How to have comprehensive term insurance at low premiums?

Life insurance policies are the best way by which you can protect and give a wholesome life to your loved ones. A common fallacy regarding insurance policies is that you need to pay hefty premiums to get higher coverage. But in reality, higher coverage is not dependent on high premiums. Instead, certain parameters will help you to keep your insurance premiums within your budget.

Let’s take a look at some imperative factors that will help you keep your insurance premiums minimum for your term insurance policies. Most customers highly appreciate term insurance plans. To decide your premium for a term insurance policy, insurance providers evaluate various factors. You can control some of these factors, but some are not.

7 Premium influencing factors that you can control

1. Your overall health
2. Lifestyle Factors
3. Profession
4. Policy Tenure
5. Riders
6. Payment mode of the premiums
7. Policy Purchase Mode

1. Your overall health

Your health condition plays a pivotal factor in deciding your term insurance policy’s premium. A customer suffering from major health issues like hypertension, blood pressure, cholesterol, etc., is more susceptible to premature death than someone who doesn’t possess these conditions. Therefore, the insurance provider will certainly charge higher premiums for the person suffering from major health conditions.

For instance, in today’s fast-paced world, obesity is a major health issue. An obese person is more susceptible to illnesses, including blood pressure, diabetes, heart problems, and stroke. So, if you are an obese person, the insurance company will charge higher premiums for your term insurance plans.

Before calculating your premiums, most insurance companies recommend the applicant to go for a thorough medical check-up. For an older applicant, this medical check-up is mandatory. Some insurance providers even ask young applicants to go for medical tests before estimating their premiums. So, a complete medical examination is a deciding parameter if you are looking for higher coverage.

2. Lifestyle Factors

Unrestrained smoking, drinking, or chewing tobacco may affect your health adversely. All these habits will uplift your mortality risk. Before calculating the premiums for your policy, the insurance company will ask you about these habits. Your premiums will be higher if you are a smoker as compared to non-smokers. The same goes for drinking also.

3. Profession

Applicants involved in high-risk occupations like mining, firefighting, deep-sea diving, etc., need to pay higher premiums than those who have office jobs (9 a.m. to 5 p.m.). Many insurance companies don’t even want to insure these high-risk professionals. The high-risk jobs will uplift your mortality risks. As a result, you need to pay higher premiums for your term policies.

4. Policy Tenure

If the tenure of the policy is longer, your premium will also be higher because the insurer needs to cover the risk of the applicant’s death for an extended period.

5. Riders

Riders welcome customers with surplus benefits on term policies. But you need to pay an extra amount to enjoy the benefits of riders. This will uplift your premium cost. Thus, before purchasing riders, evaluate their actual needs and requirements.

6. Payment mode of the premiums

To pay your premiums, insurance companies will embrace you with plenty of options. You can either pay a one-time payment or yearly or bi-yearly, quarterly, or even monthly. You need to pay lower premiums if you opt for a one-time or yearly payment than monthly payments. If you choose a one-time payment or annual payment, the insurance provider can save a lot on administrative costs. Moreover, the company gets a humongous amount in advance for the entire year compared to monthly or frequent payments.

7. Policy Purchase Mode

If you purchased a policy online, you need to pay lower premiums. But your premiums will be higher if you buy the same policy through an agent or offline. If these policies are purchased online, companies can save their money on agent commission, administrative, and distribution costs. Thus, they offer discounted premiums for online policies.

Premium deciding factors that you can’t control

• Age: This is a prime deciding factor for your premiums on term insurance plans. A young person is less susceptible to life-threatening diseases and he will pay more numbers of premiums as compared to an older applicant. There, you need to pay a lower premium if you purchase a policy at a young age. On the other hand, you will pay higher premiums if you buy the policy at an older age because you are more susceptible to life-threatening diseases. As a result, your mortality risk will also increase.
• Gender: A plethora of medical surveys have proved that the life expectancy of women (81.1 years) is higher than men (76.1). Thus, insurance providers charge a lower premium for women as compared to men (of the same age) for the same policy.
• Family Health History: Currently, you have no health issues. But if your family has any history of health issues, especially hereditary diseases, this can enhance your life insurance premium and increase your coverage.

Moreover, your premium will also depend on the insurance company’s rating and underwriting policies. Thus, it would help to compare various term insurance plans from different companies before investing a single penny in them. Also, evaluate insurance companies based on their claim settlement ratio, customers’ reviews & ratings, policy coverage, market reputation, etc.