Which Factors Decide Your Term Insurance Premium?


Term life insurance is mainly known for how ‘affordable’ it tends to be. This ‘affordability’ refers to the low cost of premiums offered by these plans. However, it is important to remember that term insurance premium rates may not be the same for everyone. For example, as you get older, your premium rates may increase.

Let’s take a look at some of the factors affecting term life insurance premiums.


Age is one of the most important factors affecting term insurance premiums. It is commonly known that term insurance premium tends to increase with age. Hence, it is advisable to get a term life policy as early in life as possible. The older you get, the higher the premium you may have to pay.


Gender is another factor affecting term insurance premiums. It is generally believed that women tend to have a higher life expectancy as compared to men. Thus, women are offered lower premium rates as compared to men. Thus, if you are a woman, you may have to pay lower premiums than your male counterparts.


Your occupation can affect your life expectancy. For example, being in a job that is physically stressful or risky can lower your life expectancy. Term life insurance providers take this aspect into consideration when offering you a premium.

Remember that online term insurance premium calculators can only give you broad estimates for what you may expect to pay into your plan. You can get more precise figures when you are buying a policy. Once the insurer is aware of your occupation, they may be able to offer you a relevant premium rate.

Area of residence

Mortality may differ across regions. Thus, term life insurance providers may offer varying premium rates across various regions. For example, if you live in areas that are prone to seismic activity such as earthquakes or tsunamis, your premium rates may be higher than for people living in relatively safer areas.


Your lifestyle may play a role in determining the premium rates you get offered. If you are a smoker, your life expectancy is assumed to be lesser than a non-smoker. Thus, you may be required to pay a higher premium as compared to your non-smoking counterpart. Similarly, if you are in the habit of regularly consuming alcohol, your premium prices may be higher.

Family History

The history of diseases and ailments in your family can influence your term insurance premiums. For example, if someone in your family had cancer or kidney ailments or any such serious conditions, chances are that you may be predisposed to the conditions. Insurance providers may require your family health history and may take it into consideration when deciding what premium rates to offer you.


Adding riders to your policy can enhance your plan and make it more lucrative. However, it can also easily increase your premium rates. Each rider you may add to your policy will further add to your premium amount. Here are some of the common riders you may boost your policy with.

  • Premium waiver
  • Income
  • Accidental death
  • Accidental permanent disability
  • Critical illness
  • Policy duration

Your policy duration is another factor that may influence your premium. If you want a higher sum assured for a lower duration, you may end up paying a high premium. On the other hand, a lower premium for a higher duration may lead to you paying a relatively lower sum as a premium.

Sum assured

The sum assured you desire is one of the key factors influencing your premiums. The higher the sum assured you choose, the higher the premium you will be required to pay. It is recommended to choose a sum assured that is 10x your annual income.

When buying term insurance, ensure that you use a term insurance premium calculator to get a better idea of how much premium can you expect to pay. You are required to input your age, residential details, lifestyle habits, and other relevant details in these online calculators. Thus, these calculators may give you a fair idea of what you may expect to pay into the plan based on the personal details you may provide. Alternatively, you may also consult an insurance agent or representative to help you understand how much premium you will be required to pay based on your age, policy duration, lifestyle habits, and other such factors.

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