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Life Insurance, how much does it cost?

Updated: May 31, 2022

The decision to buy life insurance has been made, and now you're researching the choices available to you.

You'll find differences in some of the benefits offered and what's required to get coverage, but the biggest difference is in the cost. Depending on the additional coverage that you purchase, your premiums can be significantly different between insurers. Choosing a life insurance carrier and coverage is all about balancing the features and benefits each carrier provides with the cost.

To help you gain a better understanding of what to expect when purchasing life insurance, I'll explain how premiums are calculated, and tell you what influences, or doesn't influence, this price.

How are life insurance premiums determined?

Although the overall average cost of life insurance premiums is relatively low, there are multiple variables that impact the amount each individual pays.

Here are some of the most common factors that influence the cost of life insurance premiums:

Coverage Amount and Term Length

Just like any other insurance policy, the amount of coverage you elect to purchase affects how much you pay for that coverage. If you want your beneficiaries to receive $250,000 upon your death, for example, it will cost you much less over time than if you want them to receive $1 million in benefits.

How much insurance you purchase is one of the greatest factors that influences the cost of your premiums. The higher the benefits your family will receive, the more your coverage will cost you. Additionally, the term length of your policy impacts how much you will pay. If you want to purchase whole life insurance, which will provide benefits regardless of your age when you die, it will cost more than purchasing term life insurance. And, the shorter the amount of time you purchase term life insurance, the less you’ll pay. When it comes to term life insurance, insurance companies estimate the risk that you’ll die within the term when determining your cost. Say, for example, you purchase a policy at 35 years old. It’s much more likely that you will die by 65 than by 55, so insurers will charge you more for a 30-year term policy than they will for a 20-year term policy.

Your Health

The healthier you are at the time you purchase your policy, the less insurers will charge you for coverage.

If you are in poor health, or suffer from a pre-existing condition such as diabetes, heart disease, or cancer, insurers calculate that your risk of dying early is much more likely than that of someone who is in great health. Not exercising, being overweight, being a smoker, and having high blood pressure or cholesterol also make your health insurance more costly. Insurance companies use both your self-reported information and health screenings to calculate your premiums. Additionally, you will be asked to provide information on your family history of chronic diseases and early death to your chosen insurance company during the application process.

Your Age

Purchasing life insurance earlier in life is less costly on a monthly basis than purchasing insurance when you are older. The reason for this is two-fold: You are considered less likely to die during your policy’s term if you’re purchasing term life insurance, and the longer you pay into a whole life policy, the more the cost of the policy is spread out and the less it costs in the long run.

Your Hobbies and Occupation

When you apply for life insurance, the underwriting process factors in a series of variables about your habits and health to determine your cost. If you are in a risky occupation, where you face more danger on a daily basis, your premiums are going to cost more. Firefighters, members of the military, and commercial pilots, for example, run more risk of dying on the job at a younger age than accountants or bankers, for example.

What you do in your free time also plays a role in whether you are determined to be more likely to die early and, as a result, to have higher insurance premiums. Participating in high-risk hobbies regularly such as mountain climbing or skydiving will mean you are going to pay more money for life insurance coverage.

Your Gender

Because women tend to live longer, on average, than men, they are often given lower insurance rates. For transgender individuals, there is no official policy regarding whether you will be quoted based on your actual gender or the gender you were assigned at birth, meaning the rates you will be quoted will vary depending on the insurance company.

What Factors Do Not Influence the Cost of Premiums?

It may seem like the price of life insurance is determined by a lot of different factors, and that everything is up for grabs. However, there are a few things that don’t impact the cost of life insurance premiums.

Where You Live

The premiums for other types of insurance, such as auto and home insurance, are greatly influenced by where you live. Some areas, for example, are more prone to flooding or accidents, making it more costly for an insurance company to insure homes and cars in those areas. The cost of life insurance, however, isn’t dependent upon where you live.

How Many Beneficiaries You Have

When you purchase your life insurance policy, you designate beneficiaries. These are friends and family, or even charitable organizations, who will receive the monetary benefits of your life insurance policy when you pass. Whether you have one beneficiary or five, your premiums are not going to change. The amount of coverage you purchase in your policy determines how much each beneficiary receives, as your total coverage amount is divided among those beneficiaries using the percentages you designate.

How Many Policies You Have

Many people carry just one life insurance policy or, at most, two. Some individuals who receive life insurance coverage through their employer may elect to purchase their own individual coverage. Having more than one life insurance policy does not impact how much you pay for that coverage.

To Sum It Up...

Everyone purchasing life insurance wants to know how much it’s going to cost them. For many, the fear of paying high premiums keeps them from purchasing insurance, but a little knowledge of the life insurance industry and how premiums are calculated can go a long way toward helping you understand just how much it will cost you to receive coverage.

Insurance companies use a variety of factors when calculating their premiums, with the type and amount of coverage, your age at the time you purchase the policy, and your overall health being among the biggest variables. However, just because you are quoted one premium by an insurance company doesn’t mean that’s the amount you can expect to pay from other insurers.

As an Independent Insurance Advisor, I can save you from having to shop around with various life insurance companies. In a click of a button, can help you find more affordable coverage for the same amount of benefits, from various insurance carriers.

If you’re looking for assistance comparing life insurance quotes and finding the coverage that’s right for you, I can help! Compare premiums and plans, get a personalized quote, and apply for coverage quickly.

Contact me today!


The information contained in these articles are for general information purposes only. Nicole Marques assumes no responsibility for errors or omissions in the contents of the Service. In no event shall Nicole Marques be liable for any special, direct, indirect, consequential, or incidental damages or any damages whatsoever, whether in an action of contract, negligence or other tort, arising out of or in connection with the information provided in this article. Nicole Marques reserves the right to make additions, deletions, or modifications to the contents on the Service at any time without prior notice. The information provided above is for general information only. It is not to be relied upon as providing legal or tax advice. You are encouraged to consult with a professional tax and/or legal advisor and/or financial advisor about your particular circumstances.


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