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12 factors that impact the cost of life insurance

by Sam Stilson
7 min read

Wondering why someone’s Life Insurance premium is lower than yours? Here are 12 key factors that impact the cost of life insurance.

No matter what we’re buying, everybody wants to get a good deal. Whether it’s a 2-for-1 sale on Frappuccinos or a lower rate on your mortgage, shaving a little money off the cost of anything makes us feel like a savvy buyer and validates our decision to buy. This holds true for the cost of life insurance too.

Even if you already found the perfect policy from the perfect provider, you’ve read our blogs, used our calculators and assessment tools and you know that policy is exactly what you’re looking for…you’re still going to want to get it for the best price possible.

But how do you go about ‘getting a deal’? Life insurance doesn’t exactly go on sale. There’s no Black Friday for term life policies, or discount codes on your favourite podcasts…

What factors affect the cost of life insurance policy?

#1: Age

If you needed another reason to long for your youth, here it is: the younger you are, the cheaper your life insurance will be. Life insurance premium costs rise as you age – statistically you’re more likely to die or develop poor health. When you’re young, you present less risk to the insurance company covering you, especially on a shorter ‘term’ plan. If you’re highly likely to outlive the term set in your policy, your insurer won’t be called upon to pay your death benefit. This is reflected in your premium rates. So if you’re looking to save a buck, opt in early.

Average Monthly Cost

25-Year-Old 33.93$
30-Year-Old 34.51$
35-Year-Old 35.62$
40-Year-Old 52.61$

Life Insurance rates by age chart

Find out life insurance costs by age groups

How much does life insurance cost for a 30 year old?
How much does life insurance cost for a 40 year old?
How much does life insurance cost for a 50 year old?
How much does life insurance cost for a 60 year old?

#2: Gender

Remember how younger people are statistically less like to die? So are women. The average life expectancy in Canada is 4 years higher for females. Women and children first – at least in terms of insurance rates! So yes, your gender affects cost of life insurance

#3: Smoking

It’s no secret that smoking is terrible for your health and increases your likelihood of developing a long list of diseases. Insurers are experts on these numbers and therefore jack the prices for those who hack a daily dart. If you are a smoker it will impact your Life Insurance premiums. The good news for smokers is that if you prove (or profess) that you quit smoking for 12 months, you may no longer be considered a smoker. Keep in mind, solemnly swearing won’t suffice, you probably need to submit another blood sample.  One more motivating factor to kick the habit!

For those who smoke the odd bud, now and again, there’s also reason to rejoice. Cannabis consumers are no longer considered smokers by most insurers.

Smoker premiums are high

30-year-old, male. 20-year term, $500,000 coverage.

#4: Health

Insurers like healthy people. Insurance companies ascertain your health based on certain key parameters like your height and weight to determine BMI. Insurers want to know if you are taking medications or were treated for certain conditions like cholesterol, blood Pressure, hypertension etc. Your consumption of alcohol and any history of substance abuse affects cost of life insurance. If your BMI, cholesterol, blood pressure, history of disease, alcohol and drug use are in a good place, you’ll most likely receive a lower life insurance premium.

#5: Family medical history impacts life insurance premium

Many medical conditions are hereditary. It’s common for family members to end up developing the same conditions, be it cancer, heart disease or rarer afflictions. You’ll be asked about the medical history of your immediate family when applying for coverage and any critical illnesses or related deaths will be reflected in your premiums. Unfortunately, there’s nothing you can do to change this, other than maybe planning your family’s meals and workout schedules. While it might seem unfair that the health of your family reflects on you, take comfort that the Canadian government has taken some steps to limit the level to which insurers can check into your DNA.

#6: Driving history and Adventure activities

Sometimes healthy, young, straight-edge people are just as risky to insurers as their counterparts. Regardless of your health status, if you have a poor driving record (tickets, accidents, drunk driving charges) or you regularly engage in dangerous activities like sky-diving, race car driving or mountain climbing, insurers are going to raise your premiums or deny your coverage altogether. Some insurers are even looking into using credit scores to assess risk.

#7: Occupational risks influence cost of Life Insurance

Just as extreme sports enthusiasts make insurers nervous, so do those who work dangerous jobs. Firefighters, police officers, pilots, Alaskan crab fisherman, and MMA fighters all face higher costs for life insurance (or may not even qualify for life insurance) because of the risk found in their occupation. However, if you spend most of your day sitting on a stability ball in an office, you can relax.

#8: Foreign travel

Do you have a well-stamped passport? What you gain in worldliness may end up costing you on your insurance premiums. If you regularly travel for extended periods to high-risk nations, you may also be charged more (or altogether denied coverage).

#9: Risk classification by insurance companies

Based on all the information above, most underwriters place applicants in risk categories when extending coverage and charge them accordingly. Each company names their categories differently (e.g. Regular, Premium, and Premium Plus – kind of like UberX, Uber Black, Uber Select etc). While it’s not realistic to try to improve your overall classification in a rush before the medical exam, it can provide an incentive to continue to eat well, exercise and curb your weekend drinking.

#10: Length of the policy term

Aside from all the health-related factors, one of the most impactful variables on the cost of life insurance is the length of your coverage. A longer term translates to higher premiums because the insurer is required to cover you for a longer period of your life. As we know, an ageing client is a red flag for insurers, so they charge you more to offset the risk in the latter years of your policy. You can use our online insurance quoting tool to see Life Insurance quotes across policy terms.

#11: Life Insurance coverage amount

This one should be obvious. Understand how much Life Insurance coverage you need to protect your family and dependents. If premium costs are a real concern, make sure you’re accurately filling out our life insurance needs calculator and staying realistic about your family’s future financial requirements. If you can lower your death benefit, while still confidently protecting your family, you can save some money over the years.

#12: Policy options or Riders impact cost of Life Insurance

Everybody likes extra sprinkles on their sundaes, but if your premiums are becoming cost-prohibitive, look into declining some optional riders found in your policy if you don’t really need them. Things like convertibility, guaranteed renewability, critical illness, disability and long-term care insurance riders, waiver of or return of premium clauses and more, can really drive up the cost of your policy.

Looking for a deal, compare quotes across providers 

This is where we come in. If you’re only looking at insurance products from one company or relying solely on the advice of one insurance broker or advisor, you might be missing out on better prices for the same coverage. When you compare prices online you stand to save on premiums for same coverage amount.

PolicyAdvisor lets you instantly compare quotes from the most trustworthy insurers in the country, so you know you’re getting the best price for your life insurance needs.

Start comparing quotes now.

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