When you calculate insurance premiums, the most important piece of the puzzle is the type of insurance you're attempting to price. Homeowners, auto, life, health, long-term care and disability insurance are the most common types and each has specific aspects that affect how the premium is determined.
Determine the age of the insured. Most personal lines of insurance use the insured's age as a primary factor. For example, the very young and very old pay higher auto-insurance premiums because statistics show they have more accidents. For life, disability, long-term care and health insurance, the older you are, the higher the premiums, because the potential for a problem is greater.
Calculate the amount of coverage. No matter what type of insurance you have, it has limits. For health insurance, the limit is the aggregate lifetime maximum; for life insurance, it's the face value of the policy. The value of the property and liability limits is the amount of coverage for auto and homeowners insurance, and it's the replacement income chosen for disability insurance. For long-term care insurance, it's the daily amount of reimbursement and the total amount payable.
Consider your job or hobbies. Life, health and disability cost more if your job or pass time is dangerous.
Look for increased premiums per thousand if you purchase lower amounts of insurance. Life insurance has break points where the cost per thousand drops when you reach them. These are banded premiums. $49,999 might actually cost more than $50,000 of life insurance. The same is true for other types of insurance. The base amount is the most expensive per thousand for the insurance companies to issue. Underwriting and servicing a policy costs the same for a $100,000 home as it does for a $30,000 home. The base liability is the most expensive. Increasing the amount is often just a few dollars more.
Investigate the condition of the property insured. Just like an insurance that covers your person, property insurance increases if the property needs some repair. Companies don't want to insure a house with bad wiring since the potential for claims is higher.
Hunt down discounts. Most of the discounts are in percentage of premium. Life insurance lowers premiums if you’re a preferred risk in great health. Auto insurance offers good driver discounts, multiple car discounts, theft prevention discounts and discounts if you only use your car for pleasure. Homeowners policies offer discounts if you have smoke alarms or burglar protection. Most companies offer discounts if you have more than one type of policy with the company.