Which of the following factors generally affects life insurance premiums?

The type of coverage selected influences life insurance premiums in significant ways. Different life insurance products, such as term life insurance, whole life insurance, or universal life insurance, come with varying levels of risk and benefits associated with them. Term life generally has lower premiums since it provides coverage for a specific period without a cash value component, while whole life can be more expensive due to its lifelong coverage and accumulation of cash value.

Factors like the policyowner’s profession and current interest rates may also impact premiums, but these influences are more variable and often secondary to the specifics of the coverage type itself. Policy limits—while they determine the maximum payout and can affect the premium—are more of a function of the coverage selected. Hence, the fundamental nature of the insurance product chosen is the main driver of premium costs.