What affects life insurance prices?
The key factors insurance companies look at to determine the cost of your life insurance premiums can be separated into two categories:
Your personal health and lifestyle
Age and birthday: The younger you are, the cheaper your premiums will be. And, if your birthday is in less than 6 months, the insurance company will consider you to be that age instead of your current one.
Gender: Canada’s statistics show women have a life expectancy around 4 years higher than men. This means rates for women are usually lower than for men.
Smoking status: As we showed above, smokers have much higher premiums because it’s not healthy. This includes marijuana, vaping, and e-cigarettes.
Current health status: The healthier you are, the better your insurance rates will be. Insurance providers look at things like your weight and BMI, previous illnesses, history of drug use and more.
Family medical history: Some health conditions can be passed down through your family. So, insurance companies look at your family’s health history to see how likely it is you might get certain illnesses and pass away sooner than expected.
Occupation: Some jobs are considered more risky than others. Think of firefighters, police officers, pilots, and even fishermen whose lives can be at risk on the job. They also have higher premiums.
Foreign travel: If you travel a lot to high-risk countries, you may also be charged more. Or, you could be denied completely.
The details of your insurance policy
Type of policy: In general, term life is the cheapest type of life insurance plan. Term life insurance policy quotes are the lowest, then whole life, and no-medical costs the most.
Term length (for term life plans): In many cases, a longer term costs more than a shorter term. A 20-year term usually costs more than a 30-year term. But, bear in mind that this isn’t always the case.
Coverage amount: The more coverage you get usually means you pay more for premiums. This is why it’s important to use a calculator to make sure you’re not buying more than you actually need.
Policy options and riders: You can buy optional life insurance riders to give you more coverage, like insurance for critical illness or disability. But it will cost you a bit more.
