A life insurance policy is a legal agreement between an insurer and the insured (policyholder). In exchange for the premiums paid by the policyholder throughout their lifetime, a life insurance policy promises that the insurer will pay an amount of money to designated beneficiaries when the insured dies.

All life insurance plans give a death benefit in return for paying premiums to the insurance provider during the policy’s term. The cost of life insurance plans is determined by various factors.

Why your life insurance premium is so high

1. Medical History

One of the determining factors for the cost of a life insurance plan is one’s health. Pre-existing diseases, such as blood pressure, heart disease, cancer, diabetes, lung illness, and cholesterol levels, are often considered.

Your height and weight (BMI) will also be considered by insurers and if you have a family history of major health concerns, your insurer may inquire.

Obesity, high blood pressure, and smoking are all risk factors that raise life insurance premiums since they reduce life expectancy.

2. Occupation or Lifestyle

What you do for a living and your way of life might also influence the cost of your life insurance. If you work in a hazardous or high-risk occupation, you may be at a higher risk of death. As a result, you may have to pay a little extra for life insurance.

Similarly, if you engage in high-risk hobbies such as skydiving, you will most certainly pay extra for life insurance. This is because of the greater risk of death associated with these activities, and insurers will usually charge you more to compensate for this.

Furthermore, some life insurers consider travel to conflict zones to be a high risk and may result in your coverage application being refused.

3. Type of life insurance

There are various forms of life insurance. Term life insurance offers coverage for a certain period and the rate is often lower than other types of life plans. Whole life insurance, is intended to last the rest of your life.

This means that the insurance company is significantly more likely than with a term policy to pay out the death benefit. To compensate for the increased risk, whole life insurance prices are often higher.

Read more about term life and whole life insurance.

4. Age

Younger people often pay less for life insurance. Age is one of the biggest predictors of death. The cost of purchasing grows with age. The longer you wait to get a plan, the higher your rates are going to be.

This is because the chance of your insurer needing to pay out your insurance increases. That is why it is best to get life insurance as early as possible; the longer you wait, the higher your premiums will be based purely on age.

If you’re a little older and are only now considering getting life insurance, expect to spend more than if you took up a policy years ago. This is why financial experts advise buying life insurance when you are young to enjoy a lower life insurance rate.

5. Gender

Women usually pay less than men of the same age and health since they have longer life expectancies—which makes them a lower risk to life insurance firms.

Based on this, guys often pay more for life insurance than females of the same age and health.

Bottom Line

When life happens, life insurance is to give financial support to your loved ones. Life insurance is a good investment if you have loved ones who rely on you financially.

It provides essential financial security and is seen as a part of a sound overall financial strategy.

The answer to if life insurance is expensive isn’t straightforward since it depends on factors such as your age, gender, health, death benefit amount, and other policy choices.

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