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7 Key Factors That Affect Your Term Insurance Premium

1 November 2023 4 min read
7 Key Factors That Affect Your Term Insurance Premium

Term insurance is a vital component of a sound financial plan. It provides financial security to your loved ones in case of your untimely demise. However, the premium you pay for your term insurance policy is influenced by several factors. In this blog, we will discuss seven key factors that affect your term insurance premium. Understanding these factors can help you make informed decisions about your coverage and budget. Let’s dive in!


Age is one of the most significant factors influencing your term insurance premium. Generally, the younger you are when you purchase a term insurance policy, the lower your premium will be. This is because younger individuals are statistically less likely to make a claim during the policy term. As you age, the risk of health issues and mortality increases, leading to higher premiums. Insurance companies assess the risk associated with insuring you based on your age when you enter the policy. Buying term insurance at a younger age can help you save money over the long term, making it an attractive financial decision for individuals with dependents.


Believe it or not, gender also plays a role in determining your term insurance premium. Statistically, women tend to have longer life expectancies and are considered less risky to insure. Therefore, women often enjoy lower premium rates compared to men. However, many insurance companies are moving towards gender-neutral pricing, but this factor can still affect your premium.


Your health is a critical factor in determining your term insurance premium. Insurance companies evaluate your medical history, current health condition, and lifestyle choices. Those with pre-existing medical conditions or risky health behaviours like smoking may face higher premiums. Maintaining good health through regular exercise and a balanced diet can help you secure lower premium rates.


Your lifestyle choices can significantly impact your term insurance premium. Your premium will be higher if you engage in high-risk activities such as extreme sports or have a hazardous occupation. Insurance companies consider these factors when assessing the risk associated with insuring you. Opting for a safer lifestyle can help lower your premiums.


Your profession is another crucial factor that insurance providers consider when calculating your premium. Certain occupations, such as jobs that involve high physical risk or exposure to dangerous conditions, are deemed more perilous. This leads to higher premiums for individuals in such professions. If you work in a hazardous field, you may want to explore additional coverage options to ensure your family’s financial security.

Amount of Coverage

The coverage amount you choose for your term insurance policy directly affects your premium. Higher coverage comes with higher premiums. It’s essential to strike a balance between adequate coverage and affordability. Assess your family’s financial needs and choose a coverage amount that provides sufficient protection without straining your budget.

Payment Frequency

The frequency with which you make premium payments also has an impact on the total cost of your term insurance. While paying annually may be the most cost-effective option, some individuals prefer to pay monthly or quarterly for budgetary reasons. Keep in mind that more frequent payments usually come with slightly higher administrative fees, increasing the overall premium cost.

Ways to reduce Term Insurance Premiums:

Commence Your Term Plan Early

Initiating a term insurance policy at a young age secures a lower base premium for the entire policy duration.

Choose Essential Riders

The Waiver of Premium (WOP) rider for critical illness and accidental disability is typically recommended for term insurance. However, for other riders, you can find comprehensive features in standalone products. Being selective with riders can help in curbing premium costs.

Thoroughly Research and Compare Features

Each term insurance plan is unique, just like your requirements. Therefore, selecting a term plan should involve a careful evaluation of available policies, considering factors such as premium rates, benefits, and the insurer’s reputation, among others.


In conclusion, your term insurance premium is influenced by various factors, including your age, gender, health, lifestyle, occupation, coverage amount, and payment frequency. It’s essential to understand how these factors affect your premium so that you can make informed decisions when choosing a term insurance policy. By maintaining a healthy lifestyle and carefully considering your coverage needs, you can work towards securing a term insurance premium that suits both your budget and your family’s financial protection.

At 1 Finance, we are committed to providing you with clear, relevant, and human-centred financial information. Our aim is to empower you to make informed financial decisions. When it comes to term insurance, we understand that the premium can be a significant consideration. We hope this blog has helped you gain a better understanding of the key factors that affect your term insurance premium.

Do explore our Term insurance scoring and ranking model to help you make informed choices. Your financial well-being is our top priority.

Views are personal and not recommendations. Reach out to the Qualified financial advisor and read the policy terms and conditions of the policy before buying.

Please note,

The views in the article /blog are personal and that of the author. The idea is to create awareness and not intended to provide any product recommendations.


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