What determines the cost of life insurance?

Factors that affect life insurance premiums may have a large influence on the price.

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Life insurance can provide your beneficiaries with financial support when you pass away. The cost of the policy premiums will vary from person to person based on multiple factors.

Factors that affect life insurance premiums

Ultimately, life insurance policies are priced based your life expectancy. There are a variety of factors that influence the cost. These include:

Age

Younger people generally receive lower rates because they represent a lower risk to life insurance companies based on having a longer life expectancy. As you get older, there are more factors that may contribute to shorter life expectancy.

Health

Your overall health, including the presence of preexisting conditions, can lead to higher premiums. For instance, high blood pressure, high cholesterol, heart disease and diabetes are just a few of the life insurance risk factors that can impact the cost.

Gender

Men typically have a shorter life expectancy than women, and they generally pay higher life insurance premium rates.

Occupation

Working in a field such as construction or manufacturing is riskier than working in an office, so people working in those occupations typically pay higher premiums.

Lifestyle

Risky hobbies such as rock climbing, auto racing or being a weekend pilot can also drive up premiums due to the higher chance of accidents.

Driving record

A history of speeding, accidents and DUIs are other underwriting factors in life insurance. Having these incidents on your driving record can lead to higher rates because of the associated risky behavior that record entails.

Tobacco use

When it comes to pricing life insurance, companies know that tobacco use lowers life expectancy, and premium costs increase accordingly.

Family health history

Similarly, a history of serious health conditions in your family may lead to higher life insurance premium rates because it increases your chances of developing similar issues.

Life insurance policy characteristics

Policy type and coverage amount also affect the size of your insurance premiums. Different policies offer different features and cover you for different periods of time. For instance, term life insurance usually costs less than other policy types since it remains active for a specific period, often 10, 20 or 30 years. Meanwhile, whole or permanent life insurance provides coverage for your entire life and generally offers additional benefits such as cash value and fixed premiums, which may cost more than term coverage. This calculator can help you determine your life insurance needs and thus the amount of coverage that might fit your situation.

The information in this article was obtained from various sources not associated with State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates). While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. State Farm is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. State Farm makes no guarantees of results from use of this information.

Neither State Farm® nor its agents provide tax or legal advice.

State Farm Life Insurance Company (Not licensed in MA, NY or WI)
State Farm Life and Accident Assurance Company (Licensed in NY and WI)
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