• Age
The chief factor that affects the life insurance premium rate is your age. Younger people are healthier and less risky for the insurance company to cover since the probability of claims will be lesser. As you grow older, you become more susceptible to medical conditions. Even commonly prevalent diseases like diabetes, asthma, etc. can have a huge impact on your premiums. So, you should ideally buy life insurance when you are young.
• Gender
The next important factor is your gender. Women, on average, tend to live longer than men and hence, insurers charge them lower premiums. A report by the 2022 Economic Surveys says that women have a longer expectancy rate as compared to men. So, it can be inferred that a woman might end up paying premiums for a longer time than a man, leading to lower premiums.
• Lifestyle choices
Your lifestyle plays a big role in how much you pay for life insurance. Lifestyle
means how you spend your time and what you like to do, including your health
choices, hobbies, and interests. These choices can affect how long you live. For
example, if you enjoy risky activities like kayaking, surfing, etc, your life
insurance premiums could likely be higher. This is because such hobbies can
be dangerous, and insurance companies might see them as risky.
•Tobacco Use
"Smoking is injurious to health" is a health advisory that you can often see on
screens during ads, movies, and series. It is true, smoking is really bad for you.
But did you know it can also impact how much you pay for life insurance?
Using any form of tobacco is harmful, no matter how little you use. Insurance
companies know that smoking and other tobacco use can lead to serious
health problems over time. This is why they ask questions about tobacco use
when you apply for insurance to understand the risks you might bring.
Questions might include: Are you a smoker? How many cigarettes do you
smoke per day? When did you last use tobacco? And based on your answers,
they will decide your premium. In essence, smokers typically pay more than
non-smokers.
• Medical History
Any insurance company will require you to go through a medical screening
before signing up for the policy. This test helps them in evaluating your profile
for any existing or future medical risks. Medical conditions can be hereditary
or an outcome of your lifestyle. If you are diagnosed with a pre-existing severe
medical condition while buying the policy, then your premium rates will be
higher than that of a healthy person - since you will be a risky individual to
cover.
For example, Anisha and Amina apply for term insurance plans. Anisha has
diabetes, whereas Amina doesn’t have any pre-existing conditions. So, the
premiums of Anisha’s policy will be higher
• Policy Duration
The policy tenure also has an influence on the premiums you pay. The longer
the duration, the longer the premium payment term. Short-term policies are
cheaper than long-term policies
• Profession
Your profession also plays a key role in determining the cost of your life
insurance. If you are working in hazardous environments that can have an
effect on your health, it can increase your premium. Industries like mining,
fisheries, chemical, oil and gas have been known to have adverse health
effects. This is why insurers might calculate higher premiums if you work in
these professions