible 50 times more likely to die at work than anyone else.

How well they are rewarded for risking their lives depends on where they fit in the pecking order. At the very top, with your own boat and crew, in a good year, you could bring home more than £100,000. At the bottom of the heap as a trainee deckhand you would be lucky to get more than £10,000 a year.

In the army, these experts have the nickname Felix - because they need every one of the nine lives. We all make mistakes at work and in this role mistakes will kill or maim you. 

In return for taking up such a dangerous role, you'll be paid £32,000 a year, which is made to look even more paltry by the fact that many of these experts end up drawing a disability pension before very long.

The risks of working with highly volatile and explosive materials in impossibly difficult natural environments is bad enough. Add in the risks of working in politically charged environments where you may well be a target for terrorists, and you can see why this is a dangerous job. In fact it has a fatality rate of around 32 per 100,000, and around 100 people a year die in the industry- around twice the average for all UK workers.

This risk, however, is reasonably rewarded - partly because of the fact it can be hard to attract workers to the places where oil and gas needs to be extracted. It's not uncommon for those with experience to be making £75,000 a year.

Put people up high, give them something heavy and awkward to carry, then get them to do it in the rain. It's not surprising this is a dangerous job. What is perhaps surprising is that over the past five years 30% of all work-related deaths in the UK have been in this industry. The riskiest construction jobs are those where heights are part of the every-day business of work - with scaffolders, steeplejacks ad roofers facing the most danger at work.

The pay starts around £20,000 for skilled workers, rising to around £50,000 for site managers.

Around 54,000 road accidents involving professional drivers take place on British roads every year - which is around 250 a day. Meanwhile, one in four of all road deaths involve a driver who is at work at the time. Despite stringent rules about how long they are allowed to drive for, and in-cab telematics to make sure they don't bend the rules, tiredness is the main cause. 

In return for the danger, plus the long hours and the anti-social lifestyle, these workers can expect to earn around £25,000 a year.

The risks are perhaps unsurprising, given that drowning accounts for the majority of fatalities. However there are also problems from high gas consumption and mental health problems, often due to having to spend inordinate times decompressing in a confined space with another individual.

However, given the risks, the inhospitable locations and the skills required, the role can earn you £100,000 a year or more.

These are often ex-military personnel employed to protect wealthy or powerful individuals. The role is unsurprisingly highly dangerous, with the constant threat of terrorist attacks, enemy fire or booby traps.

There really is danger money associated with this job, which is another role than can earn the right individual 6 figures a year.

Around 15 police officers lose their lives at work every year. However, surprisingly, the biggest risk is from involvement in a road accident, which causes 70% of the deaths. Around half of these are officers getting to and from work. Meanwhile no more than one or two are killed by criminals in an average year. Fatalities, however, are only a small proportion of the massive number of injuries a policeman can pick up - with roughly one police officer injured every hour.

In return they can expect to earn around £40,000, rising to £55,000 for senior officers.

Again there aren't a huge number of deaths in the line of duty. However, every fire is potentially fatal, and every job carries the risk of injury. Injures are very common, although burns account for only 5% of them, the rest tend to be due to things like training and carrying equipment.

The pay has been subject to a number of arguments and even strikes but is currently around £30,000.

Perhaps it's surprising that this doesn't come higher up the list. Since 2001 over 350 have lost their lives fighting in Iraq and Afghanistan. The front line is clearly just about the most dangerous environment possible, and has to be up there with the place that most people would least like to work.

In return for putting their lives on the line in the service of their county, army personnel can expect to be paid £14,000 when they start out - rising to up to £100,000 for the most senior officers.

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