Life insurance premiums: How to keep costs down |

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Life insurance premiums

Life insurance is an ongoing purchase — and a premium is what you’ll pay to keep your coverage.


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When you purchase a life insurance policy, you’re agreeing to pay premiums to maintain your coverage. The amount you pay comes down to a range of factors, including your health, lifestyle and whether you add riders to your policy.

What is a life insurance premium?

A premium is the money you pay for your life insurance coverage, and payments are typically due monthly, quarterly or annually. Your policy stays in effect as long as you pay your premiums, so it’s important to apply for a policy you can afford.

If you stop paying your premiums, your policy will lapse — ending your coverage.

What’s the difference between a premium and a quote?

A life insurance quote is an estimate of the premium you might pay. This ballpark figure is based on the information you supply when you get a quote, like your age, gender, occupation and how you view your health.

Once you actually apply for coverage, you’ll go through the underwriting process — unless you’re applying for a guaranteed issue policy. To get a more complete picture of who they’re insuring, your provider will ask you to fill out a comprehensive questionnaire about your lifestyle and family medical history. It might also request a medical exam, and pull your prescription and driving records.

The underwriting process may reveal information that could affect your rates. Either way, it allows the insurer to better assess your risk factors and come up with an accurate premium.

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4 factors that affect life insurance premiums

The riskier you are in the eyes of the insurer, the higher your premium will be. With that in mind, here are four major factors that underwriters take into account.

Type of policy

Your premium depends on which type of policy you choose. Term life insurance is cheaper because it provides protection for a limited time, like 10 or 20 years. On the other hand, permanent policies — like whole life — offer lifelong protection and become a cash asset over time. Since they never expire, you can expect to pay a much higher premium.

If you choose term life insurance, your term length comes into play, too. Generally, you’ll pay a higher premium for a longer term.

Coverage amount

This refers to the face value of your policy, and directly impacts your premiums. A $1 million policy is going to be more expensive than a $500,000 or $250,000 policy. To keep your premiums affordable, only buy the coverage you need.

To crunch the numbers, add up your debts, assets and financial obligations, and consider purchasing a policy to match.

Age, health and lifestyle

Life insurance rates rise with age. It makes sense: The older you get, the lower your life expectancy — and the more likely you are to develop a health condition. As a result, younger applicants often score the best premiums.

Underwriters analyze your health, too. Along with assessing the results of your medical exam, they’ll look at your pre-existing conditions, prescriptions and family medical history. You might pay a higher premium if:

  • You have elevated blood pressure or cholesterol levels.
  • You have a family history of serious health conditions, like diabetes or heart disease.
  • You’re a smoker.
  • You’re overweight.

Some insurers specialize in “high risk” applicants, which is why it’s important to compare providers if you have a health history working against you.

Finally, insurers weigh your occupation and lifestyle. If you’re a thrillseeker or work in a high-risk profession, you’ll pay more for coverage.

Policy riders

Depending on your provider, you could customize coverage with riders, like a waiver of premium or critical illness rider. You’ll typically need to pay a fee to add them to your policy — which increases your premium.

How long will I have to pay premiums?

If you have a term life policy, you’ll need to pay premiums for the length of the term to maintain coverage. This could be 1, 5, 10, 15, 20, 25 or 30 years.

With permanent policies like whole life, you’ll have to pay premiums for your entire life — otherwise you’ll lose coverage. But once you’ve accumulated enough cash value, you can use it to pay your premiums.

Is my premium tax deductible?

Unfortunately, no — you won’t get a tax break on your premiums. But typically, the death benefit is paid out to your beneficiaries tax free.

Watch our short video below where we breakdown what goes into the cost of your life insurance policy.

Ask an expert: Are there any insider tips to getting the cheapest possible rate?

Brian Greenberg

Brian Greenberg
CEO of True Blue Life Insurance

Life insurance agents have a secret tool that we use when a client has multiple health issues. It’s called a “quick quote.” It’s a simple form that we submit to numerous carriers to do a preliminary assessment of whether the client is insurable and learn the estimated cost for the policy.

The thing is, we can do this at any time for anyone. The main reason we don’t do quick quotes is that it takes about two weeks to hear back from all the insurance companies.

If you want to ensure you get the best rate possible on your life insurance policy, ask your agent to do a quick quote to see which company bids the lowest price for your business.

I don’t smoke or drink. Is there anything else I can do to lower my rate?

Smoking raises the cost of life insurance three-fold. What also increases your rates is the medications you take. Insurance companies don’t like narcotic pain medications. I’ve seen clients get higher rates because they were prescribed pain meds after getting their wisdom teeth removed. If possible, pass on the pain pills.

Will my life insurance premiums change?

With most life insurance policies, the premium is set by your insurer. This means the payments stay the same for the life of the policy.

There are two exceptions:

  • Annual renewable term life insurance is a policy that lasts for one year, with the option to renew each year up to a set number of years. While the premium won’t change during the year, you can expect to pay a higher premium when you renew your coverage.
  • Universal and variable universal life policies offer flexible premiums, so you can adjust the amount and frequency of your payments. These policies are ideal for people who have income fluctuations.

Compare life insurance providers

Name Product Issue age Minimum Coverage Maximum Coverage Term Lengths Medical Exam Required
18 - 60 years old
10, 15, 20, 25, 30 years
Get a quote in less than 10 minutes with on-the-spot approval and no medical exam.
Haven Life
18 - 64 years old
10, 15, 20, or 30 years
No exams for some applicants
Fill out a quick online application and get approval in minutes with up to $3 million in coverage.
20 - 60 years old
10, 15, 20, 25 or 30 years
Depends on policy
Apply for term life insurance online without the medical exam. Get an instant decision and adjust your coverage at no charge.
18 - 85 years old
10, 15, 20, 25, 30 years
Depends on provider and policy
Compare 12+ top insurers side-by-side to get the best possible deal, and shop return of premium policies online.
Nationwide life insurance
40 - 95 years old
10, 15, 20 and 30 years
Get term, whole, universal or no-exam life insurance with up to $1 million in coverage.

Compare up to 4 providers

Bottom line

Life insurance is a contract, and your premium payments keep your coverage in effect. With most policies, the premiums never change, and the dollar amount you pay depends on things like your age, health and lifestyle.

To save on your premium, shop around and compare life insurance providers.

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