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8 factors that affect life insurance premiums

From your general health to how much coverage you buy

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Contrary to popular opinion, our underwriters aren’t actually magicians. Instead, they’re people who have thought very long and very hard about risk, and how to quantify it. (They’re also very good at math, which is almost sorcery.)

But you might be wondering: What specific factors do they use to determine life insurance premiums? We’ve wondered that, too.

Read on to learn the eight factors that go into the cost of life insurance, and how those things might impact your life insurance premium.

In this article:

What are life insurance premiums?

Life insurance premiums are regular payments you make to your insurer in exchange for life insurance coverage. Typically, you pay your premiums monthly or annually for the life of your policy. Also typically, you’ll pay level term premiums, which means your rates stay the same throughout the term of the policy.

What factors affect life insurance premiums?

So now let’s look at some of the key factors insurers will consider when calculating your monthly premium.

1. The type of life insurance

There are multiple types of life insurance — and the policy you choose will have a significant effect on your premium. Generally, you’ll choose between two major types of life insurance:

Term life insurance: Term life insurance provides coverage for a specified period of time (the “term”). You can buy a policy that lasts for 10, 15, 20, 25, or even 30 years — most people elect a term length that covers the years when someone else depends on them to pay for everything from groceries to rent or a mortgage.

The advantage of this type of policy is it does not cover the years when you’re older, and likely in weaker health. (And therefore, in actuarial terms, more likely to die.) Those older years might also coincide with your dependents (read: kids) having moved out of the house, with you having paid off a mortgage or retired (or both). In other words, you no longer have a salary to replace, or anyone who benefits from your salary.

Because of this, a term life insurance policy is often the most affordable option on the market.

Whole life insurance: A form of permanent life insurance, whole life insurance covers you for your whole life. The advantage is that you don’t have to worry about a term expiring. The disadvantage is that, because coverage lasts until you die, so do the premiums. Moreover, those premiums will likely be higher because you’re paying for coverage through your older, likely-less-healthy years.

2. Your term length

If you elect term life insurance, the number of years in your term will affect the price of your policy.

For example, a 25-year-old woman in excellent health can buy a 20-year, $250,000 policy for just $10.82 per month. That same woman would pay $14.57 per month for the same amount of coverage over a 30-year term — a nominal amount for one month, but nearly double the expense over the life of the policies.

Of course, that added expense allows for an extra decade of coverage, at a still reasonable rate. In fact, it’s less than a month of content from your favorite streaming service.

3. How much life insurance coverage you buy

This is the other big factor, which makes sense: To get more of anything, you usually have to pay more. When you purchase life insurance, the value of the policy is equal to the death benefit your loved ones would receive in the event of your death. Given that, a $3 million policy is going to cost more than a $250,000 policy, all other things being equal.

So how much makes sense for you? A good rule of thumb is that you want a policy worth 5 to 10 times your annual salary. This is because that money would be used by your loved ones in the event that you die, paying for everyday necessities and bigger, long-term expenses like tuition or housing.

That said, everyone’s needs are different, and you can start by using an online life insurance calculator to determine how much life insurance coverage makes sense for you.

4. Your age

Time remains undefeated, as they say, and that adage applies to life insurance premiums as well. If you are older, you will likely pay a higher premium than the younger version of you would have paid.

Why is that? Well, again, in actuarial terms, you are closer to your death. (It’s okay, it’s true for everybody.) You are more likely to get ill, and your health may decline, so your life expectancy is shorter.

It’s not fun, but look on the bright side: It’s all just one more reason why the best time to buy life insurance is always now.

5. Your gender

Gender also plays a role in determining life insurance premiums. Women tend to live longer than men, so they typically pay lower premiums for the same amount of coverage. This is because women are considered to be at a lower risk of death than men of the same age and health status.

6. Your health and health history

It’s a cold, hard fact of life (and life insurance): The less healthy you are, the odds of your death increase. So if you have chronic health conditions (like diabetes), or are just out of shape, you’ll probably pay a higher life insurance premium than if you’re running marathons… while lifting weights… and eating a salad… and undergoing a blood test (that comes back at healthy levels).

At Haven Life, there are three life insurance health classes, and which one you’re in will help determine your life insurance premium. Suffice it to say that improving your health can help lower your premium, but it’s often better to get insured now (and have coverage in case something happens) then wait for your health to improve.

In any case, your insurer will get a picture of your health through your application, reviewing your health history, and conducting a life insurance medical exam. The results will play a big part in determining your life insurance premium.

One other thing: You can get a no-medical-exam policy, but doing so might result in a higher premium because your insurer knows less about you. (You might also be limited on the amount of coverage you can buy, and know that issuance and payment of the policy will depend on your truthfulness in applying for it.) Haven Simple is a no-medical-exam life insurance policy, and you can get a free online quote today.

7. Smoking and tobacco usage

This is related to health, but deserves a section all of its own: Smoking and tobacco use can significantly impact life insurance premiums, as they are major risk factors for a range of health problems, including heart disease, lung cancer, and stroke. If you use these products, expect to pay more for any life insurance coverage you buy.

8. Other risk factors

Engaging in risky hobbies or activities can also affect the cost of life insurance premiums. Examples of risky hobbies or activities may include skydiving, scuba diving, rock climbing, auto racing, or flying a private plane. If you engage in these types of activities, you may be charged higher premiums than someone who does not engage in these activities, as you are considered to be at a higher risk for injury or death.

If you work in a high-risk occupation, you may be charged higher premiums than someone who works in a lower-risk occupation. Examples of occupations that insurers consider to be exceptionally risky include law enforcement, aviation, and construction.

What are some examples of rates for term life insurance?

To give you an idea of what a term life policy might cost as you compare life insurance options, here are some example rates of what people in excellent health might pay per month for Haven Term.

AgeGenderPolicy lengthCoverage amountMonthly Premium
25Male30 years$250,000$17.49
25Female30 years$400,000$19.55
35Male20 years$500,000$20.72
35Female20 years$600,000$19.75
45Male15 years$750,000$50.62
45Female15 years$1,000,000$49.40
Estimates based on pricing for eligible Haven Term applicants in excellent health. Pricing differences will vary based on ages, health status, coverage amount and term length. These prices do not reflect the rates for applicants in DE, FL, ND, NY and SD.

For an estimated rate tailored to you, get a free online quote today.

Haven Life: Life insurance that’s actually simple

Life insurance is more affordable than you think

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About Sarah Horvath

Read more by Sarah Horvath

Our editorial policy

Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.

Our disclosures

Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.

MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.

Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit: https://havenlife.com/plus

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