7 Factors That Affect Your Life Insurance Premium

Life insurance can help you protect your loved ones from financial strain, but it’s also a major investment. Over a period of years, a lower premium can yield major savings. When you're pricing life insurance policies, you'll want to consider the major factors that insurers use to calculate the cost of your premiums.

Some of these factors considered for getting life insurance are beyond your control, like your age. However you can take steps to lower your life insurance premium in other ways, such as by making lifestyle changes and improving your health.

Key Takeaways

  • Life insurance can be financial tool to help you provide for your loved ones after your death, but it's a significant investment.
  • Many factors contribute to the cost of your premium and whether you qualify for discounts.
  • Age is the most important factor in determining your premium cost. The younger you are, the lower your payments.
  • Gender is also a key factor in life insurance cost as women generally live longer than men.
  • Insurance companies consider your health, lifestyle, family medical history, driving record, and whether or not you smoke.
Factors That Affect Your Life Insurance Quote

Investopedia / Ellen Lindner

1. Age

The primary factor affecting the cost of life insurance premiums is the your age. Life insurance policies are less expensive for younger people, who have longer life expectancies and are less likely to get ill. In some cases, you may not even qualify for life insurance if you are over a certain age.

Typically, the cost of a life insurance premium increases from 8% to 10% on average for every year of age. Essentially, the longer you wait to buy life insurance, the more you will have to pay for premiums. With term life insurance, your premium remains the same every year. However, after your term life insurance expires, should you buy insurance again, your premium will likely be higher because you are older and your health status may have changed. The premiums for whole life insurance should stay the same. Qualifying medical exams are likely to get more stringent as you age.

2. Gender

Gender is also a significant factor in the price of life insurance. Insurance carriers use statistical models to approximate how long someone with a specific profile will be around. Women, on average, live nearly five years longer than men, so they have lower rates as a result.

3. Smoking

Smoking puts you at a higher risk for many health problems. So, life insurance companies charge more to insure smokers. In fact, smokers may pay more than twice as much as non-smokers for comparable coverage.

An insurance company may classify you as a smoker even if you occasionally smoke cigarettes, cigars, or vapes. If you lie to your insurance company about your smoking habits and get caught, you policy could be canceled.

4. Health 

The underwriting process for most carriers includes a medical exam in which the company records your height, weight, blood pressure, cholesterol, and other vital metrics. In some cases, it may also require an electrocardiogram (ECG or EKG) to check your heart.

It’s important to get serious conditions like high cholesterol and diabetes managed before searching for coverage to ensure a competitive rate. Some companies offer “no exam” policies, but expect to pay more.

5. Lifestyle

If you lead a risky lifestyle with hobbies such as racing cars, scuba diving, or rock climbing, you'll probably have to pay substantially more for insurance. Some companies also charge more if you have a relatively dangerous profession such as a police officer or a miner

6. Family Medical History

Having a family history of stroke, cancer, or other serious medical conditions may predispose you to these ailments and result in life insurance higher rates.

Carriers are usually interested in any conditions your parents or siblings have experienced, especially if they have contributed to a premature death. Some life insurance companies factor in your family’s health history more than others.

7. Driving Record

Many life insurance companies will look at your driving record during the underwriting process. Whether or not they ask about violations on the application, they can access your Department of Motor Vehicles records to find out if you have any concerning violations.

Keep in mind that the last three to five years carry the most weight. So if you’ve improved your driving habits since then, you may benefit from a more favorable price.

What Is the Age Limit for Life Insurance?

Each life insurance company and policy will have its own age limit for you to qualify for life insurance. Generally, the older you are, the more difficult it will be to get life insurance. Many life insurance companies do not offer life insurance policies after you reach a certain age, like 85.

How Does Gender Affect Life Insurance Premiums?

Men generally pay more for life insurance than women because they have a shorter life expectancy. However, gender is not the only factor that determines the prices of premiums. Other factors like lifestyle and age can make one policy more expensive than another.

What's the Best Age To Get Life Insurance?

The younger you can purchase a life insurance policy, the more affordable it will be. When you buy life insurance, you'll also want to consider your income and coverage needs.

The Bottom Line

Life insurance is a common financial tool that can provide security for your loved ones who depend on you. This can give you peace of mind that if you die, your beneficiaries won't face financial hardships. However, life insurance can also be a significant expense and it's not necessarily ideal for everyone.

Familiarize yourself with different types of life insurance, such as term, whole, and variable life insurance. Then, consider consulting with a financial professional to determine which life insurance may be right for your situation and goals, and how you can reduce your premium costs.

Article Sources
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  2. U.S. Census Bureau. "Living Longer: Historical and Projected Life Expectancy in the United States, 1960 to 2060," Page 5.

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  4. Guardian Life. "Life Insurance Rates 2022."