How Life Expectancy Influences Your Term Insurance Premiums


When you purchase an insurance policy, your main expectation from it is to provide ample financial coverage to your loved ones from different life risks. To be able to provide the protection your family deserves in the long run in your absence, you should choose a well-designed term insurance

However, there are many factors that come into play when it comes to deciding the premium of your policy. One such major factor that affects the premium is your life expectancy. So, how does life expectancy come into play when deciding the premium of your policy? Read more to find out.

What is term insurance?

Term insurance is a type of life insurance policy. In this policy, the insured and the insurer get into an agreement with each other, whereupon the insurer will financially compensate the dependents of the insured in the event of their untimely demise. The dependents would receive financial assistance in the form of a sum assured. This money will help them survive life risks and provide financial stability in the long run.

How does life expectancy decide the premium?

Life expectancy means how long will you as a policyholder survive once you have purchased the policy. Insurance companies take the help of services that specialise in calculating the life expectancy of policyholders. They take in the following factors to get an idea about the life expectancy of a potential customer:

  1. Lifestyle

Insurers consider the lifestyle of a customer to determine what their term insurance premium could be. If smoking or drinking alcohol is a part of your lifestyle, you could be charged more compared to a non-smoker or a non-alcoholic. This is due to the fact that smoking and drinking have severe health effects that reduce the life expectancy of a person drastically. Your fitness routine is also considered in this calculation.

  1. Profession

If you have a desk job or a job that does not require you to work in risky environments, your term insurance premium would be lower. However, if your job is at places, such as construction sites or chemical plants where the chance of mishap is high, your insurer will charge you more. 

  1. Medical history

If you have any pre-existing medical conditions, the cost of your term insurance premium goes up as the insurer will be required to pay more in compensation. Similarly, if you did not have a medical condition during the purchase of the policy but you develop one during your policy duration, the premium increases. 

What can be done to improve life expectancy?

There are ways in which you can improve your life expectancy in order to lower your insurance premium. The first would be to quit smoking and alcohol. As these two things have a very severe impact on your health, it is prudent to stay away from them. Secondly, while it is not possible to switch jobs or careers mid-way, you can ask for a position at your workplace that has a low-risk factor. This will also decrease the chances of being involved in any kind of mishap.

It is always better to be open about your pre-existing medical conditions with your insurer. If they find out that you lied about your health while purchasing the term insurance, chances are you or your family could get fined for it in the future. Also, make sure you do routine health check-ups and keep your insurer in the loop about them.This is how life expectancy plays a huge role in deciding what the premiums of your policy could be. To get in-depth information about other factors that decide the premium of your policy, you can get in touch with your insurer. Alternatively, you can use the term insurance plan calculator before you purchase your policy. The calculator can help you get an idea about which plan is suitable for you based on your requirements.