Factors That Decide Your Term Insurance Premium in India
Life may change in a matter of seconds. You are organising your holiday on one day, and the next day you are dealing with an unexpected issue. Whatever we do, we cannot determine what will happen, but we can prepare for it. Among the ways we can prepare is through purchasing term insurance.
Term insurance is an easy plan. You give a small amount periodically (this is the premium) and in exchange, the insurance company guarantees paying your family lots of money (the sum assured) in case anything untoward happens to you within the policy term. They can use this money to cover everyday expenses, settle loans, or fund their children’s education.
But here’s the thing: everyone doesn’t pay the same premium for the same cover. You may pay less, your friend may pay more. Why? A number of factors influence how the insurance company determines your premium.
Let’s see these factors in simple terms so you know how they operate and how you can save premiums on your term insurance policy.
-
Your Age
Age comes first when insurance companies verify. The lower the premium, the younger you are. Younger individuals tend to be healthier and have less likelihood of developing severe health problems.
For instance, a 25-year-old purchasing a ₹1 crore plan may pay nearly half the premium as a 40-year-old. That’s why it makes sense to purchase term insurance as soon as possible.
-
Your Health Condition
Your present health plays a large role. If you suffer from medical issues such as diabetes, asthma, or cardiovascular diseases, your premium will be higher. The insurer perceives more risk in providing you with coverage.
Most firms request a medical test before accepting the policy. In case your medical test is satisfactory, you might receive a lower premium.
-
Sum Assured (Amount of Coverage)
The sum assured is the money your family will get in case something untoward happens to you. A greater sum assured provides more cover but is also more expensive. For instance, a plan offering ₹50 lakh coverage will cost less than a ₹1 crore plan.
If you’re unsure how much coverage you need, you can use a term insurance calculator. This online tool shows you how much coverage is right for your family’s needs and what the premium will be. Many of the best term life insurance providers in India offer free calculators so you can compare and choose easily.
-
Policy Term (Duration)
This is how many years your policy will be in effect. The higher the term, the longer the company covers you, so the premium could be higher.
For instance, a 30-year term plan will be more expensive than a 15-year term plan for the same protection. Select a term that covers you at least until you retire or until your major financial obligations cease.
-
Your Lifestyle Habits
Your daily habits can affect your premium, too. Smoking, drinking alcohol, or using tobacco products can increase your premium because these habits can lead to health issues.
When filling out your application form, always be honest about your lifestyle. Giving wrong information can cause claim rejection later.
-
Gender
In India, women even pay lower premiums than men for equal coverage. Women generally tend to live longer and are considered lower risk by insurers. Women policyholders even receive special discounts from certain companies.
-
Occupation
Your profession also counts. Working in a hazardous industry such as construction, mining, or aviation will increase your premium. Being employed in an office job or a low-risk profession will decrease your premium.
-
Mode of Premium Payment
You have the option to pay monthly, quarterly, half-yearly, or annually. Paying annually is sometimes more economical. Some insurers also give you a discount if you pay the entire premium for the entire term all at once.
-
Rider Benefits
Riders are additional benefits you can opt for in your plan, such as accidental death cover, critical illness cover, or waiver of premium on disability. These provide you with additional protection but cost more in terms of premium. Select only the riders that you need.
-
Company’s Claim Settlement Ratio
The claim settlement ratio (CSR) informs you how many claims a company settles out of all the claims that it receives. High CSR indicates that the company is trustworthy in settling claims.
Though CSR does not make an immediate difference in your premium, when you opt for a good CSR company, your family stands a greater chance of receiving the money without any hassle.
Ways to Save on Your Term Insurance Premium
Understanding these factors is just half the battle. Here’s how you can implement them to save:
- Buy early – Don’t delay. The earlier you buy, the lower your premium will be.
- Stay healthy – Eat well, exercise, and get regular check-ups.
- Compare before buying – Compare the top term life insurance plans in India using a term insurance calculator.
- Avoid risky habits – Smoking or excessive drinking raises your premium.
- Choose the right term – Choose a term that suits your financial needs.
- Pay annually – This may be less expensive than monthly payments.
Why It’s Important to Understand Premium Factors
Most individuals fail to consider anything other than the cheapest premium. However, the cheapest premium is not always the best option if it provides less coverage or a shorter duration. The aim is to achieve the correct balance, sufficient coverage for your family at an affordable price.
By knowing what influences your premium, you can make better decisions. For instance, purchasing early, maintaining good health, and quitting dangerous vices can keep the money in your pocket without compromising the safety of your loved ones.
Conclusion:
Term insurance is more than just another financial product. It’s a guarantee that regardless of what life brings, your family will have the financial security they deserve. Your premium payment is similar to sowing a small seed today, which turns into a mature tree of safeguarding for the ones you love.
Before purchasing a plan:
- Know the reasons behind influencing your premium.
- Use a term insurance calculator to view the proper coverage for you.
- Compare India’s best term life insurance policies.
- Choose a company that has a high claim settlement ratio.
The proper plan provides you with peace of mind today and security for your loved ones tomorrow, and that you simply can’t put a price tag on.
Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
