7 Factors That Affect Your Life Insurance Premiums

Factors That Affect Your Life Insurance Premiums

Life insurance is a good way to protect your family from financial distress should anything unfortunate happen to you. Leaving your dependents with everything they need to carry on with life will shield them from difficult times. That said, a life insurance plan may also serve as a great boost to your retirement plan.

Different people pay different premiums when taking out an insurance policy. In today’s article, we’ll look at some of the factors insurers use to calculate these life insurance premiums.

Factors That Affect Your Life Insurance Premiums


Age is one of the biggest factors affecting the premiums you pay for your life insurance. The older you are, the higher the odds are that the insurer will pay out a claim, causing the premiums to be higher. Younger people are also likely to be healthier and have fewer underlying medical conditions. This puts them at minimal risk of losing their lives, making their premiums lower.

This is why it’s a great idea for individuals to take out life insurance while they are still young.

2.Your occupation and hobbies

When an insurance company is figuring out how to price your premiums, they will consider your hobbies and occupation. People who work in certain industries and high risk situations in general often pay higher premiums. And that makes sense.

A middle school teacher who prefers to stay indoors and knit will pay less premiums than a construction manager who drives monster trucks over the weekend. As we’ve mentioned above, that’s because the teacher poses lower risk to the insurer than the constructor.

3.Your health history

Many life insurance companies tend to analyse your medical history while calculating your premiums. This is all risk assessment.

People with health conditions such as diabetes and cancer may pay more than their healthier counterparts. Many insurers will also check whether you’re genetically predisposed to any such conditions- this will then inform how high your premiums are.

A great way to ensure your life insurance premiums stay low even as you get older is to prioritise your health. If you come from a family with a history of, say, diabetes, get regular screening and maintain a healthy lifestyle.

4.Lifestyle factors

The lifestyle you live will determine largely how much you spend on your insurance premiums. For example, habits such as smoking and drinking are generally frowned upon by most insurers. This is because they put the policyholder at a greater risk of passing away.

Studies show that smokers die up to 10 years earlier than non-smokers. Some pass away from excessive alcohol use, while others get involved in fatal accidents due to driving while drunk.

This is why people that drink and smoke heavily often pay higher life insurance premiums than those that don’t.

5.Your payment plan

Many people aren’t aware of the numerous payment options available when taking out a life insurance policy. Although monthly life insurance premiums seem to be more affordable in the short term, extra costs may add up in the long run.

When looking for life insurance, you can go for one of three payment plans: single premium payment, regular premium payment, and limited premium payment.

Under the regular payment plan, premiums are paid periodically – yearly, monthly, bi-annually, and quarterly. Under the single payment plan, the entire policy’s worth is paid in one lump sum. Under the limited payment plan, all the premiums are paid in a short while, say, 5 years, while the benefits are enjoyed long term.

The type of payment plan you go for will determine how much your premiums become.

What kind of driver are you?

In a bid to determine how much risk you pose, many insurance companies will go through your driving records. Speeding tickets, running red lights, and other traffic offences will make you pay higher premiums when taking out a life insurance policy. Remember, this is one of the few factors that you can control when it comes to paying life insurance premiums.

Be sure to be a careful, considerate person on the road. Avoid distractions while driving, and most of all, don’t drink and drive. This will help make you a low-risk candidate for insurance, making your premiums lower.

Your gender

Gender is another factor that determines how high a policy holder’s life insurance premiums will be. This is because men and women are predisposed to different risks at different ages. For example, a pregnant woman is likely to pay higher premiums than a man in the same age bracket. In the same vein, the woman is likely to pay lower premiums than the man at 60.

In general, women tend to live longer than men: since they have a lower mortality rate, they often pay lower life insurance premiums.

Final Thoughts

Life insurance protects you and your loved ones in case something tragic happens. If you go to work every day, you’re exposed to many risks that you should protect yourself from. When you’re covered by a life insurance company, you’re sure that the people you love will be catered for even if the inevitable happens. Get covered today!

Read also: How do Insurance Companies Make Money?