Factors that Affect Your Life Insurance Premium

Life insurance provides crucial financial protection for your loved ones in the event of your passing, but the cost of a policy isn’t the same for everyone. When applying for life insurance, you may notice that premiums can vary widely based on various factors. From your age and health to your lifestyle and family history, insurers take several aspects into account to assess risk and determine your premium. 
Understanding these factors can help you navigate your search for life insurance with confidence and ensure that you get the best coverage for your situation. In this blog, we’ll explore key factors that influence life insurance premiums and offer some tips that will help you make an informed decision when purchasing a policy. Keep reading to learn more!

1. Age

Your age is one of the most significant factors affecting your life insurance premium. All things being equal, younger clients are less expensive to insure. This is because insurers assess risk based on life expectancy, and younger individuals present a lower risk. Additionally, purchasing a policy at a younger age can offer long-term benefits, such as the ability to convert a term policy into a permanent one (e.g., whole life insurance) without the need for a medical exam.
If you've delayed purchasing life insurance, there’s no need to worry - affordable coverage may still be within reach. Simply contact a broker to explore options that are tailored to your current age and financial needs.

2. Health Status

Your health plays an important role in determining your life insurance premium. Insurers may review your medical history and require a medical exam to assess factors like cholesterol levels, weight, and overall fitness. Maintaining a healthy lifestyle by staying active and managing chronic conditions can help you qualify for better rates.
While conditions - such as diabetes or high blood pressure - might influence your premium, they won’t necessarily prevent you from getting the coverage you need. Both traditional and non-traditional underwriting options are available, offering plenty of solutions regardless of your health situation. If you’re concerned that your health status will prevent you from obtaining coverage, a BIG broker can help you find the right policy for your unique needs.

3. Lifestyle and Habits

Your lifestyle choices play a crucial role in determining your premium, but can also present opportunities for savings. Habits such as smoking or heavy alcohol consumption may lead to higher premiums because insurers view them as increasing health risks. Additionally, insurers may review your driving record to determine if you have a history of accidents or violations, as these can reflect your level of risk. A broker can provide further clarification on this.
To promote healthier and safer choices, many insurers now offer solutions that reward positive lifestyle changes. For example, some carriers allow policyholders to reduce their premiums by proving a commitment to healthier living through apps that track fitness and well-being, often with added perks or rewards. Additionally, some insurers offer specific programs to help smokers quit, with incentives for achieving a smoke-free lifestyle within a set timeframe.

4. Family Medical History

When you apply for life insurance, insurers will ask whether any close relatives have experienced serious health conditions such as cancer, heart disease, or genetic disorders. If these conditions are present in your family’s medical history, insurers may consider you at risk of developing similar issues, which could affect your premium. However, the good news is that insurers view medical conditions differently, based on their claims experience and other factors. Some carriers may place less emphasis on family history, especially if you maintain a healthy lifestyle and have no personal history of related conditions.
If your relatives have experienced health issues, working with an experienced broker can greatly improve your chances of finding affordable coverage. Brokers have access to a range of carriers and can help identify insurers who take a more flexible approach to underwriting hereditary risks, potentially unlocking more competitive rates.

5. Coverage Amount

The coverage amount you choose directly impacts your life insurance premium because a larger payout means greater financial responsibility for the insurer. Naturally, a higher coverage amount will result in higher premiums. However, selecting the right coverage isn’t just about choosing the maximum amount—it’s about ensuring that your policy provides sufficient financial protection for your loved ones while staying within your budget.
To determine the appropriate coverage, consider factors such as outstanding debts, mortgage balance, future education costs for your children, and income replacement. Striking a balance between adequate protection and affordability is key. If you’re unsure about how much coverage is right for you, a broker can help assess your financial situation and recommend an amount that doesn’t overburden your budget.

6. Type of Life Insurance

The type of life insurance policy you select plays a major role in determining your premium and the overall value of your coverage. Term life insurance, which offers coverage for a specified period (i.e. 10, 20, or 30 years), typically starts with lower premiums, making it an attractive option for those seeking affordable protection for a set timeframe. However, as the term expires and you renew or extend your coverage, premiums can increase significantly. This is why many term policies include a conversion option, allowing you to switch to permanent coverage later in life without a medical exam—a valuable feature for ensuring lifelong protection.
Permanent policies, such as whole life or universal life insurance, come with higher initial premiums but offer long-term value since the price typically stays fixed for the duration of the policy. Additionally, they include benefits like cash value accumulation, which can support future financial planning. Choosing a policy with flexible options ensures that you can secure affordable coverage now while retaining the ability to adapt your plan as your needs change over time.
Secure the Best Life Insurance Through BIG
Finding the right life insurance is about more than just getting the lowest premium - it's about ensuring you have the right protection for your future. While some of the factors we discussed might seem out of your control, there are many proactive steps you can take to access better rates and a wide variety of flexible life insurance solutions available to suit your needs. To learn more about your life insurance options, be sure to contact a BIG broker or request a quote today.