Factors that impact your life insurance premium

Factors that impact your life insurance premium

Pricing a life insurance policy is not an easy task. Actuaries and underwriters must evaluate the risk that you represent in terms of insurance and payment to your beneficiaries upon your death.

To do so, they must consider the essential criteria used to calculate insurance premiums.

The basics

To make long-term risk predictions, actuaries use statistics to construct mortality tables.

3 criteria are used in these tables:

Your age

The older you are when you sign the contract, the higher your premium.

The reason is obvious: the death rate is higher.

Your gender

Since women have a higher life expectancy, they pay a lower premium than men.

Your tobacco use

This is one of the most important factors that will determine your life insurance premium.

If you’re a smoker, your premium could be nearly double that of a non-smoker.

If you stop smoking mid-contract

You should definitely inform your insurance company when it has been more than 1 year since you stopped smoking because this may lower your insurance premium.

Personal information

When taking out an insurance policy, the premium will be based on criteria that are specific to you and your lifestyle.

Your general health

Those in good health are less likely to die. That’s why they pay a lower premium than a person with health issues.

Your alcohol consumption

Remember: moderation is always in good taste.

If you’re a moderate alcohol drinker, there will be no impact on your insurance premium.

However, if you consume a lot of alcohol, your risk of dying increases and will skyrocket your premium.

Your drug consumption

Insurers are wary of prescription and illicit drug use because consuming them increases your risk of dying… so expect a higher insurance premium if you do.

Your job

Some jobs are more dangerous than others and will increase your risk of dying, specifically those that require frequent travel and those that are very stressful or dangerous (construction worker, tree trimmer, etc.)

Your favourite sport

Thrill-seekers like rock climbers and scuba divers tend to pay higher premiums because they practice a high-risk activity on a regular basis.

Your insurance product

Not only personal factors are considered when calculating your life insurance premium.

The type of product you choose will also have an impact.

Your type of insurance

There are 3 types of life insurance:

  • Term Life Insurance
  • Permanent life insurance
  • Universal life insurance

Their specific coverage (e.g., cash value, additional benefits) will influence the premium.


The longer the term, the higher the risk of dying during the period will be.

Therefore, term life insurance is less expensive than permanent life insurance because you could outlive the policy.

Important! Premiums will rise every time you renew a term life insurance policy because the risk of dying increases as you get older.

Insurer predictions

When setting insurance premiums for a person’s entire life, insurance companies don’t have a crystal ball.

They must rely on the following instead:

  • Interest rates
  • Expenses
  • Insurance law and taxation
  • Commissions for advisors

Talk to your advisor

Is all this information giving you a headache?

Then, talk to a financial advisor to clear things up. They will go over the criteria with you and help you find the best product for your needs and budget.

Note: This blog post is provided for information purposes only. It is not a substitute for professional legal, financial or fiscal advice. For advice specific to your personal situation, always speak with your advisor. SSQ Insurance cannot be held responsible for any decision made as a result of reading this blog post.