Finance

Factors that affect term insurance premium

The premium is a necessary component of every insurance policy. Under term insurance, the premium is paid in exchange for the coverage. When you choose a term policy, your insurer can allow you to pay the premium amount quarterly, monthly, half-yearly, or annually based on your convenience. If you struggle to pay the premium within the selected duration due to loss of income, critical illness, physical disability, and so on, your insurer can grant you 30 days. When you are unable to pay the whole premium amount even within the 30 days, your term policy can lapse.

Term Insurance - Compare Best Term Plans & Policy in India 2019-20

Before purchasing a term policy, you should always determine the premium amount to ensure you can afford it or not. If you want to calculate the premium amount beforehand, use a term insurance premium calculator, which can provide you with an estimated value. However, your final premium value can depend on the top four essential factors mentioned below:

  1. Age

Although a term policy can be purchased at any point in your life, you should buy it at a young age. When you are young, your insurer can charge a relatively low premium amount. Since you might be physically fit at a young age, free of severe health conditions, such as cancer, stroke, kidney failure etc. you can receive a life cover at a minimal cost. Moreover, if you buy term insurance when you are young, you might have a significant amount of time to protect your family members as well as meet their financial requirements.

  1. Medical history

Medical history can play a crucial role in determining the premium rate. Since your insurer can determine the premium amount rate based on your health condition, you should disclose it at the time of purchase. Some insurers can ask you to undergo medical tests before they provide you with term coverage. After the medical test results are produced in front of the insurance company, your insurer can offer the coverage at the right amount.

  1. Mode of purchase

Initially, term insurance plans were purchased primarily through life insurance agents. As times have changed today, many insurance companies have made term policies available on their websites. With the introduction of online term plans, the overall purchase procedure, as well as the premium rate, has significantly reduced. Since online term insurance might not consist of overhead costs, you can purchase it at a relatively cheaper rate than an offline term plan.

  1. Smoking

One of the crucial factors that can have an immediate impact on your term policies can be your smoking habits. Since smoking can put your life at stake, your insurer can charge you with relatively high premium value. Although your smoking habits can cost you extra, you should not hide it from your insurer. If you fail to disclose your smoking habits to your insurer at the time of purchase, your claim can be rejected during an emergency.

To sum up, term insurance can depend on these above-mentioned factors. Additionally, there can be other factors, such as family history, income, gender, hobbies, etc. All these factors clubbed together can form the basis of your overall premium amount. The best way to buy term insurance at a low premium rate can be to compare the different term plans available online that can let you determine the premium of each policy. However, select the term policy that can offer adequate coverage at a minimal price.

 

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