What affects the cost of life insurance?

The life insurance cost factors you can’t control

Two of the biggest influences on life insurance rates are also the ones you can’t control: age and sex. Typically, younger people pay less than older people because they are less likely to have health problems. As for gender, males tend to pay more for life insurance because they have shorter lifespans and are also more likely to have dangerous jobs or lifestyles, making them riskier to insure overall.

Term life insurance rates by age and sex

The chart below provides examples of the average term life insurance rates for males and females, 25 to 40 years old, quoting a 10-year term policy through eFinancial. As you can see, rates for men are higher than those for women, on average. Plus, the average rates for 25 and 30-year-olds are nearly the same, while those for 35-year-olds skew higher as a result of increasing risk.

Age Coverage amount: $250,000 Coverage amount: $500,000
25 years old Coverage amount: $250,000 Male: $13.48Female: $12.18 Coverage amount: $500,000 Male: $20.44Female: $18.27
30 years old Coverage amount: $250,000 Male: $13.48Female: $12.40 Coverage amount: $500,000 Male: $20.44Female: $18.70
35 years old Coverage amount: $250,000 Male: $14.35Female: $13.70 Coverage amount: $500,000 Male: $22.62Female: $20.88
40 years old Coverage amount: $250,000 Male: $16.31Female: $15.22 Coverage amount: $500,000 Male: $26.10Female: $24.36

Note that the above figures are based on non-smokers who are classified as “preferred-plus,” which generally signifies a minimal amount of potential health problems (e.g., no history of cancer or cardiovascular disease, low cholesterol and blood pressure, etc.).

The life insurance cost factors you can usually control

  • Your health: Insurers typically look at your height, weight, and medical history — especially any chronic or serious illnesses you have or have had. Some insurers might also require a medical exam before determining if they can provide coverage.
  • Tobacco use: Smokers usually pay higher rates than non-smokers due to the number of medical conditions associated with smoking, including cancer.
  • Hobbies: If you sky-dive every weekend or partake in amateur stock car racing, then you might have higher premiums than someone who collects stamps. However, the exact activities insurers consider risky vary by company.
  • Criminal history: Things like DUIs, previous arrests, or other criminal convictions may affect your rate, or even disqualify you from coverage with some insurers.
  • Occupation: As with hobbies, the riskier your job is the more you could pay for life insurance. Police officers, firefighters, pilots, and construction workers are just a few of the occupations that sometimes see higher life insurance rates.
  • Financial history: Your actual credit score won’t affect your premium, but any bankruptcies or other risk factors contained in your credit report may. Long periods of unemployment may also affect your rate or ability to get coverage.
  • Coverage amount: As you’d expect, the amount of coverage you select will have a big influence on your life insurance rate — more coverage means higher rates.

What is the right amount of life insurance for me?

You want enough life insurance to pay off your mortgage and any other debts, as well as enough to replace your income for however many years your family would need support. If you have kids, you should also factor in the total cost of their tuition, whether it’s for college or private K-12 school. Finally, add in the estimated cost of your funeral expenses and you’ll have a rough idea of how much life insurance you need.

Learn more about choosing the right amount of life insurance.

How can I lower my life insurance rate?

There are several ways you could lower your life insurance rate, most of which center around maintaining a healthy lifestyle:

  • Keep a healthy weight: Being overweight is linked to medical conditions with higher mortality rates, such as heart disease. Staying within a healthy weight range will make you look less risky to insurers.
  • Manage your medical conditions: If you have an ongoing medical condition, such as asthma or high blood pressure, make sure you’re following up with your doctor and sticking to your treatment plan.
  • Stop smoking: This includes using e-cigarettes, which most insurers view the same way as smoking. The longer you go without smoking, the better your rate could be.
  • Avoid high-risk hobbies: The less frequently you engage in high-risk activities, the lower your rate could be. So, you can still go sky-diving, as long as it’s just a couple of times a year.
  • Apply early: The cost of a term life insurance policy is typically higher for someone who applies in their 40s or 50s, versus someone who takes out a policy in their 20s or 30s.

If you’ve recently stopped smoking or made other positive lifestyle changes, contact your life insurance company or quote around to see if you could get a lower rate.

See how affordable life insurance can be by getting a customized quote today.