8 Factors That Affect Your Life Insurance Premium

Jay Kanjere

Do you know what life insurance is and why it is important to have?

Life insurance pays an amount of money when the policyholder passes on or after a certain time period has lapsed. Premiums can be made on a monthly basis or in one large payment.

The different types of life insurance policies include Term Life Insurance, Permanent Life Insurance, Whole Life Insurance and Equity Index Life Insurance.

Term Life Insurance policy maintains a premium rate for a certain period of time, after which you may choose to continue cover with a premium that increases annually. Deciding on a fixed premium for the next 15 years may be effective for those who function on a fixed budget. This is understandably the cheapest type of insurance as rates do not increase, but as a result, the cash value

This is understandably the cheapest type of insurance as rates do not increase, but it should be noted that the cash value, when paid out, will not be as significant as other packages.

Permanent Life Insurance Policy provides cover for the duration of the policyholder’s lifetime. It has more benefits and a sizeable cash value that accumulates over time. This cash value amount can be utilised by the policyholder or by their heirs.

Whole Life Insurance is lifetime protection with a guarantee on the death benefit and a guaranteed cash value with a tax-free premium. This is one of the most expensive kinds of life insurance.

Equity Index Life Insurance is similar to Whole Life insurance but includes an invested portion which ties your earnings to a market index. This is more costly than whole life as there is an added potential to increase earnings through the stock market.

So with the all the options listed, what are the factors that affect your premiums


This is one of the main determinants of how much you will pay. If you are young, your premiums will be cheaper than those of an elderly person. This is because the you are less likely to die when you are still young, although this is not always the case.

For this reason, many insurance experts recommend taking out insurance earlier in life when your premiums are lower.

Health history, family health history and current health

Your medical records play a crucial role in determining the premiums you will be charged. If you have a history of chronic diseases, you are more likely to pay a higher premium.

Most life insurance companies will also require you undergo a medical examination to assess your current condition and make decisions accordingly.

The same goes for any pre-existing chronic family illnesses such as breast or testicular cancer.


Research and statistics have shown that females generally live longer than their male counterparts. Whether this is by five or 10 years, life insurance companies do not take this lightly.

This translates to lower premiums for women since there is a higher expectation is that they will pay their premiums for a longer period than a male might.

Family medical history

The insurance company will want to know if there are family members such as your siblings or parents who suffered from a particular condition. This sets you at a higher likelihood of suffering from similar ailments.

If your family’s medical history has mentions of cancer, heart disease or other chronic dieases, you may experience higher premiums.


If your height to weight ratio shows that you are obese or overweight, this may work against you in terms of premiums. Obesity or being overweight is seen as a signal of potential future health problems such as an early death or other health complications. 

It is safe to assume that the higher risk taken on by the insurance company is translated into a higher policy premium.


Insurance providers take your occupation into consideration as well as some occupations are considered to be “high risk”.

High-risk jobs include an airline pilot, commerical diver, registered nurse, professional athlete, construction foreman, police officer, mining machine operator and an electrician.  

 If you are in one of these professions, expect to pay a little more.


Insurance companies are interested in finding out whether you smoke or not. Policy premiums for people who smoke are higher than for non-smokers.

Smokers are seen to be at a higher risk of falling sick with diseases such as cardiovascular or lung disease, due to the harmful effects of the chemicals and toxins that they expose themselves to.

The same goes for people who drink alcohol frequently.

Type of policy

Group insurance policies work well for a company as well its policyholders. This is because the risk is spread for bigger groups, thereby reducing the risk for the insurance company.

As a result, premiums charged for group policies are less than individual plans.

On a final note …

Make sure you make the best health decisions to insure your life insurance premium is as cost-effective and sustainable to better suit your pocket, and your life. It is comforting to know that some decisions, can be up to you when lowering your premium.

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