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How Good Choices Can Save You Money on Insurance How Good Choices Can Save You Money on Insurance
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How Good Choices Can Save You Money on Insurance

Insights & Ideas Team •  October 17, 2016 | Your Finances

Buying insurance isn’t like ordering a burger at a fast food restaurant, where the price on the wall is what you pay. The cost of insurance—whether it’s car, home, health, disability income or even life insurance—can vary depending on a number of factors.

For example, if you’re overweight, you may pay more for life, disability income and health insurance. Similarly, if you live in a bad neighborhood, you can expect your auto and home insurance to be more expensive.

But if you’re aware of the things that can cause you to pay more, you can take action now in order to save money in the future.

Free Download: Term or Permanent Insurance, Which is Right for You?

Auto Insurance

Auto insurance rates vary based on a few factors—some of which are out of your control, such as your age and gender. But one of the biggest factors that decides how much you’ll pay is what you drive. Drivers who own safer vehicles or cars that aren’t often targeted by thieves typically pay less.

Other factors that can affect your car insurance rates include your credit rating, where you live and how often or far you drive. The less you drive, the fewer accidents you are at risk of having.

Rack up enough traffic infractions or violations and you’ll also pay more. Someone with too many speeding tickets or a record of reckless driving or operating a vehicle while intoxicated can expect higher premiums.

Home Insurance

Home insurance is very dependent on the state and location of your home.

One of the biggest factors that affects your rate is your neighborhood since it helps predict how likely you are to experience thefts, fires, floods, sewer backups or storm damage. Another location-based factor is how far your home is to the nearest fire hydrants and fire stations.

If you want to reduce your insurance costs, you can renovate your home to ensure it includes copper or plastic pipes, a new roof, an updated electrical system, forced-air gas or electric heat, and monitored burglary or fire detection systems. These features are associated with fewer claims and so will help you save money.

Another thing that could affect your rates is your credit score—so improving your score could reduce your rates.

Term or Permanent Life Insurance: Which Option is Right for You?Health Insurance

Your health is tied to the cost of health insurance because it’s a good indicator of how often you’ll use your insurance. Some conditions that might affect the cost—like age, gender, family history or conditions you already have—are beyond your control. But there are many aspects of your health that you do have the power to manage or even prevent.

Take tobacco, for example. If you smoke, chew tobacco or use snuff, you’ll pay more for health insurance. Being overweight or having a body mass index (BMI) that’s too high also increases the chances that you’ll suffer from related health problems.

Some other factors that could affect your health premiums include high blood pressure, sleep apnea and diabetes. Taking good care of yourself by eating well and getting exercise could decrease your premiums since it could help cure or reduce the severity of these issues.

Disability Income Insurance

One of the biggest factors affecting your disability income insurance rates is your profession. Obviously, those in more dangerous jobs have higher premiums, but there are other considerations, too.

How old you are has a lot to do with it, as the older you are, the more expensive your insurance will be. So, the sooner you buy disability income insurance, the lower the monthly cost might be.

Besides age, there are two other major factors. Risky behavior and your health both affect your premium. For example, you might pay more if you have recently gotten a speeding ticket, if you’re learning to fly or if you have any of the health risk factors that also affect your health insurance. If you choose to avoid behavior that might place you in a risky situation, your reward may be lower insurance rates over time.

Life Insurance

Similar to health insurance and disability insurance, life insurance is cheaper if you’re young and healthy. Any chronic diseases may increase your rates, as would a high BMI, smoking, drug use or excessive drinking, By choosing to take care of your health through exercising, eating well, avoiding drugs and tobacco use and moderating drinking, you can potentially reduce your rates.

Risky behavior like speeding or drinking and driving will also make your premiums more expensive, as would participating in dangerous hobbies like skydiving or mountain climbing.

Make the Right Choices and You’ll Save Big

Premium rates for different types of insurance can vary widely depending on whether your behavior qualifies you for discounts. Obviously, what you pay for insurance isn’t the only consideration when making choices in your life. But being aware of some of the things that can cause your insurance rates to increase can help you can take steps to make changes, live a healthier or safer life and save money.

Northwestern Mutual and its subsidies do not offer auto, home or health insurance. 

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