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Insurance Coverage and Fixed Annuity Rates

Insurance coverage is a complicated subject. In fact, few people outside of the insurance industry really understand how financial coverage is determined or why two people in different circumstances may have very different coverage limits.

What is Insurance Coverage?
Insurance coverage has two related definitions: 

1. inclusion in an insurance policy's protection
2. the amount of financial coverage offered by the insurance company, or the amount of cash that could be received when making a claim.

How is Financial Coverage Determined?
Different factors, many of which are beyond a policyholder's control, determine how much financial coverage an insurance agency chooses to offer an individual.

In life insurance, for instance, the following aspects are taken into consideration:

• age 
• general health (i.e. disabilities, congenital conditions, etc) 
• gender (women tend to live longer than men)
• lifestyle (i.e. smokers and heavy drinkers generally receive less financial coverage than other policy holders).

Auto insurance coverage also calculates financial coverage using age and gender as variables. For example, young male drivers are statistically more likely to be involved in auto accidents than other demographic groups. As a result, the premiums for the same financial coverage will be higher for a 19-year old male than a thirty-year old female.

Previous insurance history is another factor that affects insurance coverage. An individual with a repeat history of insurance claims will have difficulty obtaining adequate financial coverage. As a result, (s)he may have to pay high premiums to secure even limited insurance coverage.

Variable and Fixed Annuity
Life insurance coverage is determined, in part, by the results of medical tests taken at the beginning of the policy. Life insurance coverage can be taken out as a variable or fixed annuity. While a fixed annuity remains the same for years, or even for life, variable annuity financial coverage can change over time, as the policyholder's health changes.

Of the two, fixed annuity life insurance has the higher premiums. However, it also has advantages over a variable annuity. As people age, life insurance coverage becomes more expensive and difficult to obtain. If a young policy holder opts for fixed annuity life insurance, the financial coverage will be the same for as long as (s)he maintains the insurance payments.

Improving Financial Coverage
You can improve your insurance coverage in a number of ways, depending on the type of insurance policy you are looking to improve. For example, you may be able to improve your life insurance coverage by proving that health conditions are under control and being treated consistently.

Auto insurance coverage can be improved by maintaining an accident-free record for several years. Financial coverage may also be higher if the policyholder takes driver safety courses. Even switching vehicles can increase coverage: sports cars, convertibles, and vehicles popular with car thieves, for example, have higher premiums because they are greater coverage risks than other vehicles.

Homeowners can take steps to improve their financial coverage and lower insurance premiums. A house with a security system and sprinkler system will have better coverage than a house lacking these features. The location of the nearest fire hydrant also plays a role in setting home insurance coverage and premiums. Conversely, a home with an outdoor swimming pool will have higher premiums for coverage, due to the increased possibility of accidents.

If you are looking to reduce your insurance coverage premiums further, consider taking out higher than normal deductions on financial coverage. For instance, an auto insurance coverage with a $500 deductible will have higher premiums than the same coverage with a $750 deductible. The monthly savings obtained with high deductibles must be balanced against the expense of the deductible should a claim ever become necessary.