Life Insurance Premiums

The life insurance premiums you pay are calculated based on a number of different factors. The life insurance company uses the information you have provided to determine how much you should pay.

Some of the factors that will contribute to calculating your life insurance premiums include your age, gender, occupation, smoking status and the amount of cover you require. This gives the insurance company the basic information they need to calculate your base premium.

If you choose to proceed with the cover, the insurer will obtain more in-depth information from you. This includes more detailed information on your health and medical history, as well as your pastimes and other relevant information.

If there are no problems with your health and medical history, and you do not participate in any hazardous or dangerous pastimes, it is likely that your life insurance premium will remain at the base rate originally quoted. However if there is any adverse information, the insurer may increase your premium to reflect the increased risk.

There are specific reasons why these factors will influence your life insurance premiums, and we will now delve into some of the major factors:

Age

Your age affects your life insurance premiums due to the increased risk of serious illness as you become older. Generally your premiums will increase with age, although there is an exception for males in their early twenties, as their premiums actually reduce for a period of time as their risk of accidental death reduces.

Gender

Males and females have different life expectancies, as well as different profiles when it comes to serious illness. For this reason, premiums for males and females do differ to varying degrees throughout the lifecycle.

Occupation

Although life insurance covers you regardless of whether your death is a result of work or not, what you do for a living can have a major impact on the life insurance premiums you pay.

Higher risk occupations such as underground mining and deep sea diving will attract higher premiums, and in some cases the insurer may not even be able to offer cover. Occupations perceived to be lower risk, especially those not involving manual labour, will generally result in lower premiums.

Smoking Status

It is widely accepted that smoking is a major contributor to serious illness and death, and for that reason higher life insurance premiums must be charged to cover the higher risk that these clients pose.

Higher rates will generally be imposed for anyone who currently smokes, or has smoked within the last twelve months. The good news is that once you have quit smoking and refrained for at least twelve months, the insurance company can bring your life insurance premiums back down to non-smoker rates.

Amount of Cover

The amount of cover you apply for will have a considerable influence on the life insurance premiums you pay. Naturally the more cover you apply for, the higher the premium will be. Use our calculator to get idea of how much life insurance cover do you need.

Calculating Fair Premiums

Life insurance companies use their claims history data to calculate premiums that are fair for all clients and reflect the client’s individual risk. This means that clients who represent the lowest risk are rewarded with the lowest premiums.