Life insurance doesn’t have one price. Your rate is built from a handful of personal factors. Here’s how carriers determine what you pay, and how to get the best rate possible.
The Basic Formula
At the highest level, life insurance pricing comes down to one question the carrier is trying to answer: how likely is this person to file a claim during the policy term?
The more likely the claim, the higher the premium. The less likely, the lower the premium. Every factor in your rate ties back to this calculation.
Carriers use actuarial data, which is statistical analysis built on decades of mortality data from millions of policyholders, to predict risk. They combine that data with your personal profile to arrive at your rate. The result is a monthly or annual premium that reflects your individual level of risk.
6
Primary factors that determine your premium
30x
30%+
How much rates can vary between carriers for the same person
- The Big Takeaway
Age Highest Impact
Age is the single biggest factor in your premium. The older you are when you apply, the higher your rate. This is because statistically, the risk of a claim increases with each year of age.
Premiums increase by roughly 8% to 10% for every year you wait. That compounds fast. A person who applies at 45 can expect to pay roughly two to four times what the same person would have paid at 25 for the same coverage, assuming their health stayed the same.
| Age at Application | Relative Cost | What This Means |
|---|---|---|
| 25 | 1x (baseline) | Lowest rates available for most applicants |
| 30 | ~1.2x - 1.4x | A modest increase, still very affordable for most |
| 35 | ~1.5x - 1.8x | Noticeably higher, but still reasonable for the coverage |
| 40 | ~2x - 2.5x | Roughly double the cost compared to mid-twenties |
| 45 | ~2.5x - 3.5x | Costs accelerate significantly from this point forward |
| 50 | ~3.5x - 5x | Three to five times the cost of applying at 25 |
Relative multipliers reflect general industry patterns. Your actual rates will depend on your carrier, health, and policy details.
Why This Matters
Waiting a decade can double your monthly premium for the same policy. Over a 20 or 30 year term, that adds up to thousands of extra dollars. And that assumes your health stays the same. If it doesn’t, the gap gets even wider. Age is the one pricing factor you can’t improve, which is why applying sooner is almost always the better financial decision.
Health and Medical History Highest Impact
Your current health and medical history are the other major driver of your premium. Carriers look at your blood work, blood pressure, BMI, prescription history, past surgeries, chronic conditions, and any history of serious illness.
Based on this, they assign you a rate class. The rate class is the carrier’s assessment of your overall health risk, and it directly determines what you’ll pay.
| Rate Class | Profile | Relative Cost |
|---|---|---|
| Preferred Plus | Excellent health, ideal weight, no conditions, clean family history | 1x (baseline) |
| Preferred | Very good health, minor well-managed conditions | ~1.2x - 1.4x |
| Standard Plus | Good health, slightly elevated risk factors | ~1.5x - 1.7x |
| Standard | Average health for age, controlled conditions like mild hypertension | ~2x or more |
The difference between Preferred Plus and Standard can be double or more for the exact same coverage. That’s why health is so influential. And it’s also why the timing of your application matters. A clean bill of health today translates directly into savings that last the entire length of your policy.
Conditions That Affect Rate Class
Tobacco and Nicotine Use Highest Impact
Non-Smoker Rate
1x
Occasional Use
1.5-2x
Regular Smoker
2-3x
Over a 20 year term, that multiplier translates into thousands or even tens of thousands of dollars in additional premiums. The difference between smoker and non-smoker rates is often the single largest cost variable after age.
Most carriers define «tobacco use» broadly. Cigarettes, cigars, chewing tobacco, vaping, nicotine patches, and nicotine gum can all result in a smoker classification. However, each carrier draws the line slightly differently. Some are more lenient with occasional cigar use. A few treat vaping differently than cigarettes.
Conditions That Affect Rate Class
Coverage Amount and Term Length High Impact
The more coverage you buy, the more you pay. And the longer the term, the higher the premium. Both of these are straightforward. A $1,000,000 policy costs more than a $500,000 policy. A 30 year term costs more than a 20 year term.
What’s less obvious is that the cost per dollar of coverage often decreases as the amount goes up. Doubling your coverage doesn’t double your premium. It might increase it by 50% to 70%. This means higher coverage amounts are often a better value per dollar.
| Change | Typical Effect on Premium |
|---|---|
| $250K → $500K coverage | Premium increases roughly 40% to 70%, not double |
| $500K → $1M coverage | Premium increases roughly 50% to 80%, not double |
| 10 year → 20 year term | Premium increases roughly 40% to 60% |
| 20 year → 30 year term | Premium increases roughly 30% to 50% |
Choosing the Right Balance
Gender Moderate Impact
Women statistically live longer than men. As a result, women generally pay less for the same life insurance policy. The difference is typically 15% to 30%, depending on the carrier and coverage type.
Over the full length of a 20 or 30 year policy, that percentage difference adds up to a meaningful amount. But it’s worth keeping in perspective: the gap between genders is much smaller than the gap between rate classes or the gap between smoker and non-smoker rates.
Context
Gender is a factor you can’t control, but it’s useful to understand. If you’re comparing rates between spouses to decide who to insure, the gender difference is one data point. The more important question is always whose income the family depends on most.
Lifestyle and Occupation Moderate Impact
Higher Risk Occupations
Higher Risk Hobbies
Driving Record
Travel History
Each Carrier Sees Risk Differently
How Much Each Factor Affects Your Premium
Relative Impact on Your Premium
How to Get the Best Rate Possible
Some pricing factors are fixed. You can’t change your age or gender. But there are real steps you can take to position yourself for the lowest premium available
Apply as early as possible. Every year you wait costs you money. Your age at the time of application locks in your rate for the entire term. Today is the youngest you’ll ever be.
Quit nicotine before you apply. If you can be 12 months nicotine-free before applying, you’ll qualify for non-smoker rates, which can cut your premium in half or more.
Manage controllable health factors. Bringing your blood pressure, cholesterol, or BMI into a healthier range before your medical exam can bump you into a better rate class. Even small improvements matter.
Prepare for the medical exam. Fast for 8 to 12 hours, avoid alcohol and heavy food the day before, hydrate well, and schedule for the morning. Clean results can be the difference between Preferred and Standard.
Compare carriers. This is the single most effective way to save money. Different carriers offer different rates for the same profile. Comparing takes 2 minutes at Ozzo and can save you thousands over the life of your policy.
Consider annual payments. Some carriers offer a discount if you pay annually instead of monthly. Over a 20 or 30 year term, that savings adds up.
- Worth Knowing
If your business carries $300,000 in debt and you have $200,000 in personal guarantees, a $500,000 policy covers both the business obligations and gives your family a buffer. The cost of that policy is a fraction of what your family would face if those debts came due without it.
Why the Same Person Gets Different Quotes
| Carrier | Rate Class Assigned | Relative Premium |
|---|---|---|
| Carrier A | Preferred | 1.25x baseline |
| Carrier B | Standard Plus | 1.6x baseline |
| Carrier C | Preferred Plus | 1x (lowest) |
| Carrier D | Standard | 2x baseline |
- This Is Why Ozzo Exists
See Your Actual Rates in 2 Minutes
Compare expert-filtered options from top-rated carriers side by side, including no-exam policies. Ozzo shows you the real numbers for your specific profile so you can make a confident decision.
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