Life Insurance Cost

The cost of life insurance can vary from one insurance company to the next, and will also vary significantly depending on a number of factors including your age, sex, medical history, occupation and of course the amount of cover you require.

In this article we will take a look at some of the factors which have the biggest effect on life insurance cost, as well as some tips on how you can lower your life insurance cost.

Insurance Company

The insurance company you choose will have an effect on the life insurance cost.  As we know, many similar products are priced differently depending on the manufacturer, and life insurance is no different.

When choosing a life insurance company it is important to consider the cost, as there is no point paying extra for your life insurance if you don’t have to.  As with everything, it is important to shop around.

It is still important to choose a reputable life insurance company however, as buying insurance based purely on cost could leave you with an inferior policy.

Age

Your age will have a huge impact on your premiums.  For young people, especially males, life insurance actually becomes cheaper from the late teens into the late twenties.  The reason for this is that young males are especially susceptible to accidental death during this part of their life.

As you reach your late twenties your chance of accidental death diminishes and therefore your life insurance cost comes down, however from your early thirties onwards your chances of illness start to increase, and unfortunately your life insurance cost will increase in line with this.

You cannot change your age, but there is a way to stop your life insurance cost from increasing due to age.  The way to do this is by selecting ‘level premiums’ for your life insurance.  This option means that your life insurance cost will not increase due to age.  Keep in mind that this is a more expensive option to start with, and the benefits will not be seen until later in life.

Occupation

The type of work you do will have an impact on your life insurance cost.  For many blue collar workers the chance of accidental injury will be much higher than for the average white collar worker.

Shopping around can help here, as some insurers treat various occupations differently, and one insurer may give a better rate for your occupation than other insurer.

Amount of Cover

The amount of cover chosen will have one of the largest impacts on your life insurance cost.  Common sense tells us that a life insurance policy of $1 million is going to be much cheaper than a life insurance policy of $2 million.

Although reducing your sum insured will reduce your life insurance cost, it is still important to have sufficient life insurance cover to meet your needs and objectives.

Medical History

Your medical history will in some cases mean that you cannot obtain life insurance at all, but in some cases it will mean a loading is places onto your insurance, affecting your life insurance cost.

For example if your BMI is seen as being high, instead of declining life insurance the insurer may instead place a loading of 50% onto your policy, or 100% in more extreme cases.

So if the standard life insurance cost was $100, your premium would increase to $150 or $200 respectively.  Whilst this may seem like a harsh increase, at least you are still able to obtain cover, with the increased cost intended to cover your increased risk.

Reducing Your Life Insurance Cost

There are a number of things you can do to reduce your life insurance cost, and it all starts with finding the insurance provider who will provide the most competitive premium for your own unique circumstances.