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Life Insurance Premiums | What is a Life Insurance Premium?

How would your loved ones fare if they lost a pillar of the family? Aflac’s life insurance is meant to help protect their financial future with coverage tailored to your personal needs.

The fundamental parts of a life insurance policy are premiums, the death benefit, and in some cases, the cash value. Understanding how each component works can help you decide if life insurance is the right choice for you. Read on to discover what life insurance premiums are, how they are calculated, how much life insurance can cost, and whether premiums are tax-deductible.

What is a Life Insurance Premium?

A life insurance premium is a payment made to the insurance company that keeps the policy active. Without this payment, the policy will lapse, and the coverage will come to an end.1 Paying life insurance premiums helps allow your beneficiary to receive the death benefit later. Without these payments, the death benefit is not guaranteed, and you may have to surrender the policy.

Life insurance premium costs vary, so it is important to understand the frequency and cost of these payments. In some cases, premiums are required monthly, semi-annually, or annually.1 Usually, premium payments will stay constant throughout the life of your policy, but this depends on your specific plan. Level-premium payments, or premiums that stay consistent, are more common in term life insurance plans.2

How much does life insurance cost?

The cost of life insurance can vary based on factors like your age, health, and smoking status. Additionally, policy type and coverage level you have can affect the premiums you’ll pay. For instance, permanent life insurance policies, such as whole and universal life insurance, can come with higher premiums than term life insurance since they offer lifelong coverage.

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How to Calculate Life Insurance Premiums

There are a few factors that can help you understand how to calculate a life insurance premium. As mentioned earlier, average life insurance premium rates vary depending on the type of life insurance policy, your age, your medical history, and the coverage amount. Here’s a closer look at some of these factors:

Type of Policy

Your life insurance premiums may be impacted by the type of policy you choose. At Aflac, we offer Aflac® Life Solutions – Whole Life and Term Life.

Our whole life insurance plans cover your entire life cycle and function as a type of permanent life insurance. Aflac’s term life insurance plans offer coverage for a set period, like 10, 20, or 30 years. Depending on the plan and the term length you choose, premiums will fluctuate.

Typically, whole life insurance plans can come with more expensive premiums because they utilize a cash value component and provide coverage for the entire life of the policyholder. Term life insurance tends to have less costly premiums than whole life insurance plans.3


Your age can also influence what your premium payments look like. Typically, premiums can become more expensive as you age.4 If you are a senior, you might have a completely different set of coverage options available compared to a young adult.

Premiums are usually less expensive the younger you are, so getting a life insurance policy early in life can help keep costs down.5


In some cases, your medical history may affect what your life insurance premium looks like. Smoking and common family illnesses may impact the premium cost. However, if you are concerned about your medical history, there may be an option to secure a policy without a medical exam. Chat with an agent to see if this option is available for you.


Lastly, the amount of coverage you are looking for will change the premium payments. If you are not sure how to navigate finding the right amount of coverage, you can try our life insurance calculator and get a life insurance quote. Usually, the more coverage you want, the higher your premium payments will be, and vice versa.3

Are Life Insurance Premiums Tax-Deductible?

It is not uncommon to question whether life insurance premiums are tax-deductible. While premiums are typically not tax-deductible, there are a handful of life insurance tax benefits worth exploring.6 For example, if the policy is planned out correctly, most death benefits are paid to the beneficiary without being taxed.6 Tax-deferred cash value growth in our whole life insurance plans is also a major perk.

Choosing the right beneficiary or naming the beneficiary as a trust may also yield certain tax advantages. For instance, naming your beneficiary as an irrevocable life insurance trust can allow you to distribute your death benefit to multiple people and can keep the cash value from being lumped into your estate value, which has a greater chance of being taxed.7

Is life insurance worth the cost?

Life insurance can be worth the cost if you have family members who depend on you financially. The death benefit payout can allow beneficiaries to replace your income, pay off debts, cover everyday expenses, and more. Consider chatting with a financial advisor if you’re unsure whether life insurance is right for you and your loved ones.

Get life insurance with competitive premiums from Aflac

Now that you know how life insurance premiums work and the factors that affect them, you may be wondering which type of policy is right for you. At Aflac, we will work with you to find a life insurance policy that works with your needs. Chatting with an agent can help clarify your financial goals and the future you want to leave behind for your family. Our plans come with competitive premiums and are portable and tailored to your unique lifestyle.

How Life Insurance Works

Once you take out a life insurance policy, you make premium payments to a life insurance company. After you pass away, the company will pay out a lump sum of money known as a death benefit to your beneficiaries. Your beneficiaries can then use the funds for a variety of purposes, such as paying for your funeral, covering everyday expenses, and taking care of your remaining debts.

Two common types of life insurance policies are term life insurance and whole life insurance. Whole life insurance offers lifetime coverage, while term life insurance provides protection for a set period of time. 

How are Life Insurance Premiums Determined?

Life insurance costs vary greatly from person to person. Several factors will determine what you’ll pay for life insurance premiums, including: 

  • Age: In general, life insurance is cheaper for younger individuals than seniors. As you get older, getting a policy will become more expensive.

  • Health: The best rates are often reserved for healthy individuals. You may pay more for a policy if you have a pre-existing condition, such as diabetes or heart disease. 

  • Gender: Men tend to pay higher premiums for life insurance than women. This is because men generally have a shorter life expectancy. 

  • Smoking: Smoking can lead to serious health conditions, like cancer, asthma, stroke, and heart attack. For this reason, smokers typically have to pay higher life insurance premiums. 

  • Policy type: Not all life insurance policies are created equal. For instance, term life insurance is usually less costly than whole life insurance since it offers temporary coverage.

How Do Insurance Companies Use Your Life Insurance Premiums?

While every life insurance company is different, many will use your premiums to cover outstanding liabilities and make sure beneficiaries receive the payouts they’re owed when policyholders pass away. 

Premiums may also go toward operating expenses, such as salaries, benefits, and office space. Some life insurance providers might also invest some of the premiums to grow and expand. 

Are Life Insurance Premiums Negotiable?

In most cases, you won’t be able to negotiate your life insurance premiums. But the good news is that you can shop around and compare quotes to find a policy that works well for your budget and goals. You may also reduce your life insurance costs if you improve your health or lower your coverage.

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