Important Factors That Can Severely Affect Your Insurance Plan

Are you wondering why insurance premiums vary from company to company? Insurance companies rely on the data they gather from specific groups of people to establish the level of risk they pose. Each company uses different types of data to calculate their rates on different offers, and clients who belong to a high-risk group often pay high monthly premiums. Read on to learn more about the important factors that can severely affect your insurance plan. 


The first factor that can affect your insurance plan is your location. Most insurers ask for your ZIP code to determine where you are located and based. People who live in populated urban areas are likely to pay higher premiums for auto insurances compared to individuals living in less populated rural areas. The same applies to house and business insurances where location plays a critical role in determining the premiums. If you live in neighborhoods known for higher rates of theft and other risk factors, your plan is also likely to be affected. 


Age can also impact your insurance plan depending on the type of policy that you want to get. For example, in auto insurance plans, younger drivers usually pay high premiums for their policies since they belong to the high-risk group of drivers. On the other hand, young and single people pay lower premiums for life insurance policies compared to people who are past their prime age. 

Type of Plan and Coverage

There are different types of insurance policies that are designed for various purposes. The common types of insurance plans include life insurance, health insurance, auto insurance, home insurance, business insurance, and travel insurance. Before you choose a policy, you should have a reason why you need it. Your income can play a crucial role in determining the type of policy you can get together with the monthly payments you will make.    

Regardless of age, gender, or occupation, medical insurance is one of the most critical policies that everyone must have. While everyone has the right to basic healthcare, this can be difficult without a proper health insurance plan. The two most common types of health insurance include private and public policies. The private policy offers more benefits than public health insurance. With this healthcare plan, there are different services that you can get which are not covered by public policies. Also, your level of income can severely impact your plan as privacy policies are more costly than public plans.


Your insurance deductible plays a significant role in determining the monthly payment for your policy. A deductible is the money you pay for covered services before the insurance plan begins to pay, and they apply to different types of insurances. A policy with higher deductibles has lower monthly premiums while a plan with higher monthly premiums comes with lower deductibles. 

Marital status

Marital status can also be a factor that can affect your insurance plan. For example, married couples are more considered to drive safely than single individuals. As such, young and single drivers pay higher premiums for their auto insurance. Also, married couples can get discounts on auto insurances since they are regarded as responsible drivers. However, when it comes to life insurance, younger couples pay lower rates than elderly people due to the age factor. 

Credit History

Your credit history can affect your insurance plan in many ways. Those with poor credit scores are likely to pay high insurance premiums while people with good credit scores pay more favorable insurance rates since they are not categorized as high-risk. Therefore, you must maintain a good credit score to have a positive impact on your monthly insurance premiums. To do this, you must ensure to repay your debts on time to avoid interests that can affect your credit rating. You should also try to minimize your debts or avoid having one if not necessary. 

Claims History

The last factor that can affect your premium pay and plan is your previous claims. Insurers believed that there is a correlation between the claims that one made before and the future claims that are likely to be made. If you have a high rate of claims, you should not be surprised when you are charged with higher premiums for your policy. 

Insurance helps to protect people from unexpected and unfortunate things that can greatly impact their lives. There are many different types of insurance policies available on the market, and these are designed to suit the needs of different people. However, other important factors can also affect your insurance plan, and you need to know about them. Before getting an insurance policy of any kind, do thorough research to establish if it is the best fit for your needs.