7 Factors That Will Impact Your Life Insurance Premium

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Most of us recognize the value of life insurance. After all, protecting the ones you love is human nature. A life insurance policy can ensure that your family’s financial needs are met and fulfill some of their plans like continuing education or retirement, even when you no longer can be there for them.

So, what is a life insurance premium? It’s simply the cost of your life insurance policy which is typically paid on a monthly or annual basis.

Despite recognizing the importance of planning for the future, life insurance is often something that many will delay looking into. It can feel complicated, even tricky at times. And figuring out how much life insurance costs can be overwhelming. It’s not something that comes in a standard size or model, but rather life insurance is very personalized.

In short, calculating the cost of life insurance takes into account factors such as your age, gender, health details, and lifestyle. It also needs to factor in the policy type, the coverage amount, and duration. These seven key factors will certainly influence the cost of your life insurance, and they could also be used to determine if you’re eligible for discounts. 

Here Are 7 Key Factors That Will Impact Your Life Insurance Premium

1. Type of Life Insurance Policy

The two most popular types of life insurance are:

1) Term Life Insurance provides coverage for a set amount of time (term), and the length of that term play a big role in the cost of the policy; and

2) Permanent or Whole Life is designed to provide protection for the rest of your life and as a result, is usually more expensive than term life insurance.

Plus, whole life insurance policies often offer a cash value which your premiums contribute to. 

2. Age

This has the most significant impact on your life insurance premiums. Typically, the younger you are, the lower the cost of your life insurance. As you age, the risk of your health deteriorating increases.

Consequently, life insurance policy premiums grow more expensive with age. With this in mind, it simply makes financial sense to apply for life insurance sooner rather than later. You’ll never be younger than you are today. It’s never too late to buy life insurance to safeguard your family’s financial future.

However, buying today will save you money on the protection you’re after. 

3. Smoking Habits

Smoking has proven to be a risky habit, and insurance companies know this all too well. Those who smoke or vape are likely to pay significantly higher life insurance premiums, sometimes double that of non-smokers. There is good news, however.

Many insurance companies define a non-smoker as someone who has not consumed any product containing nicotine during the past 12 months, and some are willing to re-evaluate once you’ve quit. Some insurance companies even have quit smoking incentive plans to help their customers.

This means it’s never too late to make a positive lifestyle change and enjoy some significant savings on your life insurance premiums.  

4. Gender

Statistically, women live longer and engage in healthier lifestyles. In general, because men are thought to die at a younger age – Canadian men live an average of 80 years – their premiums are more expensive than those of women, who on average live to the age of 84.

5. Lifestyle

How you live your life could be an indicator of risk for insurance companies. From obesity and heavy drinking to high-risk behavior like skydiving or reckless driving, your lifestyle can increase your life insurance premiums. Just like heart-pumping, hazardous sports are considered a higher risk, so are dangerous occupations – jobs such as firefighting, police, pilots, and stuntpeople. 

6. Coverage Amount

The coverage amount is the death benefit. The more significant the life insurance payout, the higher your premiums will be. It’s important to work through how much life insurance coverage you need – if keeping costs low is a priority, make sure to keep your family’s future financial requirements realistic.

Lowering your death benefit while ensuring your family’s financial future can result in some cost savings. 

7. Your Health

No surprise, insurance providers like healthy people. As part of the life insurance application process, you may need to undergo a health assessment or even a medical examination with a healthcare professional. If you have a pre-existing condition or a history of health issues, your insurance premiums may cost more due to the increased risk to the insurer.

What if you don’t like needles or medical exams?

Well, some insurance companies offer “no-medical” life insurance. To apply, you would need to answer a brief health questionnaire instead of completing a medical exam.

This option may cost more than traditional life insurance coverage where you’ve undergone a medical assessment. But no medical life insurance might be worth it for people, who want a fast, hassle-free application process!

Wrapping It Up

When choosing a life insurance provider, it is essential to find a reputable insurer that offers the breadth of coverage you need at a price you can afford. The best way to ensure affordable life insurance premiums and save the most over the lifetime of your coverage is to enroll while you’re young and healthy and shop around to explore your options.

A life insurance advisor can be a great resource while you’re looking around. They can help you determine an ideal life insurance coverage length and amount to align with your unique circumstances and goals.