Top Factors That Can Affect Your Insurance Premium

A comprehensive life insurance plan can provide financial security to the family member, especially the dependents of the insured individual, in the event of their sudden death. To avail of such coverage, policy buyers need to pay a regular premium or a predefined amount of money, to the insurance provider. Notably, the premium amount varies among policies and several other factors, such as the policy buyer’s age, gender, health, and lifestyle choices. It is recommended that intending policy buyers understand how different factors affect their premium amount so that they can control them and manage their costs accordingly. 

Let us check the top factors that affect insurance premiums and how they affect the cost of the policy and coverage.

Which Factors Affect the Life Insurance Premium Cost?

These are the top factors that tend to influence the cost of insurance premiums –


  • Applicant’s Age: Age is among the top factors affecting the premiums of all life insurance plans. To elaborate, the younger the intending policy buyer, the lower will be the insurance premium. This is because younger individuals are widely considered to be less risky as they are perceived to be healthier and more likely to have a longer life expectancy. As a result, senior citizens or those in their late 40s will pay more than those in their 20s or early 30s.
  • Gender: The insurance premiums for men and women tend to differ.  Insurance providers consider men more prone to risks and likely to die in reckless accidents and violence. This makes them likely to get a policy at a high premium. However, women are considered more likely to die due to chronic diseases. Recently, this gender gap in premium cost is rapidly narrowing as more men are opting for living healthier lifestyles and women are taking on a higher risk.
  • Medical History: The insurance policy applicant’s medical history and their health conditions, play a key role in significantly affecting the policy premium. Those with chronic health illnesses or a family history of having chronic diseases will end up paying higher premium amounts. The seriousness of their health situation will also affect the premium cost. For example, individuals with hypertension will get a life insurance policy at a lower premium than those with a cancer scare.
  • Health Records: Insurance providers often ask individuals to share their health records so that they can assess the individual’s risk of developing any health-related issues in the future. Those with a family history of chronic health disorders or a history of serious diseases will attract a higher premium amount. Some insurance providers may be willing to offer applicants a discount for providing them with premiums. It is recommended to be honest with the insurer about health history, as it can also affect the success of one’s claim.
  • The Insurance Policy Term: Your choice of insurance plan term also influences the insurance premium amount. Usually, policies with longer tenure attract relatively lower premium costs. Contrarily, policies with shorter terms have higher premium costs. However, it is advised that individuals avail an insurance coverage based on their requirements. 
  • Employment Status: The policy buyer’s employment status and the nature of the job impact the premium to a great extent. Policy providers may offer lucrative premium rates to individuals who have a regular paying job, as they are perceived to be more likely to pay for the policy on time. Individuals who have risky job roles often have to pay a higher insurance premium for a cover. For instance, individuals who work in the fishing, mining, oil, or gas sectors are likely to pay more for coverage than those in teaching, sales, or retail jobs. 


  • The Habit of Smoking: Individuals who have the habit of smoking are perceived as risky and thought to be more prone to developing diseases. This is why insurance companies charge habitual smokers with a higher premium amount than non-smoker insurance buyers. Individuals who give up on smoking or avoid it have a greater chance of getting insurance cover at a low premium. 
  • The Habit of Consuming Alcohol: Alcohol consumption is considered to be harmful to health. This is why individuals who consume alcohol daily are more likely to pay a higher insurance premium. This is why individuals who steer clear of habits like smoking or drinking alcohol are at a greater advantage of saving on their premium amount than those who indulge in these harmful activities. 
  • Risky Lifestyle Choices:  Insurance companies often categorize those individuals as risky and enjoy indulging in adventurous activities such as mountaineering, trekking, scuba diving, etc. Because of such activities, they might end-up paying a higher premium for basic coverage. 


  • Obesity or Sedentary Lifestyle: A sedentary lifestyle and obesity are considered the root cause of several lifestyle-related disorders, such as hypertension, cardiac diseases, and diabetes. As a result, many insurance providers flag individuals with such lifestyle disorders or complications as risky. 


These factors tend to influence the cost of availing of an insurance premium and their coverage amount.

Individuals cannot control factors like age, gender, medical history, etc. However, if they can manage their lifestyle habits, maintain a stable job, and avoid indulging in risky behavior to avail insurance policies at affordable premiums. They should also consider getting an insurance policy at an early age to avail of it at a relatively lower premium, start retirement plans, and mobilize savings through plans that allow investment and savings components. 


While insurance premium is a crucial factor to weigh to make an informed decision while getting a policy, individuals should not judge the merit of an insurance policy only based on it. They should instead weigh in other factors such as coverage amount, policy exclusion, claim process, rider benefits, and claim settlement ratio to understand which insurance would be best suited for them. Individuals are also advised to read the terms and conditions of insurance plans for a better understanding of what to expect from them. Only once one has all the information they need can they decide which policy they would like to pick. 

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