Life Insurance 1277 views March 31, 2020

Life Insurance Companies provide you lots of options of life insurance policies to choose from according to your needs. You need to pay a premium to keep the policy in-force. The amount of premium to be paid is decided on the basis of different factors. Let’s understand what these factors are which affect life insurance premiums 

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Factors that affect Life Insurance Premium

Sum Assured

The higher the sum assured the higher would be the premium payable and vice-versa. If you choose a higher sum assured level, the insurance company allows you a higher coverage for which the premium is also increased.

Your Age

The amount of premium of the policy also depends on your age. The younger you are while buying the policy the lesser premium amount you need to pay as the risk of contracting diseases or untimely death is less at younger age. 

Your Gender

Women pay a lower premium than men. Statistics show women to have a lower mortality rate. This reduces their mortality risk as a result of which insurance companies offer women lower rates than men.

Your Occupation

Your occupation is also a major factor that affects the amount of premium. If you are working in risky jobs like mining industry, oil or gas industry, fisheries etc. the amount of premium increases as the risk of death is high.

Your Health and Medical History

The healthier that you are the lower the premium will be. Your medical state while buying an insurance policy is a major factor in determination of premium. If you have existing medical conditions or any health related problem, your mortality risk increases. An increase in the mortality risk increases the premium and you are required to pay a higher amount of premium. Besides your current health condition, your medical history also helps in determination of premium. If you have had no ailment in the past and have a clean medical history, the premium would be low. If, however, you have suffered any critical illness or undergone major treatments, the amount of premium will be higher as the risk involved is also high.

Frequency of Premium Payment

Insurance plans allow different premium payment modes. You can pay premiums regularly, for a limited period or in one lump sum. Needless to say, single premiums are the highest followed by limited premiums which are paid for a limited period. Regular premiums give you the lowest annual premium rates compared to single or limited premiums. Similarly, there are different types of premium payment frequencies. You can pay premiums annually, half-yearly, quarterly or monthly. Annual or half-yearly premiums give you lower premium rates compared to quarterly or monthly premiums. Usually, if premiums are paid quarterly or monthly, the insurance company imposes an additional charge on the premium for increased administrative work which drives the premium higher.


Your habits and lifestyle also affect your premium. If you like adventure sports like scuba diving, bungee jumping or thrill activities like speeding car, climbing mountains etc. you will be charged a higher premium as the risk of death or claim is higher. Similarly, if you drink or smoke regularly, premiums would be high as these habits increase the mortality rate.

Physical Build

The height and weight of the insured is also taken into account when calculating the premium rate. If you are substantially overweight or underweight, the premium would be high as these conditions depict a bad health which increases the mortality risk.

Premium Discounts

Life insurance plans allow you different types of premium discounts which help in lowering the premium rate. You can avail discount for buying the policy online, for paying premiums annually or half-yearly, for choosing high sum assured levels, for not smoking, etc. These discounts reduce the premium charged under the plan.

Riders Selected

There are different additional coverage benefits under life insurance plans which are optional in nature. These are called riders and they come at an additional premium. So, if you choose riders with the base plan, the premium would increase because the premium for the rider would be added to the premium of the base plan to arrive at the aggregate premium payable.


Life insurance plans have become a necessity nowadays. In order to secure your and your family’s future financially, a life insurance plan is an ideal choice. You should check and compare various life insurance plans available online provided by various insurance companies and then opt to buy one which best suits your needs and requirements. Also understand the factors which determine life insurance premiums so that use the factors to reduce your premium outgo. 

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