What affects the premiums payable for your term insurance policy? Here is a guide that will help you get an understanding of these aspects.
Your Age
A term insurance premium calculator considers the applicant’s age as one of the primary factors. Younger people are likely to get lower premium amounts for comparatively higher coverage. It is due to their longer life expectancy and generally lower risks of serious health conditions at this age. Thus, if you are in your 20s or 30s, you can anticipate lower rates. They will naturally be higher for those in their 50s.
Health
If you are healthy and fit, then it may reduce your premiums. This is why calculators enquire about habits like smoking, and insurance companies may also ask for medical tests depending on the policy and sum assured. They can thus find out more about your health conditions and determine a suitable premium amount. However, some conditions, even if not immediately serious, may still increase premiums.
Sum Assured
Of course, your chosen coverage is the basis for the premium calculation. The higher this amount, the more your premium will be. Many people often make the mistake of choosing a lower amount in coverage. They feel that this will help them pay lower premiums overall. However, a smaller payout may not be enough to meet the future financial requirements of loved ones, especially when accounting for inflation. Thus, it is advisable to try to get as much coverage as possible, keeping your premium affordability in mind.
Policy Term
Another factor is the length of time you would like to be covered. Premiums will generally be higher for longer tenures of policies, although buying a long-term policy at a younger age can help lock in lower premiums. Longer terms are suitable since they enable coverage for big-ticket objectives like the higher education of children or repayment of mortgages.
Lifestyle and Profession
Both your lifestyle and profession can also influence the premium charges suitable for you. People engaged in a risky occupation have a greater risk of death, therefore life insurance companies will charge a higher premium. However, people working in a stable, non-risk environment are likely to get lower premium quotes. While income does not directly affect premiums, it can play a role in determining the sum assured.
Add-Ons (Riders)
Your term insurance can be more than the basic coverage, but this comes at an extra cost called riders. Riders are different benefits that you could add to your base policy for further protection. Common riders are critical illness cover, accidental death benefit, or disability cover. Riders can provide additional coverage but will also raise your total premium, depending on the type and extent of coverage. So, just be sure to evaluate whether or not you actually need those additional covers.
Get Absolute Financial Safety with Term Insurance
Term insurance is a key component of financial planning, and knowing which factors can impact your policy’s premium ensures that you take the right decisions for you. With a wide variety of term insurance policies available, you can select the best policy for your coverage needs and buy it at an affordable price according to your age, present medical condition, occupation, and financial obligation. So, the next time you decide to buy term insurance, use a term insurance premium calculator to get an estimated idea of the best policy for you. Keep in mind that the final premium may vary based on the underwriting process.