9 Factors That Affect Life Insurance Costs

Are you looking to protect your loved ones financially? Life insurance is the best way to make sure your family is taken care of at the end of your life. It is also a great investment! As you are searching for a policy, though, you might be confused about the multiple quotes you are receiving. How do insurance companies determine your premiums? In order to find the policy that offers the most coverage for the lowest price, you should have an understanding of the different factors that go into premium pricing. Some factors you can control, while others you cannot. 

1. Age

illustration of a woman holding her hand out with money over it
The younger that you are when you buy life insurance, the cheaper it will be.

Age is one of the primary factors in determining how much your life insurance policy will cost. The older you are, the more expensive a plan will be for you, simply because younger people have a longer life expectancy than older people. In addition, the older you get, the higher the risk of developing a health condition. Studies show that approximately 40% of people who have life insurance wished they had purchased their policies at a younger age, so don’t put off looking for your policy!

2. Gender

Gender is another primary factor in determining price. Statistically, women live longer than men, and because of this, life insurance premium rates are higher for men than for women. 

3. Coverage Amount

The amount of coverage you choose will determine how much your premiums will be. The higher the coverage, the higher your premiums will be. For example, if you want $50,000 in death benefits, you will pay less for that policy than for one with a death benefit of $1,000,000. The duration of your policy will also help determine pricing; a term life insurance policy will be cheaper because it covers you for a certain amount of time, unlike whole life insurance, which covers you for your entire life. 

4. Family History

Even if you have no current health issues, life insurance companies will look at your family history and take it into consideration when determining your premiums. If your family has a history of hereditary disease, you can expect to pay slightly more. 

5. Tobacco Use

caucasian woman with her hood up smoking a cigarette
If you smoke, then you can expect to pay more for a life insurance policy.

Smokers have a lower life expectancy than non-smokers because they are more likely to develop  health issues such as cancer. Smoking will increase your premiums, but if you quit smoking for 6 months or more after purchasing your plan, you can get your rate lowered!

6. Hobbies/Lifestyle

Do you go skydiving a lot? Are you into extreme sports? Well, your hobbies can impact your life insurance premium prices. The more risky hobbies you have, the higher your risk of death, which will raise a red flag for insurance companies. 

7. Occupation

The same goes for your occupation: the higher the risk of you getting hurt and killed in your job,  the higher your premiums will be. Pilots, roofers, and people who deal with toxic chemicals, for example, will have higher life insurance premiums. 

8. Health

Some insurance companies might require a medical exam before issuing a policy. If you have a history of health conditions, including high blood pressure, high cholesterol, heart disease, or are overweight, then your premiums will be higher. If you lower your blood pressure or cholesterol, your insurance company might lower your premiums. The healthier you are and the better your  habits, the less you will pay for coverage. 

9. Driving Record

close up picture of a car's front bumper that is smashed up.
Your driving record may be looked at by some life insurance companies to determine premium prices.

Many people are unaware that your driving record plays a role in determining how much your life insurance premiums will be. Because accidental death is something that underwriters consider when making their decisions on premiums, insurance companies will take into account things like DUIs or at-fault collisions. However, as long as your last infraction was over 3 years ago, your driving record will probably not have an impact on pricing. 

When it comes to life insurance premiums, some factors are out of your control, such as your family’s health history, but there are some things that are in your control, such as your driving and lifestyle habits. If you quit smoking, are a safe driver, and engage in safe hobbies, you can get a lower-priced life insurance policy. Just remember: when applying for your policy, make sure to answer all questions honestly, because if you lie, it will be considered fraud and you will lose your policy and possibly face criminal charges. 

The best way to find the most affordable policy for you is by working with a licensed agent from a top-rated insurance company. They can help you find a company with good rates, and give you ideas for how to cut down on costs. We have listed some companies to work with that will be able to find you the most coverage for less. Always check multiple sites to make sure you have bargaining power and to know the different advantages of each company. Make sure a hard time for your loved ones isn’t made harder by a financial burden, check life insurance rates today.