Life insurance is a contract between an insurer and a policyholder, in which the insurer agrees to pay a sum of money to the beneficiaries of the policyholder in the event of their death. Life insurance can provide financial protection and peace of mind for the loved ones of the insured, as well as cover funeral costs, debts, taxes, and other expenses.
However, life insurance is not a one-size-fits-all product. The cost of life insurance premiums depends on various factors, such as the type and amount of coverage, the age and health of the applicant, the gender and lifestyle of the applicant, and the insurer’s underwriting criteria. Some of these factors are beyond the control of the policyholder, while others can be influenced by their choices and actions.
In this article, we will explore some of the factors that affect life insurance rates and answer the question: who usually pays more for life insurance? We will also provide some tips on how to lower your life insurance premiums and find the best policy for your needs.
Key takeaways
- Life insurance premiums are based on the risk of death of the policyholder, which is influenced by various factors, such as age, gender, health, lifestyle, family history, occupation, hobbies, driving record, criminal record, and financial situation.
- Generally speaking, older people pay more for life insurance than younger people, women pay less than men, smokers and nicotine users pay more than non-smokers, healthy people pay less than unhealthy people, and low-risk occupations and hobbies pay less than high-risk ones.
- The type and amount of coverage also affect the cost of life insurance. Term life insurance is cheaper than whole life insurance, and lower coverage amounts are cheaper than higher ones.
- To lower your life insurance premiums, you can shop around and compare quotes from different insurers, choose a policy that suits your needs and budget, improve your health and lifestyle habits, quit smoking or using nicotine products, avoid risky activities, drive safely and obey traffic laws, maintain a good credit score, and review your policy periodically.
Factors that affect life insurance rates
Age
Age is one of the most important factors that affect life insurance rates. The older you are, the higher your risk of death is, and therefore the higher your premiums will be. According to a study by LIMRA¹, a global research organization for the life insurance industry, age is responsible for 50% to 70% of the variation in term life insurance rates.
For example, according to Bankrate², a 30-year-old male in good health can expect to pay an average of $16 per month for a 20-year term life policy with a $250,000 death benefit. However, a 50-year-old male in good health would pay an average of $58 per month for the same policy. That’s more than three times as much.
The table below shows some examples of average monthly term life insurance rates by age and gender for a 20-year term policy with a $250,000 death benefit.
| Age | Male | Female |
|---|---|---|
| 25 | $14 | $12 |
| 30 | $16 | $14 |
| 35 | $18 | $16 |
| 40 | $23 | $20 |
| 45 | $34 | $28 |
| 50 | $58 | $42 |
| 55 | $93 | $64 |
| 60 | $163 | $108 |
As you can see from the table above, age has a significant impact on life insurance rates. Therefore, it is advisable to buy life insurance when you are young and healthy to lock in lower premiums for the duration of your policy.
Gender
Gender is another factor that affects life insurance rates. Women tend to live longer than men on average³, which means they have a lower risk of dying during the term of their policy. Therefore, women usually pay less than men for life insurance.
According to Bankrate², a 30-year-old female in good health can expect to pay an average of $14 per month for a 20-year term life policy with a $250,000 death benefit. However, a 30-year-old male in good health would pay an average of $16 per month for the same policy. That’s 14% more.
The table below shows some examples of average monthly term life insurance rates by age and gender for a 20-year term policy with a $250,000 death benefit.
| Age | Male | Female |
|---|---|---|
| 25 | $14 | $12 |
| 30 | $16 | $14 |
| 35 | $18 | $16 |
| 40 | $23 | $20 |
| 45 | $34 | $28 |
| 50 | $58 | $42 |
| 55 | $93 | $64 |
| 60 | $163 | $108 |
As you can see from the table above, gender also has a noticeable impact on life insurance rates. Therefore, women can benefit from lower premiums than men for the same amount and type of coverage.
Health
Health is another crucial factor that affects life insurance rates. The healthier you are, the lower your risk of death is, and therefore the lower your premiums will be. Life insurance companies usually require applicants to undergo a medical exam or answer health-related questions to assess their health status and assign them a risk class.
The risk class determines how much you will pay for your life insurance policy. The risk class is based on various health factors, such as your height, weight, blood pressure, cholesterol, blood sugar, heart rate, family history, and medical history. The risk class can range from preferred plus (the best) to substandard (the worst), depending on the insurer’s underwriting criteria.
For example, according to Policygenius⁴, an online insurance marketplace, a 30-year-old male in good health can expect to pay an average of $21 per month for a 20-year term life policy with a $500,000 death benefit. However, a 30-year-old male with high blood pressure and high cholesterol would pay an average of $41 per month for the same policy. That’s almost twice as much.
The table below shows some examples of average monthly term life insurance rates by age and health for a 20-year term policy with a $500,000 death benefit.
| Age | Preferred Plus | Preferred | Standard Plus | Standard |
|---|---|---|---|---|
| 25 | $19 | $22 | $26 | $31 |
| 30 | $21 | $24 | $29 | $34 |
| 35 | $23 | $27 | $33 | $39 |
| 40 | $31 | $36 | $44 | $52 |
| 45 | $48 | $56 | $68 | $81 |
| 50 | $75 | $88 | $107 | $128 |
| 55 | $122 | $143 | $174 | $208 |
| 60 | $211 | $247 | $300 | $358 |
As you can see from the table above, health has a significant impact on life insurance rates. Therefore, it is advisable to maintain a healthy lifestyle and manage any chronic conditions to qualify for lower premiums.
Smoking
Smoking is one of the most detrimental factors that affect life insurance rates. Smoking increases your risk of developing various diseases, such as cancer, heart disease, stroke, lung disease, and diabetes. Smoking also reduces your life expectancy by about 10 years⁵. Therefore, smokers pay much more than non-smokers for life insurance.
According to Policygenius⁴, a 30-year-old male in good health who does not smoke can expect to pay an average of $21 per month for a 20-year term life policy with a $500,000 death benefit. However, a 30-year-old male in good health who smokes would pay an average of $90 per month for the same policy. That’s more than four times as much.
The table below shows some examples of average monthly term life insurance rates by age and smoking status for a 20-year term policy with a $500,000 death benefit.
| Age | Non-smoker | Smoker |
|---|---|---|
| 25 | $19 | $69 |
| 30 | $21 | $90 |
| 35 | $23 | $115 |
| 40 | $31 | $167 |
| 45 | $48 | $268 |
| 50 | $75 | $422 |
| 55 | $122 | $689 |
| 60 | $211 | $1,127 |
As you can see from the table above, smoking has a huge impact on life insurance rates. Therefore, it is advisable to quit smoking or using any nicotine products at least one year before applying for life insurance to qualify for lower premiums.
Lifestyle
Lifestyle is another factor that affects life insurance rates. Your lifestyle choices can influence your risk of death and your overall health. Life insurance companies usually ask applicants about their hobbies, occupation, driving record, criminal record, and financial situation to assess their lifestyle risk.
Some hobbies that are considered risky by life insurance companies include skydiving, scuba diving, mountain climbing, racing, flying planes, and traveling to dangerous destinations. These hobbies can increase your chance of dying in an accident or contracting a disease. Therefore, if you engage in any of these hobbies regularly or frequently, you may have to pay higher premiums or add an exclusion rider to your policy.
Some occupations that are considered risky by life insurance companies include firefighters, police officers, construction workers, miners,.
Some occupations that are considered risky by life insurance companies include firefighters, police officers, construction workers, miners, pilots, military personnel, and journalists. These occupations can expose you to hazards, violence, or extreme conditions that can increase your chance of dying or getting injured. Therefore, if you work in any of these occupations, you may have to pay higher premiums or add an occupational rider to your policy.
Your driving record can also affect your life insurance rates. If you have a history of speeding tickets, accidents, DUIs, or other traffic violations, you may be considered a high-risk driver by life insurance companies. This can increase your chance of dying in a car crash or injuring yourself or others. Therefore, if you have a poor driving record, you may have to pay higher premiums or add a driving rider to your policy.
Your criminal record can also affect your life insurance rates. If you have a history of convictions, arrests, or imprisonment, you may be considered a high-risk individual by life insurance companies. This can increase your chance of dying due to violence, suicide, or legal consequences. Therefore, if you have a criminal record, you may have difficulty getting approved for life insurance or have to pay higher premiums.
Your financial situation can also affect your life insurance rates. Life insurance companies usually check your credit score and income to determine your financial stability and responsibility. A good credit score and income can indicate that you are more likely to pay your premiums on time and less likely to engage in risky behaviors. Therefore, if you have a good credit score and income, you may qualify for lower premiums.
The table below shows some examples of average monthly term life insurance rates by age and lifestyle for a 20-year term policy with a $500,000 death benefit.
| Age | Low-risk lifestyle | High-risk lifestyle |
|---|---|---|
| 25 | $19 | $38 |
| 30 | $21 | $42 |
| 35 | $23 | $46 |
| 40 | $31 | $62 |
| 45 | $48 | $96 |
| 50 | $75 | $150 |
| 55 | $122 | $244 |
| 60 | $211 | $422 |
Source: Estimated based on Policygenius
As you can see from the table above, lifestyle has a considerable impact on life insurance rates. Therefore, it is advisable to avoid risky activities and habits, drive safely and obey traffic laws, and maintain a good credit score and income to qualify for lower premiums.
Type and amount of coverage
The type and amount of coverage are also factors that affect life insurance rates. The type of coverage refers to the kind of policy you choose, such as term life or whole life. The amount of coverage refers to the death benefit or the sum of money that the insurer will pay to your beneficiaries in the event of your death.
Term life insurance is the simplest and cheapest type of life insurance. It provides coverage for a specific period of time, such as 10, 20, or 30 years. If you die within the term of the policy, your beneficiaries will receive the death benefit. If you outlive the term of the policy, it will expire and you will not receive any benefits.
Whole life insurance is the most expensive type of life insurance. It provides coverage for your entire lifetime as long as you pay the premiums. It also accumulates cash value over time that you can borrow or withdraw from the policy. However, whole life insurance has higher fees and commissions than term life insurance and may not be suitable for everyone.
The amount of coverage also affects the cost of life insurance. The more coverage you buy, the more expensive your premiums will be. However, the amount of coverage you need depends on your personal and financial situation and goals. You should consider factors such as your income, debts, expenses, assets, dependents, and future plans when determining how much coverage you need.
For example, according to Policygenius, a 30-year-old male in good health who does not smoke can expect to pay an average of $21 per month for a 20-year term life policy with a $500,000 death benefit. However,
a 30-year-old male in good health who does not smoke can expect to pay an average of $41 per month for a 20-year term life policy with a $1,000,000 death benefit. That’s almost twice as much.
The table below shows some examples of average monthly term life insurance rates by age and amount of coverage for a 20-year term policy.
| Age | $250,000 | $500,000 | $750,000 | $1,000,000 |
|---|---|---|---|---|
| 25 | $14 | $19 | $26 | $31 |
| 30 | $16 | $21 | $29 | $41 |
| 35 | $18 | $23 | $33 | $46 |
| 40 | $23 | $31 | $44 | $62 |
| 45 | $34 | $48 | $68 | $96 |
| 50 | $58 | $75 | $107 | $150 |
| 55 | $93 | $122 | $174 | $244 |
| 60 | $163 | $211 | $300 | $422 |
As you can see from the table above, the type and amount of coverage have a considerable impact on life insurance rates. Therefore, it is advisable to choose a policy that suits your needs and budget and not overpay for unnecessary coverage.
How to lower your life insurance premiums
Life insurance is an important financial product that can provide security and peace of mind for you and your loved ones. However, life insurance can also be expensive if you do not shop around and compare quotes from different insurers. Here are some tips on how to lower your life insurance premiums and find the best policy for your situation.
- Shop around and compare quotes. Life insurance rates can vary widely depending on the insurer, the type and amount of coverage, and your personal and health information. Therefore, it is important to shop around and compare quotes from different insurers to find the best deal. You can use online tools such as Policygenius or Bankrate to get free and instant quotes from multiple insurers.
- Choose a policy that suits your needs and budget. Life insurance is not a one-size-fits-all product. You should choose a policy that matches your goals, needs, and budget. For example, if you only need coverage for a specific period of time, such as until your children are grown or your mortgage is paid off, you may opt for term life insurance instead of whole life insurance. Term life insurance is cheaper than whole life insurance and provides sufficient coverage for most people. However, if you need coverage for your entire lifetime or want to build cash value in your policy, you may opt for whole life insurance instead of term life insurance. Whole life insurance is more expensive than term life insurance but provides lifelong protection and savings benefits.
- Improve your health and lifestyle habits. Your health and lifestyle habits can affect your life insurance rates significantly. Therefore, it is advisable to improve your health and lifestyle habits before applying for life insurance or during the term of your policy. You can do this by eating a balanced diet, exercising regularly, maintaining a healthy weight, managing any chronic conditions, quitting smoking or using nicotine products, avoiding risky activities, driving safely and obeying traffic laws, and maintaining a good credit score and income. These habits can lower your risk of death and qualify you for lower premiums.
- Review your policy periodically. Your life insurance needs may change over time due to various factors such as marriage, divorce, childbirth, adoption, retirement, inheritance, or debt. Therefore, it is advisable to review your policy periodically and adjust it accordingly. You may be able to reduce your coverage amount or switch to a cheaper policy if you no longer need as much protection as before. Alternatively, you may be able to increase your coverage amount or switch to a better policy if you need more protection than before. You may also be able to save money by taking advantage of discounts or loyalty programs offered by your insurer.
Conclusion
Life insurance is a valuable financial product that can provide financial protection and peace of mind for you and your loved ones in the event of your death. However, life insurance is not cheap and the cost of premiums depends on various factors such as age, gender, health, lifestyle,
type and amount of coverage, and the insurer’s underwriting criteria. Generally speaking, older people pay more for life insurance than younger people, women pay less than men, smokers and nicotine users pay more than non-smokers, healthy people pay less than unhealthy people, and low-risk occupations and hobbies pay less than high-risk ones. Term life insurance is cheaper than whole life insurance, and lower coverage amounts are cheaper than higher ones.
However, you can lower your life insurance premiums by shopping around and comparing quotes from different insurers, choosing a policy that suits your needs and budget, improving your health and lifestyle habits, quitting smoking or using nicotine products, avoiding risky activities, driving safely and obeying traffic laws, maintaining a good credit score and income, and reviewing your policy periodically.
Life insurance is a smart investment that can protect your family’s financial future and give you peace of mind. However, it does not have to break the bank. By following the tips in this article, you can find the best policy for your situation and save money on your premiums.