What is an insurance premium?
An insurance premium is the amount you agree to pay for your coverage — whether it’s life, medical, or other types of insurance. Premiums aren’t fixed forever; they’re based on risk factors that insurers calculate when issuing a policy. Because people’s circumstances and broader costs change over time, premiums can also change.
Let’s break down the main factors that make your insurance premiums go up — and what you can do about it.
Factors that can make your life insurance premium soar
1. Age
Your age has a big impact on your premiums. Generally, the older you are when you take a policy, the higher the premiums. That’s because insurers view older individuals as having a higher risk of health issues or death compared with younger adults.
2. Health and Underwriting
Insurers assess your health when you apply — through questions, medical checks, and sometimes lab results. If you have health concerns (like diabetes or heart issues), this suggests higher risk and can raise your premium.
3. Smoking and Lifestyle Choices
Smokers generally pay more for life and health insurance than non‑smokers. This is because smoking is linked to serious conditions like cancer, stroke, and heart disease, which increase the likelihood of claims.
Lifestyle and occupational risks — like engaging in extreme sports or working in hazardous jobs — also make premiums higher because they raise the probability of injury or claims.
4. Family Medical History
Insurers consider your family’s medical history when assessing your risk. Conditions that run in families — like certain cancers or hereditary illnesses — can signal higher future risk, which may increase your premiums.
5. Gender and Longevity
Across many life insurance markets, women often pay lower premiums than men. This is because women generally have longer life expectancy, which translates into lower risk from the insurer’s perspective.
6. Broader Healthcare Cost Increases
For medical and health insurance, premiums are very sensitive to changes in medical costs:
- Medical inflation — the rising cost of treatments, tests, medicines, and hospital services — has outpaced general inflation in recent years.
- Use of advanced medical technology and newer treatments increases the overall cost of care.
- A rise in chronic conditions in Malaysia, like diabetes, hypertension, and heart disease, increases claims and pushes insurers to adjust premiums.
Insurance associations in Malaysia have noted that rising claim costs and greater utilisation of healthcare services are major reasons medical premiums have climbed sharply over the last few years.
7. Increased Claims and Higher Utilisation
More frequent use of healthcare services — partly due to an ageing population and post‑pandemic care backlogs — means insurers pay out more in claims. When claims costs rise industry‑wide, insurers often adjust premiums to keep their plans financially sustainable.
8. Risk Pooling and Industry Practices
Insurance pricing relies on pooling premiums from many policyholders to pay claims for those who need it. If the overall cost of claims rises (for example, due to more severe illnesses or increasingly expensive treatments), insurers may raise premiums across the board to keep the pool viable.
How to reduce life insurance premiums?
While many premium drivers are external and beyond any one individual’s control, there are factors you can influence:
- Start early: Younger applicants typically receive lower premium rates.
- Maintain good health: Healthy habits can lead to better underwriting outcomes and lower costs.
Shop for competitive plans: Comparing insurers and products helps you find plans that balance cost and coverage.
Conclusion
Insurance premiums are influenced by a mix of personal factors (age, health, lifestyle) and broader market and economic factors (medical inflation, utilisation rates, industry risk pooling). Understanding why premiums rise can help you make informed decisions — like securing coverage earlier, managing your health, and comparing policies — so you can strike the right balance between cost and protection in 2026 and beyond.
