6 Key Factors that Determine Term Life Insurance Premium

  | Published: 28 November 2019 | Last Updated On: 01 September 2021

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Term life insurance is one of the best ways to protect the future of your loved ones financially in your absence. The insurance company offers sum assured as a death benefit to the beneficiary in return the policyholder pays a premium to a specific period of time.

Well, we all want to opt for the cheapest term insurance so that one has to pay a low premium to secure the future of his/her dependents.

But wait, do you know how premium rates are calculated by the insurance company? If no, then fret not.  

In this article, we have mentioned the key factors that affect your premium cost towards term life insurance:


The age of the insured is one of the primary factors that affect the term life insurance premium cost. Younger individuals can get the cheapest term plan as compared to the older one. Because the younger you’re, the lower the risk of death or any life-threatening disease. Thus, it is less likely that your insurance company will need to pay a large sum assured to your dependents in the future.


Although insurers are not against gender equality, they believe that life expectancy differs from gender to gender. As per the studies, females are believed to live five years longer than males. That is why insurance companies feel that insuring the life of a female is less of a risk than insuring a male’s life.  For this reason, females can easily avail of the cheapest term insurance since they have to pay less premium cost in comparison to males.

Medical History & Health Records

Your past medical history is amongst the most important factors that affect the cost of the premium. Before issuing you a term insurance policy, the insurance company may require a medical test in order to get access to your health records.

So, if you have suffered from any critical illness or currently suffering from the one, it will increase the cost of the premium. A history of health issues especially critical illnesses such as cancer, heart disease will increase the premium cost. The insurance company will also look at your cholesterol levels, weight, blood pressure, and some other health conditions that could cause future health problems.

Smoking or Tobacco Use

It is a proven fact that those people who don’t smoke or consume tobacco products live a healthier and longer life as compared to those people who do. Because smokers are prone to contracting a life threatening disease such as throat cancer, lung cancer, etc which is why they need to pay high premiums. Ideally, if you have consumed any sort of tobacco products in the previous 12 months then you will be considered as a smoker.

Alcohol Consumption

Drinking of alcohol is injurious to your health. Too much drinking that means drinking alcohol more than the recommended amount consistently can cause alcohol related health issues such as liver disease, cancer, brain damage, etc. So, if you as a policy seeker are a heavy drinker, it will be very difficult to get the cheapest term insurance since drinking habits affect your premium at higher rates.

Family Medical History

Even if you have no current medical condition, but any of your family members such as father, mother, wife, and children have some sort of health issues especially hereditary illnesses or disease then their health condition will certainly affect your premium cost. Because insurer believes that you may also get affected with the same illness at a later stage in life.

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The Final Words

Well, how all the aforementioned factors affect your premium cost depends on the life insurance company and the way they treat all these factors and a combination of them. Each term insurance policy is rated on the basic of case to case and no two life insurance company will offer the same premium cost. That is why, it is vital to compare different term life insurance policies to find the cheapest term insurance.