For us all, our families are the source of all the happiness in life. We do all we can to make our loved ones happy and take care of their needs. When it is about planning for their future in case of any eventuality, life insurance is the most preferred choice. With an adequate life insurance cover, you can ensure your family’s financial well-being, even in the absence of a breadwinner.
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
1. Choose an Adequate Sum AssuredNext to selecting a suitable term insurance policy, the next big thing is to choose the right sum assured. The whole purpose of buying term insurance succeeds when you opt for sufficient life cover. Many people misunderstand life cover selection and prefer emphasizing low premium, which can cause problems at claim settlement. The simplest answer to how to reduce life insurance premium is to lower down the sum assured. Keep in mind that there should be a balance between adequacy and affordability when you want to reduce term insurance premium. You should consider crucial parameters, like your future working years, dependents, and lifestyle needs.
2. Buy Term Insurance at a Young AgeMany individuals wait for the right time or age to invest in a term plan to get life cover. In doing so, they need to pay a higher premium as compared to buying the exact same plan at an earlier age. In general, there is no specific age to buy a term plan. The best way to lower your term plan premium is to buy it in the initial years of your career. The younger you are, the lower will be the premium payable. For people looking forward to knowing how to reduce term insurance premium, this is the easiest and most fruitful way to ensure financial security and peace of mind.
3. Compare Policies Before Buying OneThis is yet another way to reduce term insurance premium but is often ignored. Some people end up buying a term plan based on ads they find or recommendations from peers, not realizing their actual needs before making the decision. Comparison of term insurance policies can make you move a step closer to understanding which plan suits your needs the most. If affordability is a concern, you can also check for the benefits offered by different plans in relation to the quoted premium. After going through the in-depth details of various plans, you will be in a better position to reduce term insurance premium.
4. Avoid Selecting Add-Ons That You Do Not NeedYou can further strengthen the benefits of a term insurance plan by including additional riders with the base policy. For instance, Max Life Critical Illness and Disability rider with Max Life Smart Secure Plus Plan (A Non Linked Non Participating Individual Pure Risk Premium Life Insurance Plan UIN: 104N118V02) provides financial security against medical emergencies resulting from 64 life-threatening ailments. Similarly, there are other add-ons like Waiver of Premium and Return of Premium, which you can add to a base policy. These add-ons are available at an additional price above the base policy premium. Hence, one way to reduce term insurance premium is to only opt for add-ons that you truly need and can easily afford. This will help you know how to reduce term insurance premium.
5. Buy Term Insurance OnlineIn comparison to buying term insurance offline, online term plan purchase is generally less costly. The absence of insurance agents and their commissions helps insurers save on the distribution costs. These savings are passed on to the policy buyers in terms of lower premiums. If you are struggling to find the best way to lower your term plan premium, simply buy it online. The selection of an online term plan is based on your understanding of the product. Hence, it is advisable that you dig deeper into the policy details before buying any plan. You can easily find a plethora of resources to understand how to reduce life insurance premiums.
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