A crucial part of life insurance purchase is to pay premiums regularly to keep the plan active. There are several factors on which life insurance premium depends. Even if you are planning to buy term insurance – the simplest life insurance plan, you should know how to reduce life insurance premium to save on costs. Before we move on to various ways on how to reduce life insurance premium, let us talk about the premium-determining factors.
Factors That Affect Life Insurance Premium
1. AgeA policy buyer’s age is one of the primary factors that influence life insurance premiums. From the insurer’s perspective, young individuals in their 20s or 30s are less prone to critical illnesses and are most likely to continue with the policy for the time ahead. This reduces their liability at the insurer’s end. To find ways on how to reduce life insurance premium, you must realize the impact of age on the premium payable.
2. Family HistoryCertain hereditary diseases tend to pass on to the next generations of a family. Similarly, people in a family might become vulnerable to specific diseases because of shared lifestyle choices. All life insurance companies consider these risks as a part of family medical history and then offer life insurance plans at pre-determined rates. If you know about your family’s medical history, you can rely on other parameters to find ways of how to reduce life insurance premium.
3. Medical RecordsAlong with family history, individual medical records also play a vital role in determining life insurance premiums. To check your health status, the underwriting process of most life insurance plans include medical tests. These tests are meant to highlight a clear picture of your health and pre-existing illnesses if any. Before you choose the best way to lower your term plan premium, keep a check on your health status.
4. GenderAlthough it is one of the underrated factors influencing life insurance premiums, it does matter. Its importance is based on the statistical data that shows women have higher life expectancy than men. It also makes them eligible for a longer policy tenure. You can use an online premium calculator to gauge the difference between life insurance premiums for men and women.
5. Smoking HabitsWhether an individual consumes or smoke tobacco, there is a higher risk of suffering from critical diseases like lung cancer, oral cancer, and heart problems. The impact of these habits is nearly the same for both men and women. Since smokers are more prone to health complications, they charge a higher premium for life insurance plans. The best way to lower your term plan premium in this context is to quit smoking and live a healthier lifestyle.
6. Premium Payment TenureThe life insurance policy tenure also plays a role in determining term insurance premiums. It is easy to understand how to reduce life insurance premiums in this context. Choosing a longer tenure implies the risk is spread over an extended period, which allows the insurers to offer policies at a lower rate. One way to reduce term insurance premium is to choose a longer premium payment period. This will also reduce the load of regularly paying a certain amount and making this investment fit your budget.
Ways to Reduce Life Insurance Premium
Life insurance purchase is an investment that involves your family. You need to choose the right policy in such a way that it does not cost any financial burden