Essentially, the whole risk management process involved around premiums and creating an accurate risk profile of a client based on their potential risks to the company, is all created, managed and maintained by actuaries.
Specialised mathematicians that focus on creating financial models specifically for companies that expose themselves to risk. Essentially, they work out all the statistics of any given scenario related to the business and then they determine the ideal risk profile for the company.
If youf fit the profile, then you can afford to give them the cheapest premium possible. If they are out of the risk profile and they have a poor financial track record, they will most likely be a bad risk to the company.
So when you compare life insurance policies quotes, and you see the difference in the amounts that you have to pay, you would see how each company views you in terms of risk.
If you can get a good premium with a particular company then you know that you fit their ideal risk profile. The variances in the rest all mean that there is something about your profile that they view negatively.
You also need to remember that its not necessarily the risk profile that affects the premium.
In some instances they take factors into account that others dont and that is all because they view those particular factors as relevant to the profile and therefore include them into the calculation.
You will be able to spot the companies that do it because they ask slightly different questions to the rest and even if you match up with everything else and the one thing that is extra pushes your premium through the roof.
They basically increase the premium to make sure that they cover themselves in terms of financial losses. A bad risk could mean that they would have to pay out regular claims on an insurance policy for example.
Unfortunately, the financial institutions have to be strict with the money they are dealing with and even the slightest discrepancy could put you out of the running.
Over and above the premium you are paying, you also need to be able to compare the benefits of each policy so that you know what you are covered for and whether or not you are getting value for money. You may want to add a few extension that cover for disability or an extended cover period.
This are several good reasons for you to compare life insurance policies and choose the one that fits you better.
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