What Is the Best Way to Determine Your Term Insurance Premium?

With growing uncertainties in today’s time, it has become integral to buy a term insurance plan or policy. It is essential to secure the future of family and loved ones, mainly from a financial aspect. Term insurance safeguards and imparts financial cover to the family members in case of the policyholder’s untimely death or demise. 

Hence, today there are several insurance service providers that provide term plans in India with several benefits such as low premium term insurance, accidental cover, etc. The premium amount payable is an essential element to consider before buying any term insurance plan in India. 

Thus, the obvious question that comes to mind is how to determine the term insurance premium for a plan. What techniques to use and what factors to follow? Hence, in this article, we have compiled the best way with which you can quickly determine the term insurance premium. Read more and learn about it in greater detail. 

Factors Influencing Your Term Insurance Premium

• Gender of the policyholder

Mortality expectation is a significant factor that is considered by insurance companies when they are sanctioning a term plan. Women, on average, have longer lives than males. As a result, female insurance policyholders have the benefit of paying less premium amount for the term insurance in comparison to male policyholders. Moreover, women are also given the added advantage of premium discounts. 

• Age of the policyholder

Age is among the most significant elements influencing term insurance premium rates. The premium rate of a term insurance policy like Tata AIA Life Insurance or any other insurance service provider rises in lockstep with age. This is because older people are far more vulnerable to health challenges, posing a more significant risk to insurers, whereas younger ones are deemed healthy. Therefore, getting a term insurance policy when one is young is recommended to obtain maximum coverage at the lowest premium cost.

• If you are leading an unhealthy lifestyle – smoking and drinking!

Currently, insurance companies are laying more emphasis on the health condition of the policyholder. As a result, it is essential to live a healthy lifestyle in order to get the desired term plan at a low premium rate. Health issues such as high blood pressure and hypertension can raise the premium you must pay. Consequently, it is essential to maintain a better lifestyle, perhaps to avoid paying a huge premium.

• Marital status of the policyholder

An individual’s marital status is considered while processing the insurance application and determining the premium amount for the plan. Compared to a single life insurance contract, a combined term insurance coverage will need a more significant premium.

• Medical history is the key indicator

This is yet another essential aspect influencing term insurance premium rates. Insurance service providers request medical documents before allotting the term insurance policy. The presence of any lifestyle diseases such as diabetes, cardiovascular diseases or medical issues majorly impacts the premium amount and further increases it. It may happen that the insurance service provider denies imparting the term insurance policy. 

Apart from individual factors, certain policy-related factors can determine term insurance with a return of premium. These are discussed below: 

• Fewer payouts

The method by which term insurance premiums are calculated also relies on whether the policyholder prefers a set level of coverage for the policy’s duration or a declining payment option.

• What policy are you choosing? – Term insurance or whole life insurance.

A whole life insurance policy offers coverage for the whole life, attained the age of 99, or until the person guaranteed dies. As a result, it usually has higher premiums than a term insurance plan that provides coverage for a set period of time.

• Riders that you are adding up with the policy

If a person chooses a rider option while obtaining a term insurance policy, the policy’s premium will rise simultaneously.

Conclusion

The term insurance premium is determined based on the aforementioned factors (individual and policy-related). Hence if you want to enjoy the benefits of low-premium cost, then make sure you follow the basic principles and healthy lifestyle. Keeping the elements mentioned above in mind, one may estimate the policy’s estimated premium rate and the benefits provided by the term insurance plan. They may also rationalise by selecting the complete plan for their families.