Wednesday, June 19

Factors that Determine your Life Insurance Policy Premium

Picking the right life insurance policy is one of the most important decisions we make in our lives. But it could be confusing for some. Even some think that it is too expensive to afford. But buying one can be more affordable and easier than you think if you are aware of all the aspects and factors that affect your life insurance quote.

Since there are so many insurance policies out there, one may be overwhelmed with the available options to choose from. If you are one of them, just keep in mind that the basic objective of life insurance is the same. No matter if particulars of each life insurance policy are different. These policies are designed to leave a death benefit for the insured when he/she dies.

Here you can read some common factors that determine your life insurance policy premium and help you choose the right policy. 


Your age is one of the vital elements in determining what life insurance plan you can choose and what options you can choose from. Younger individuals usually have more enticing insurance plans than older ones. Some insurance policies come with an age restriction. For instance, you cannot apply for term life insurance if you are 60. That’s why insurance providers look at your age and life expectancy to offer you the best options available. 


Gender is another important factor that can affect an insurance quote. Since females tend to live longer than males, insurance premiums are cheaper for them. Both age and gender are considered as the basic factors in calculating the life insurance premium rates. However, the gap in life expectancy is starting to shrink. 

Current Health Status

Almost all life insurance policies usually require a medical examination or answer to some medical questions. It helps insurers to determine an applicant’s state of health. The healthier you are, the less expensive your insurance premium will be. Some bad habits like smoking and drinking are known as negative factors that can cause an expensive quote.

If nicotine consumption is also mentioned in the form, the cost of your life insurance policy will also be higher. That’s why; younger and healthier individuals tend to get the best lower insurance premiums.

What you are about to spend on Life Insurance

Term life insurance policies are less expensive as compared to whole life insurance plans. These are expensive because they are for a set period of time and no cash value is being built up. You can buy one for 10, 20 or 30 years as per your needs. Once expired, you may need to buy a new one and new rates are calculated again for the new policy.

On another hand, a permanent life insurance policy is designed to stay in place for the rest of your life and usually maintain the same premium till your death. That’s why your will to spend on an insurance plan is another important factor that affects premium rates and can help you choose the right type of policy.

Policy Duration

Do you need protection for a set period of time or for your whole life? For instance, if you have bought a new home on a 30-year mortgage policy and want to get life coverage as well. Then buying a term life insurance policy for 30 years would be the best option for you.

If you want more coverage for longer, you should opt for a whole life insurance plan because it will remain for the rest of your life. The duration of the policy you need, can also have a significant impact on the amount you will be paying to the insurer as a premium.

Market Knowledge

Permanent insurance policies are usually used to generate cash value. This means the policyholder can borrow against the cash value built during the policy. That is the reason, permanent insurance plans are expensive than term policies.

Closing Thoughts

If you are still confused right after reading all the above-mentioned considerations and feeling overwhelmed to make the right decision, you should discuss the situation with an insurance agent or financial advisor. But keep in mind that any life insurance policy is better than having no one. 

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