What Factors Impact Life Insurance Premiums?

JHN FINANCE
Dec 16, 2025
4 min read

How to Get the Most Ideal Premium Rate of Coverage and Better Value out of a Life Insurance Policy

The cost—the premium—can vary dramatically from person to person for life insurance coverage. Understanding the key factors that influence these premiums is essential for making an informed decision and finding the best coverage for your needs.

Here is a comprehensive breakdown of the major variables underwriters consider when determining your life insurance rate that is suitable for you.

1. Personal Health and Medical History

Your current health status and medical past are, by far, the most significant determinants of your premium. Insurers are essentially assessing the risk of paying out a claim early, and health is the primary indicator of that risk.

Age

This is the most straightforward factor. Premiums are cheapest when you are younger and increase incrementally as you age. The younger you are when you purchase a policy, the lower your lifetime premiums will generally be, as the insurer is anticipating a longer period of premium payments before a potential claim.

Gender

Historically, women have been charged lower premiums than men because, statistically, they have a longer average life expectancy. While this difference is narrowing in some policies, it remains a factor in underwriting.

Current Health Status

Underwriters will require a medical exam (for most traditional policies) to assess key metrics:

Blood Pressure and Cholesterol: High readings for either can signal cardiovascular risk.
Body Mass Index (BMI): Being significantly overweight or obese can lead to higher rates due to associated health risks (e.g., diabetes, heart disease).
Blood and Urine Samples: These test for nicotine, drug use, and markers for chronic diseases.
Medical History: The presence of past or current chronic conditions will significantly affect your rates.

Chronic Diseases: Conditions like diabetes, cancer, heart disease, kidney disease, or stroke will result in higher premiums or, in some severe cases, may lead to a denial of coverage (though guaranteed issue policies may still be available).
Family Health History: If immediate family members (parents or siblings) had significant health issues (e.g., early-onset heart disease or cancer), it can sometimes slightly impact your risk classification, even if you are currently healthy.

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2. Lifestyle and Habits

Your daily habits and chosen profession provide another layer of risk assessment for the insurer.

Smoking and Nicotine Use

If you use any nicotine products (cigarettes, cigars, vaping, patches, or chewing tobacco), you will be classified as a smoker, resulting in dramatically higher premiums—often two to three times more than a non-smoker. Most insurers require you to be nicotine-free for a full 12 months to qualify for non-smoker rates.

Occupation

Certain high-risk occupations pose a greater threat of accidental death or injury.

Risk Level	Example Occupations	Premium Impact
Standard	Office workers, teachers, accountants	Minimal impact
Higher Risk	Construction workers, pilots, long-haul truck drivers	Moderate increase
Highest Risk	Commercial fishermen, loggers, police officers, firefighters	Significant increase; sometimes requires specialized policy

High-Risk Hobbies and Travel

Engaging in adrenaline-fueled or dangerous activities can flag you as a higher risk.

Hobbies: Skydiving, scuba diving, rock climbing, private aviation, car racing, and deep-sea fishing can lead to a "flat extra" fee added to your premium.
Travel: Frequent travel to unstable or war-torn countries may also result in increased rates or coverage limitations.

3. Policy Details

The type of insurance you purchase and the amount of coverage you choose directly influence the price.

Though premiums may be lower on guaranteed policies, this does not equate to the coverage being the most suitable for you. Conversely, higher premiums on non-guaranteed policies do not equate to what is the most suitable for you and your situation.

Type of Life Insurance

The fundamental choice between Term and Permanent insurance is a major cost differentiator.

Term Life Insurance: Provides coverage for a specific period (e.g., 10, 20, or 30 years). Since the policy is designed to expire, it is significantly less expensive than permanent insurance.
Permanent Life Insurance (e.g., Whole Life, Universal Life): Designed to last your entire life and builds cash value. These features make it substantially more expensive.

Coverage Amount (Death Benefit)

Logically, the more coverage you purchase, the higher your premium will be. A policy with a $1M Death Benefit will cost more than a $250K Death Benefit policy, assuming all other factors are equal.

Riders and Optional Features

Adding "riders" to your policy—extra features that provide specific benefits—will increase the premium. Common riders include:

Waiver of Premium: Waives premium payments if the insured becomes disabled.
Accelerated Death Benefit: Allows access to a portion of the death benefit if the insured becomes terminally ill.
Child Term Rider: Provides a small amount of term coverage for all children.

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4. Underwriting Classifications

After evaluating all the factors above, the insurance company assigns you an "underwriting class." This class is the final determination of your premium rate. While classification names vary by insurer, they generally fall into the following categories:

Classification	Description	Premium Implication
Preferred Plus (Super Preferred)	Exceptional health, clean family history, optimal weight, non-smoker, low-risk lifestyle.	Lowest rates available.
Preferred	Excellent health, minor manageable health issues (e.g., slightly high cholesterol controlled by medication), non-smoker.	Very good rates, slightly higher than Preferred Plus.
Standard Plus	Good health, average build, some minor health history, non-smoker.	Average market rates.
Standard	Average health for age, some controlled chronic conditions (e.g., controlled diabetes), average build.	Higher rates than preferred classes.
Substandard (Table Ratings)	Significant health issues, multiple chronic conditions, history of serious illness. Premiums are rated based on a "table" system (e.g., Table 2, Table 4) that adds an extra percentage to the standard rate.	Highest rates; specific to individual risk.

Conclusion

Life insurance premiums are not arbitrary; they are the result of a rigorous, data-driven assessment of risk. By understanding how age, health, lifestyle, and policy choices interact, you can better prepare for the application process and compare quotes effectively. The best strategy for securing the lowest premium is generally to apply when you are young and healthy, and to maintain a low-risk lifestyle. So don’t wait! Get started today.