smoking can influence insurance rates

How Much Does Life Insurance Cost? Top 9 Factors that Affect Your Premiums

Getting life insurance is probably one of the best decisions you can make for your family’s financial security. With a strong protection plan in place, you can rest assured knowing that in the event of your passing, your loved ones won’t face any financial difficulties, debt, or changes in lifestyle. However, as great of a safety net as it is, nearly half of Americans aren’t covered! 46% to be exact. And the most important reason why is overestimating the cost of coverage. Oddly enough, millennials are particularly confused, with most overestimating the price of a policy by up to 213%.

So, let’s fix that. As an independent insurance agent in Franklin, TN, one of the most common questions I receive is how much does a policy cost – and the answer is, every single time: it depends. A variety of factors can influence a policy’s premium, but the heart of the matter is that a young, healthy 30-year-old can get term life coverage for as little as 15 dollars a month! That’s less than dinner at most restaurants. And while there are factors that can (even significantly) raise these costs, a policy is still much cheaper than you may have been led to believe.

Understanding Life Insurance Ratings

Insurance is, fundamentally, a risk transfer – in exchange for recurrent payments called premiums, your carrier will take on the risk of you dying unexpectedly and leaving your loved ones without a source of income. As such, it’s essential for the insurance company to carefully assess your situation in order to predict gains and losses – ultimately, they wager that you’ll pay more on the policy than they will, so anything that puts you at risk of untimely death will raise your premiums and, implicitly, the cost of your policy.

To estimate costs, insurance carriers use a rating system that takes into account health and lifestyle factors. Your rating will determine how much you’ll pay for your policy, with the classes commonly being the following:

  • Preferred plus. This is the best rating you can hope for and usually suggests that your health is impeccable and your lifestyle doesn’t give your carrier any reasons for concern.
  • Preferred. Second-best rating, usually means that you have a minor health condition. Rates are still low, but not quite as low as preferred plus.
  • Select. The select rating usually suggests that the insurance company has concerns about your long-term health – you may be in good health for now, but you may have a genetic condition that predisposes you to disease later on.
  • Standard. This rating indicates that either your lifestyle choices, health conditions, or family medical history put you at risk for disease now or in the future. However, the risks don’t make you ineligible for insurance – they just make the policy more expensive.

Top Factors that Affect Your Insurance Premiums

Now that you have a general idea about how insurance premiums work, let’s take a look at the top factors that influence them.

1. Coverage

It goes without saying that policy type and payout will have a significant impact on your premiums. Permanent insurance – such as whole or universal life – is much more expensive than term life coverage. In fact, annual premiums can be up to 10 times higher for a whole life insurance policy – but then again, you get to enjoy lifelong protection and tax-deferred cash value. Additionally, adding insurance riders to your policy will make it more expensive, so take this into account when budgeting for coverage.

2. Age

One of the most important factors that influence your insurance premiums is your age. The younger you are when you buy your policy, the lower the rates, and vice-versa. Naturally, you are less likely to pass away when you’re younger, giving you more time to make insurance payments, thus minimizing the carrier’s risk.


Women have a longer life expectancy than men, and if your insurance carrier factors this in, it can lead to lower premiums.

4. Health

man jogging for better health

When it comes to your health, there are multiple aspects that influence premiums, some more than others – being slightly overweight will have a lesser impact than a pre-existing heart condition. Nonetheless, most policies require a medical exam and questionnaire in order to assess your general wellbeing and medical history. You’ll be asked about any ongoing conditions, such as diabetes, kidney disease, or high blood pressure, your smoking habits, vices, etc. If your health is significantly impaired, you may be better off with a no-exam life insurance policy, such as simplified or guaranteed issue.

5. Smoking

Smoking can double your insurance rates. Read that again. If you’re a smoker, the best thing you can do for your health and finances is to quit as soon as possible. While former smokers pay higher premiums, they’re still lower than those of active smokers, and continue to decrease as time passes.

6. Family Medical History

If your family has a history of cancer, heart disease, stroke, or diabetes, you can expect your premiums to rise. While there is no way to predict whether you will suffer from a certain illness or not, a family history of say, cancer, may put you at an increased risk of developing it in the future, and carriers make sure to account for it by increasing your rates.

7. Lifestyle

If you’re passionate about bungee jumping or skydiving, you can expect your premiums to reflect your adrenaline-seeking lifestyle. The more you put yourself at risk, the more you’ll pay on insurance – it’s as simple as that. This also goes for alcohol consumption – social drinking is fine, but anything above that counts as a risk.

8. Driving Record

A history of reckless driving may suggest that you’re not serious about your own safety, which in turn will impact the cost of your life insurance policy.

9. Profession

Your line of work may put you at risk, and insurance companies know that. Hence, you can expect to pay higher premiums if you work in construction, aviation, the military, or as a first responder.

Life Insurance Quote Comparison

To see some of these factors at play, have a look at how they influence the cost of a term policy.

life insurance quote comparison

As always, for a personalized quote make sure to drop us a line – we’d love to help.