Life Insurance is a great way to create a financial safety net for those who rely on you. It is not uncommon to pay over the course of decades, so understanding the cost of your policy, and how it is calculated is important. Determining the cost of a policy is different for everyone, but the factors that affect the price include the amount of coverage and how long it lasts, age, gender, health and hobbies.

  • Life insurance premiums can differ from one person to the next because the rate is tailored to the individual.
  • Knowing what goes into determining the cost of life insurance can help you make the best decision for you and your family.
  • Age and gender are two primary factors. Other factors, such as your lifestyle choices, give you more control over what you might pay.
  • Regardless of your health history or lifestyle, affordable term coverage is possible.

Life insurance can bring you peace of mind. Still, many people wait to buy a policy because they worry about the cost of life insurance. A term life policy can cost less than you might think.

Several factors go into your life insurance quote, and the cost can vary from one person to the next. 

But ask yourself:

Can you put a price on peace of mind? 

Here at Everyday Life, we believe in transparency. That’s why we offer no-strings-attached life insurance quotes – so you can see what a policy might cost before making a purchase.

Understanding how your monthly premium is determined can help you make the best choice for you and your loved ones.

What affects the cost of life insurance?

Policy type, coverage amount, and life expectancy are vital factors in calculating how much you’ll pay for life insurance. 

Companies base your life expectancy in part on your age, gender, health history, and lifestyle habits. The process insurers go through is called “underwriting” and your pricing isn’t finalized until it is completed.

Type of life insurance 

The life insurance you buy can make a huge difference in how much you pay. Many nuances exist in the insurance industry, but there are two types of life insurance:

  • Term life 
  • Whole life

The difference is that term life provides a financial safety net for a set number of years, while whole life lasts your entire lifetime.

According to Consumer Reports, a whole life policy can cost 10 times more than a term policy for the same coverage amount. 

Coverage amount

The coverage amount is a measure of the death benefit your loved ones can receive if something should happen to you. The higher the payout, the higher your monthly premium.

While you don’t want to pay for more than you need, millennials currently face an unprecedented coverage gap.

Policy length

Policy length is how long you’re covered under a life insurance policy. The longer the period of coverage, the higher the odds are that you’ll pass away, and the insurance company will have to pay a death benefit. 

This is one reason whole life policies are so much more expensive than term policies.

But term life is a better option for most families. 

With term coverage, your family is protected during the time of your most significant need – when you’re paying off a mortgage, raising kids, or have other responsibilities. By the time your policy ends, you’ll likely be in a much better financial position.

Your health

One of the most important factors to determine the cost for life insurance per month is your health. It’s also the one you have the most control over.

If you take good care of yourself with diet and exercise and avoid smoking, your policy will likely cost less.

Some health considerations that could increase the cost of your premium include:

  • Diabetes
  • Hypoglycemia
  • High blood pressure
  • High cholesterol
  • Weight and BMI
  • HIV/AIDS and hepatitis
  • Smoking
  • Nicotine use
  • Recreational drug use
  • Chronic illness

If you have any of the conditions listed above, don’t let it scare you off. We use term laddering to get you affordable life insurance coverage, even if you have a complicated health history.

Your age

Every year you wait to buy coverage, your cost increases. While the average cost of life insurance goes up as you age, that applies only to the cost of purchasing your policy.

What does that mean?

As soon as you buy a policy, you lock in your rate for life. 

The younger you are when you purchase a policy, the cheaper your price will be. You’re also more likely to be in good health, which can lower the cost for life insurance even further.

Your gender

Your gender is only a factor because, statistically, women live longer. The National Vital Statistics System found women live an average of five years longer than men. 

Men also tend to have riskier jobs and lifestyles.

Because men have a greater chance of dying at a younger age, their rates are more expensive when compared to the same policy purchased by a woman.

Your hobbies

Although it might surprise you, your hobbies can cause your life insurance rates to go up.

Life insurance is all about balancing risk. Riskier applicants usually pay higher life insurance premiums, and some hobbies put you at higher risk of injury or death.

Hobbies like crocheting and hiking won’t have much of an impact on your rates. Other hobbies can increase the cost of life insurance, such as:

  • Skydiving
  • Rock climbing
  • Car racing
  • Scuba diving
  • Motorcycle racing

How much will you pay for life insurance?

As you can see, there’s a lot that goes into the cost of life insurance. Stick with term life and buy a policy when you’re young to save the most on your premiums.

Want to know how affordable term life insurance is?Answer a few quick questions and get a custom quote to see how affordable a term policy can be. It won’t take more than two minutes, and you’ll have peace of mind knowing you’re taking care of your family.