5 Ways to Reduce Your Term Insurance Premium

Life is full of uncertainties. If you are the only breadwinner of the family, a huge responsibility lies on your shoulders to give them the best of comfort and happiness. It also needs to ensure the financial security of your family, in case of an unfortunate event of your death. To tackle this scenario, Term Insurance comes to a rescue.

A Term Insurance Policy provides coverage during a policy tenure and if anything unfortunate happened to you during such term, the nominee/beneficiary receives a comprehensive amount equal to the sum assured opted under the plan. A term plan provides a pure life cover and it provides financial protection for your family, in case you are not around.

Although, Term Insurance Plans are quite affordable than other insurance plans such as an endowment or ULIP plan, there are ways that can help you to reduce the premium amount of your term plan.

1)      Buy at an Early Age

The premium amount of a term insurance plan largely depends on the age of buying the plan. You will be charged with a higher premium amount, if you buy a term plan at an older age than buying it at a younger age. The reason behind is, the chance of death of an insured person increases with age and higher is the risk for an insurance company. Younger people are healthier and they have lesser chances of getting any severe illness that can cause to death. So, it is better to buy a term policy at a younger age.

For Example, Arsh aged 25 years buys a term plan with sum assured of Rs 75 Lacs and policy term of 30 years, his annual premium amount is just Rs 4,950. In other case, Harshit aged 35 years with the same life cover and policy term, his annual premium amount is Rs 8,100.

2)      Your Lifestyle

Your health plays a key role in determining the term insurance premium. In case of any history of diseases/illnesses, or consuming cigarettes, alcohol, tobacco, and other nicotine products, you have to pay higher premium amount, owing to higher health risks. Insurers direct you to go through a medical check-up and any abnormality in your health report will lead to increase in insurance premium. So, in order to reduce your premium, you need to lead a healthy lifestyle.

For Example, Arsh aged 25 years (non-tobacco user) buys a term plan with sum assured of Rs 75 Lacs and policy term of 30 years, his annual premium amount is Rs 4,950. In other case, Harshit with the same age (but, tobacco user) with the same life cover and policy term, his annual premium amount is Rs 6,450.

3)      Policy Term & Life Cover

The tenure of the policy and sum assured chosen also makes an impact on your insurance premium. If you choose a higher life cover with the longer policy tenure, and in case of your death, a high sum assured is payable, so there is a high risk for the insurance company.

It thus needs to ensure that you are not under-insured or over-insured. An under-insured cover may not be able to meet all the financial expenses for your family and with over-insured cover, you need to pay high premiums for a cover that is far enough to ensure financial protection for your family. So, it’s better to choose an adequate life cover which can ensure that your family’s goals are not hampered, due to your unfortunate demise.

For Example, Arsh aged 35 years buys a term plan with sum assured of Rs 75 Lacs and policy term of 30 years, his annual premium amount is Rs 8,100. In other case, Harshit with the same age with sum assured of Rs 50 Lacs and policy term of 20 years, his annual premium amount is Rs 4,400.

4)      Mode of Payment

The mode of premium payment also has an impact on term insurance premiums. Insurance companies offer flexibility in paying premiums such as annually, semi annually, quarterly & monthly payment options. An important point to note is that an annual mode of payment is less expensive than other payment options. So, if annual mode of premium payment is affordable, go for it.

For Example, Arsh aged 25 years buys a term plan (annual payment option) with sum assured of Rs 50 Lacs and policy term of 20 years, his premium amount is Rs 3,150. However, Harshit opts for semi annually premium payment option, with the same age and with the same life cover & policy term, his premium amount is Rs 1,638.

5)      Compare & Buy Online

Being a pure life insurance product, a term insurance plan is available at reasonable premiums, however by buying online, you can make it more affordable to buy. Before buying a plan online, you can also compare the policy benefits & features, premium calculation, value added benefits, etc. There are several insurance web aggregators such as suggestinsurance.com, offers flexibility to Compare Term Insurance Policy in India and then opt to buy a plan that provides adequate financial protection to your family. By buying an Online Term Insurance Policy, you can avail discounts that helps you to cut down the insurance cost. The online buying of a term plan helps you to save 5% to 20% in the cost of the premium. (The discounts offered by insurers may differ.)

Conclusion

Buying a term insurance policy is a smart move, as it ensures financial protection for the family in your absence. Understanding the key aspects that can help reduce the insurance cost would be helpful in getting a fair deal. We have thus, pointed out the key factors through which you can reduce the insurance premium for your term plan and secure the financial future of your loved ones.