Sources of risk / Factors creating risk in life insurance

There are many factors that create risk in life insurance. They are:

i. Age:
The less mortality rate is normally 10-35. Age is a considerable factor. It is regarded as the major risk in life insurance. Since the mortality rate of young age people is less so life insurance of those people is risky than the adult people.

ii. Profession:
Profession is another source of risk in life insurance. For example- professional driver has mortality rate is high. So driver, mariner, pilot etc. have more risk in life insurance.

iii. Physical condition:
It also creates risk. It depends on physical condition. If physical condition is well or if a man is vigorous then his life insurance is less risky.

iv. Character & Habit:
Character and habit is most important of the man. Bad habit create the risk such as smoker, drunker have more risk on life insurance because they cannot survive a long days.

v. Family History:
Sometime family history creates risk. Such as diabetic, heart-problem, pressures etc.

vi. Residence:
Residence is sometime creating risk. Where air pollution is high, there mortality rate is also high. The people who live in slum, their mortality rate is high.

vii. Education:
Education is another considerable factor that creates risk. Highly educated people have no risk and illiterate people have more risk. The people who are educated pass their life in hygienic way as a result their mortality rate is low than uneducated people.

viii. Economic status:
It is another factor. The person whose economic status is low, his mortality rate is high.

ix. Race & nationality:
Risk also depends on race and nationality. The people who are Chinese, Japanese, their mortality rate is low as a result their risk in life insurance is less.

x. Sex:
Sometimes sex of the person also created risk in life insurance.