8 Factors That Can Affect Life Insurance Premiums

Life insurance is one of the means by which you can protect your loved ones. In exchange for a regular premium payment, you gain peace of mind, and if you were to pass away, your beneficiaries would be provided for.  

However, it’s not always obvious what factors affect the cost of your life insurance premium. As you apply for life insurance, aspects of your application could raise or lower your rates —knowing what those are and how you can try to lessen your premiums is worth exploring. 

According to a survey by Life Happens, less than half of Americans consider themselves to be knowledgeable about life insurance. This is especially true when it comes to the cost of insurance, with Americans’ median estimate of the cost of life insurance clocking in at more than three times the actual cost. 

So, what actually affects life insurance premiums? We’re here to demystify the process so you know what factors impact your premium rate as you’re comparing life insurance policies.

8 Factors That Affect Life Insurance Premiums

1. Age 

Your date of birth is the top factor affecting the cost of your life insurance. There are a number of reasons why age factors into life insurance. Younger policyholders pay lower premiums for a simple reason: as you age, the likelihood an insurer will have to pay out on your policy increases. Therefore, premiums increase.

2. Gender

Women tend to live longer than men. In the United States, the average life expectancy for women is 80.2 and 74.8 for men. This disparity means that women generally pay less for life insurance than men do.

3. Health History

Insurers may require a medical exam and access to your health records before issuing a policy. Having a history of medical conditions, especially serious illnesses such as heart disease or cancer, will increase your premiums. Insurers will also look at your weight, cholesterol levels, blood pressure and other metrics that could indicate future medical conditions. If you needed another reason to look out for your health, this is a good one!

4. Family Health History

Even if you have no current medical conditions, a family history of illness, especially hereditary diseases, could factor into your life insurance premium and increase the cost of your coverage.

5. Smoking

 The health risks associated with smoking, including potentially fatal diseases like cancer, mean increased premiums. If you’ve quit smoking since you first purchased life insurance (congratulations, by the way!), call your provider to see if your nonsmoker status will lower your rate.

6. Hobbies

Do you spend weekends skydiving? Have a passion for racing cars? An affinity for high-risk hobbies could lead to higher premiums, but insurers have differing definitions of which activities fall into this category. That’s where comparison shopping can be handy: it may pay to shop around for quotes if you enjoy high-risk hobbies.

7. Occupation

Some jobs are riskier than others. Logging, piloting airplanes and fixing roofs, for instance, are among the many professions considered riskier than others. When you apply for life insurance, insurers will ask about your work. Your premiums could be higher if your occupation exposes you to toxic chemicals or requires you to perform dangerous tasks. 

8. The Policy

The specifics of the policy you choose can also be another factor that affects your life insurance premium. Policies issued for larger benefit amounts over longer terms generally cost more than policies with smaller benefit amounts over shorter periods. Furthermore, there are differences between whole and term life insurance policies. Whole (or permanent) life insurance policies tend to be more expensive than term life insurance policies because of the length of the term (forever vs. a specified time period) and the cash accumulation benefits you may have access to with a whole life policy.

Some factors can’t be helped, of course. But understanding the factors that affect life insurance premiums — and making changes such as losing weight, quitting smoking or adopting a healthy lifestyle to lower your blood pressure and cholesterol — can help get a lower premium. 

We Can Help

It’s also important to remember that the majority of people overestimate the cost of a life insurance policy. Our life insurance calculator can show you how affordable it really is to protect those you love Talk with your Farm Bureau agent to see how you can get the right policy at the right price.