Insurance is all about providing cover to certain people for certain events as a means of protecting against specific risks. In providing that cover, an insurer has to determine the level of risk in providing someone with cover and what it will mean for them by providing that cover. In coming to a decision on whether to provide the cover or to provide the cover with additional conditions, insurers assess risk based on certain aspects depending on the nature of insurance you are taking out.
Some of these are –
- Income Level
- Smoker Status
- Education Level
- Claims History
- Credit Record
- High Risks Areas or Assets
- Reason for use (business or personal)
- Safety and Security
This is not a defined list and there are many more aspects that go into the process. These things all play a part in the final premium that you pay to your insurer for covering a specific risk. It is very important that as a client you understand why your premium is what it is. It is always advisable that when taking out insurance of any nature that you speak to a financial coach or financial adviser who can provide you with the necessary guidance and understanding. Using a financial coach or financial adviser can also help you in making a more informed decision as they could assist you getting multiple quotes from different providers in order to score you the best deal for the specific levels of risk being insured.
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