The purpose of life insurance costs is to provide a financial benefit for your loved ones after you die. This can help your family pay for final expenses, cover debt or mortgage and meet other ongoing household costs like child care and education. Generally, most planners recommend obtaining enough coverage to replace your annual net income for a minimum of 10 years.

The cost of life insurance can vary depending on your needs, lifestyle and the type of policy you choose. The most common life insurance types include term and whole life policies. You can also add riders to customize your policy to meet your specific needs, such as long-term care or accelerated death benefits. Typically, the more customization features you select, the higher your policy’s cost will be.

Decoding Life Insurance Costs: Understanding What Influences Your Premium

Your health and family history are important factors that influence your life insurance rates. People in excellent health pay lower premiums than those with chronic health problems. In addition, people who smoke or participate in hazardous activities such as skydiving pay more for life insurance. Your occupation and other personal factors may also raise or lower your rate, including whether you have a dangerous job that puts you at greater risk for death.

The age you buy your policy at is another significant factor that can affect your life insurance costs. As you get older, your life expectancy decreases, which increases the likelihood that your life insurance policy will need to pay out. This is why it’s always best to buy a policy as soon as you know you need one.