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Ten Factors that Affect Life Insurance Premium


Knowing what affects your life insurance premium can help you better prepare. Here are the top ten key points.

Type and amount of policy

This is the first factor that determines how much your life insurance premium costs. We’ve discussed different insurance types on our website: term life insurance, whole life insurance, universal life insurance. Their prices vary, often depending on the policy that you buy.

Basically, term life insurance is the most affordable one. Your life insurance premium relies on how long you want it to last – the term. A ten-year term policy is cheaper than a twenty-year term one. And as we have discussed here, you can save your money if you buy more than one term policy. To achieve this, you must calculate your needs carefully.

Whole life insurance and universal life insurance are more expensive because they last longer and include a cash value. While cash value in whole life insurance is fixed, universal life insurance’s cash value is more changeable. This also leads to the difference in each type’s premium.


Age is another radical factor that decides your premium. If you buy a children’s life insurance policy, the cost is cheaper than that for adults. Besides, seniors have to pay more than adolescents. This is because when you are young, your health is better. As you age, your health deteriorates and needs more protection. Thus, it’s natural that insurance companies will charge you more as you age.


Statistics show that women have a longer life expectancy than men in general. Therefore, there are more risks that insurers have to cover for males than males. The cost of male life insurance is thereby higher than that of female insurance.

Take an example from Compulife. Alex and Laura live in the same place, have the same age and health class. They’re both non-smokers. To buy a 500,000 coverage with a ten-year term from RBC Life Insurance Company, Alex will have to pay $332.05 annually while Laura pays $241.15 per year. The difference in premium is almost $100 per year.


Jobs like pilots, firefighters, miners or divers are more dangerous than office workers. The riskier your job is, the higher risks that the insurers have to cover. They might take this and increase your premium rates. Thus, your life insurance premium is also dependent on the nature of your occupation.


Similarly, some people enjoy more adventurous leisure activities than others. Recreations such as skydiving, motorcycle racing or rock climbing can put your life at risk in many cases. Based on this, the insurers will require you to pay a higher amount of premium if you participate in dangerous pastimes.


As we’ve explained, there are four health classes rated by insurance companies. Here we have Regular, Regular Plus, Preferred and Preferred Plus. As you get a higher health class, you will pay 25% less. A preferred plus health class will cost you 75% less than a regular class. It means that the healthier you are, the less you have to pay.


A healthy lifestyle is a key to good health, and as explained above, your health will influence your insurance cost.

More directly, if you smoke or use tobacco, you will have to pay significantly more than non-smokers. For example, according to Compulife, a forty-five female smoker who buys a ten-year $500,000 term policy will have to pay triple compared to a non-smoker (Let’s suppose they buy it from Canada Life).

Smoking does harm to your health and others’. If you can quit the habit, you save not only your health but also your money. Usually, insurers require their clients to stop smoking for at least a year to be considered non-smoker.

On the same ground, alcohol consumption also affects your life insurance premium. Drinking too much alcohol might result in serious health problems such as diabetes, liver diseases, heart diseases, etc. It’s also the cause of drunk driving, which costs your life and others. Thus, drunkards are often required to pay more.

Personal and family medical history

Your health account is a strong base for insurers to charge you. Those who previously suffered from heart diseases or diabetes will be charged more than those who don’t. These also apply to mental illnesses such as depression, cognitive disorders, autism and so on. If you have cancer, you will be declined by most companies.

Thus, it is recommended that you buy insurance when you are still young and healthy. This will guarantee your insurability later. In fact, some experts suggest you should buy insurance for your newborn babies, which ensures lifelong insurability for the infants. Should the kids have cancer or other unfortunate illnesses later on, they can still buy a policy.

Besides, most companies will be careful and check your family medical history as well. This is because if your family members suffered from severe diseases or illnesses before, you might be prone to these later. Insurers will take these into account and charge you accordingly.

Personal driving record

Strange as it might sound, your driving record plays a role in determining your life insurance premium. If you ever violated traffic laws, such as over speeding, drunk drive, or passing a red light, you might present more risks to your insurers. They might look at this and increase your premium rates.

Payment Frequency

If you look closely at the rate offered by insurance companies, you’ll see that a monthly payment cost more than a yearly payment. This is because insurers can save their operating and service fees if you can pay them once per year. Hence, it is more cost-effective if you can manage to pay annually.

In conclusion, many factors can affect your life insurance premium. Like personal and health records or driving records, some of them require you to tell the truth. Remember that any dishonesty can result in your death benefit rejection later on. So it bears repeating that you are honest and sincere.

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