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Top Factors that Affect Life Insurance Premium

Here you can know the top factors that affect your life insurance premium, in case you are wondering how the life insurance premium is being calculated.

Whenever you buy life insurance then you might encounter many questions.

If you are able to answer this question will help you to decide how much risk you pose and how much the insurance company needs to pay you in case of an insurance claim.

Each and every insurance company has different criteria to offer an insurance policy to a person. Life insurance premium differs from person to person because insurance companies have defined a few certain criteria to issue a policy to the people.

Let’s discuss the factors in detail based on which life insurance premium decided

Age of the Person

The age of the person is the main factor based on which life insurance premium is decided. Let’s understand this suppose you are young there is less chance of contracting diseases in your body and as you are taking a life insurance plan at an early age you are more likely to choose the long duration and this will result in you paying the number of premium to compare to the person who is taking life insurance policy in later age.

So the life insurance premium will be less for young people because the insurance company considers policy duration to decide on the insurance premium. If older people are taking life insurance premiums will be high because they have a short duration of the policy tenure period and are more likely to encounter diseases.

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You might hear that men and women are the same but according to an insurance company, women live longer than men and are likely to have less claim risk. Hence, the premium will be less for females compared to males, although falling under the same criteria.

Smoking and Drinking

We all know that smoking and drinking are injurious to health and it also increases the chance of contracting critical diseases. The life insurance premium will be high for a person who smokes and drinks alcohol. The premium may be 40%-60% higher than a non-smoker and drinkers people. So, we can say that smoking and drinking alcohol are not only injurious to health but also to wealth.

Policy Tenure

The policy tenure period is one of the main factors in deciding the life insurance premium. Suppose the policy duration is long the insurance premium will be less and for a short-term policy premium will be high compared to the long-term policy.

The Platform You are Using to Buy Policy

Life insurance premium also depends on the way you are buying a policy. In this digital era and with easy access to the internet, all major insurance company offers insurance policy through an online platform to buy a policy.

Buying insurance is easy and will cost less premium because the cost of giving a policy is less which results in fewer insurance premiums. Buying an insurance policy online will cut down the commission, huge paperwork, and administration costs hence, the life insurance premium is less.

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The Frequency of Premium Payment

The insurance company offers the frequency of premium payments like monthly, quarterly, semi-annually, and annually. The fact is that if you choose to pay an insurance premium monthly the cost will be high because this includes.

so, much paperwork and another cost every month, and if you choose to pay the premium quarterly, semi-annually, and annually the life insurance premium will be less compared to the monthly payment because this will save lots of paperwork and other costs.

Your Current Health Situation

Many insurance companies ask you for a medical test before offering a life insurance policy to you to check your current health status. After, getting a medical report insurance company decides the life insurance premium based on your current health status. If you are prone to diseases the insurance premium will be high and if you are medically fit the insurance premium will be less.


The premium of life insurance also depends on your occupation because some occupation is more dangerous like industry worker, miners, shipping, and fisherman they need to pay a high premium compared to other occupation like people working in an office job where the workplace is safe.

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Final Word!

All the factors mentioned above that affect the insurance premium also depend on how the insurance companies rate all these factors. Insurance premiums are more likely based on an individual basis.

So, it is recommended to compare life insurance quotes online before buying life insurance. Last but not least always check the policy wording and read the fine print carefully before signing a life insurance policy.

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