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The impact of mental health on life cover premiums

By Isabelle Coetzee

When taking out life cover, your insurer will consider a range of factors when calculating your premium, including your health. But where does mental health stand in this regard?

We find out how this works and have a look at other factors that are considered when calculating your premium.

Tip: You can get life cover today by filling in the form on this page.

Mental health concerns can raise premiums

According to Mike Wood, managing director of wealth at the Apio Group, insurance providers do consider mental health when calculating life cover premiums.

“All medical history will be considered when applying for life cover – including mental health. As a result, the insurer may create a counter offer letter with a loading or an exclusion,” says Wood.

“In the case of a loading, your premiums will be slightly loaded, which usually means a percentage increase on the initial premium quoted. This could range from 5% to 200%, depending on the severity of the pre-existing condition,” he explains.

Sinenhlanhla Nzama, head product actuary at Investec Life, agrees that mental health plays a role in calculating insurance premiums. However, he points out that clients are treated on an individual basis.

“The impact of mental health on premiums will also depend on how well the mental illness condition is managed. It’s imperative that you are honest with your insurer upfront about all medical conditions, and this will ensure a smooth process when it comes to claims pay-outs,” says Nzama.

READ MORE: Do you still need credit life cover when you have life cover?

What else is considered?

Wood points out that there is a list of other factors which are also considered by insurers when they calculate your premiums. This includes:

  • Age: The older you are, the higher your premiums will likely be.
  • Gender: Since women statistically live longer, they are likely to pay lower premiums.
  • Smoking status: If you are or were a smoker, you could pay higher premiums than a non-smoker.
  • Occupational risks: If your job is considered dangerous, you will pay higher premiums.

How to keep your premiums low

With an understanding of what can impact your insurance premiums, you may be wondering what you can do to reduce them or keep them low.

Wood believes that the best thing you can do is to give up smoking if you’re able to. This will drastically improve your health and your insurance provider will reward you for this change.

In terms of the structure of your premiums, he advises that you keep an eye on the escalations that are part of your insurance agreements, since this can lead to your premiums becoming expensive later on.

“You can always look to ensure that the increases in cover amounts are in line with your needs. For example, if you have cover in place to pay off an outstanding bond or liability, you can have the cover amounts remain level or decrease over time to ensure the premium paid on this portion of the cover is not expensive and does not escalate over time,” says Wood.

And finally, he urges you to structure your cover to your specific needs and ensure that you don’t waste money on excess cover which may not be needed.

Nzama says that you ought to get insurance when you’re younger because you’re likely to have fewer – if any – exclusions or premium loadings for pre-existing conditions on your policy.

“Make sure you partner with an insurer that offers cover that is flexible and adapts as your life changes. Ensure you re-evaluate your cover annually and adjust accordingly,” he advises.

You can get a quote for life cover here to find out whether you could be paying less.

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