What Affects the Price of Term Life Insurance (And How to Lower It)
Article Written By: Lauren Hoeffel
If you’ve ever wondered, “Why does term life insurance cost so much?” or “Is there any way I can pay less for it?” you’re not alone. These are some of the most common questions people ask when considering life insurance—for good reason. Understanding how term life insurance premiums are calculated puts you in control and empowers you to make smart, informed decisions.
In this guide, we’ll discuss the key factors impacting the price of term life insurance and offer practical, straightforward tips for reducing those costs without compromising on the protection your family needs.
First, What Is Term Life Insurance?
Before diving into pricing, let’s clarify what term life insurance is.
Term life insurance is a policy that provides coverage for a specific period—typically 10, 20, or 30 years. Your beneficiaries receive the policy’s death benefit if you pass away during that term. If the term expires while you’re still alive, there’s no payout—though many policies offer renewal or conversion options.
Term life is known for being affordable and straightforward compared to permanent life insurance options like whole life. But even within term insurance, rates vary widely depending on your circumstances.
The Top 6 Factors That Affect Your Term Life Insurance Price
Let’s get to the heart of it. Here are the most significant things that determine how much you’ll pay for a term life policy.
1. Your Age
This is the number one factor. The older you are, the more expensive your term life policy will be. That’s because insurers view age as a primary risk indicator—the older you get, the more likely the insurer will have to pay out the death benefit during the policy term.
Tip: Buy your policy as soon as possible. Even locking in a rate in your 30s instead of 40s can save thousands over the term.
2. Your Health (Past and Present)
Insurers evaluate your overall health through a process called underwriting, which may include a medical exam and questions about:
• Blood pressure and cholesterol levels
• Weight and BMI
• Medical history (e.g., heart disease, diabetes, cancer)
• Prescription medications
• Any history of surgeries or chronic illnesses
Generally, the healthier you are, the lower your premium. Some companies offer no-exam policies, but they typically cost more.
Tip: If you plan to quit smoking, lose weight, or improve a health condition—do that first, then apply.
3. Smoking or Tobacco Use
This one’s huge. Tobacco users pay 50% to 100% more than non-smokers—sometimes even more. Why? Smoking is statistically linked to multiple life-shortening diseases, increasing risk for the insurer.
Tip: If you’re a smoker now, quitting can drastically reduce your rates over time. Many insurers will allow you to reapply or request a better rate after being tobacco-free for 1-2 years.
4. Policy Term Length and Death Benefit Amount
Naturally, the more coverage you want and the longer the term, the more it will cost. A $1 million policy for 30 years costs significantly more than a $250,000 policy for 10 years.
Tip: Choose the coverage amount and term that truly fit your needs—consider how long your dependents will rely on your income, your mortgage term, college expenses, etc. Don’t over-insure unnecessarily.
5. Occupation and Lifestyle
Do you work in a high-risk job like firefighting or commercial fishing? Do you skydive or race motorcycles in your spare time? If so, expect your premiums to reflect that.
Insurers assess how likely your lifestyle or career could lead to premature death. Even frequent international travel to risky regions can impact pricing.
Tip: Be honest during your application but understand you can shop around—some insurers are more lenient with certain activities than others.
6. Family Medical History
You can’t control your family’s health history, but it still plays a role. If your immediate relatives had severe conditions (like early heart disease or cancer), some insurers might consider that a moderate risk factor.
Tip: While you can’t change this, it’s not a deal-breaker. If all other factors are favorable, your rates will likely remain competitive.
How to Lower Your Term Life Insurance Costs
Now that you know what goes into the pricing formula, here’s how to use that knowledge.
1. Apply Early
This can’t be emphasized enough: term life insurance is cheaper when you’re younger and healthier. Lock in a long-term early, and you’ll pay today’s rates for the next 20–30 years.
2. Get Healthy (and Document It)
Before you apply, consider a health tune-up:
• Get a physical
• Improve your diet
• Start a consistent exercise routine
•Manage chronic conditions like hypertension or high cholesterol
• Quit smoking
Even a few months of health improvements can positively impact your underwriting results. And if your health improves significantly after buying your policy, ask your insurer about reapplying for a lower rate.
3. Compare Multiple Quotes
Insurance companies don’t all price risk the same way. One may penalize family history more, while another might be stricter on cholesterol levels. Shopping around can lead to significant savings.
Tip: Use a licensed independent broker who can access multiple carriers simultaneously and help match you with the best fit.
4. Don’t Over-Insure
It might be tempting to go big—$1 million or more “just in case.” But do a needs analysis first. What does your family need to cover?
• Your income for X years
• Outstanding mortgage balance
• Education costs
• Debts
• Final expenses
Right-sizing your policy can help keep your monthly costs manageable.
5. Ask About Policy Riders (But Don’t Overdo It)
Riders like accelerated death benefits, waiver of premium, or child term coverage can be helpful—but each adds to your premium. Make sure they’re necessary for your situation.
Final Thoughts: Price Isn’t Everything—But It Matters
Term life insurance is a financial safety net, and cost is a key concern for most families. While price shouldn’t be the only factor in your decision, knowing what drives it—and how to lower it—helps you make the best choice for your loved ones.
And remember: even the most expensive policy is far cheaper than leaving your family unprotected.
Ready to Take the Next Step?
If you’re considering term life insurance, now’s the time to act—especially if you’re in good health and under 50. Speak with a licensed insurance advisor who can walk you through your options, help you get quotes, and ensure your coverage truly fits your life.
The best time to buy life insurance was yesterday. The second-best time is today.
