The American theologian and professor Reinhold Niebuhr is credited with having composed the serenity prayer (no, not this). Although it is called a prayer, it certainly has secular applications as well. It goes, Grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.
So many people get upset over things they have no control over while at the same time, doing little or nothing about the things they have control over. Of course I’ll relate this to life insurance.
There are four main factors the determine the premium of a life insurance policy and we have control, either total or partial, over three of them. The four factors are age, health, face amount, and how long we want the policy to last.
The only factor we have no control over is our age. So of course some people choose to use age as a deal breaker. “It’s too expensive at my age.” We can choose to buy at our current age, but no younger (insurance fraud carries some hefty penalties).
The one we have partial control over is our health. I say partial because there could be some genetic or congenital issues over which we have no control. But we absolutely control how much and what types of food we eat, how much or how little we exercise and whether or not we choose to smoke and/or drink.
To illustrate the effect that tobacco has on premiums, let’s look at the premiums for a $1,000,000 20 year term policy for a 40 year old male in top health versus a 40 year old smoker. The annual premium for the best non-tobacco class is $595 whereas the best tobacco premium is $2,764.
As previously stated, there could be reasons beyond one’s control which would preclude an individual from obtaining the best underwriting class, but the individual absolutely controls whether s/he falls into the tobacco or non-tobacco category.
The next factor that influences the premium is the face amount. The higher the face amount, the higher the premium. Although there are some breakpoints such that the cost per thousand of $1,000,000 policy is less than the cost per thousand of a $500,000 policy, the absolute cost is obviously higher.
The last factor is how long we want the coverage to remain in force. The longer we want the coverage to last, the higher the premium. That is because the longer the time frame, the more likely our ultimate mortality will occur within it.
So not only with life insurance, but with everything, we should endeavor to control the things we can accept the things we can’t. The great Roman Emperor Marcus Aurelius offered this related advice: “Be careful not to give the little things more time and thought than they deserve.”