What determines the cost of life insurance premiums?

The cost of life insurance premiums is primarily determined by the age and health of the insured. When assessing risks associated with a policyholder, insurance companies carefully evaluate these key factors. Generally, younger individuals may get lower premiums because they typically have a longer life expectancy. Similarly, an individual's health status is crucial; those in good health are generally seen as lower risk than those with pre-existing medical conditions. Insurers assess these factors to estimate the likelihood of a claim being made, which directly influences the premium pricing.

While other factors like the length of the policy term or the insurance company's overall profitability may indirectly affect how premiums are structured, the immediate determinants of the premium cost are centered around the individual insured's risk profile—primarily age and health. The reputation of the insurance agent does not directly impact the calculation of premiums, although a reputable agent can help the insured find competitive rates.