Premium is paid in exchange for insurance cover. It can be given via monthly, half-yearly or annual instalments. This is used by the insurer to cover your risks. For instance, in the unfortunate event of your demise, the financial concerns of your dependents will be looked after. It may also ensure a comfortable retirement and maximise your savings. Having life insurance in place is necessary for peace of mind. No wonder India’s insurance penetration stood at 4.2% in FY21 with life insurance at 3.2%.
Trying to understand what affects premiums can be slightly confusing. But it is critical since the particulars of a policy differ from person to person. There are several factors that an insurance company may consider while pricing its product. Have a look.
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Health History
A thorough medical exam of the policyholder is performed. Or, you may have to present a record of your health status. Conditions like cancer, obesity or heart ailments will increase the premiums. The insurer can look at your blood cholesterol levels, body weight and pressure which can indicate potential medical complications. While you cannot do much about your gene pool, try to live a healthy life with controlled smoking and drinking.
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Gender
It is scientifically proven that women live 5 years more than men. In fact, ladies under 60 are generally at a much lower risk of heart issues than men. Males with COVID are also more likely to face severe outcomes than females. So, you may be paying a lower premium if you belong to the ‘fairer sex’. This is because you will be on the premium cycle for a longer period. This is a plus point for any woman wanting life insurance.
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Age
The rates will be lower if you are young. This is because you are less vulnerable to major life-threatening diseases in comparison to older policyholders. You will continue to pay the premiums for a longer duration instead of passing away at an early age. So, date of birth plays a key role in determining your premium rates. This is why it is recommended to buy a policy as early as possible to be able to avoid expensive plans.
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Lifestyle Choices
Unhealthy ways of living like taking recreational drugs, not getting enough sleep, consuming excess junk, being a chain-smoker and or exposure to chemicals can hamper your health. This shows up in your medical reports which are considered risky. A negative impact on your health will raise the cost of coverage of the life insurance policy.
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Occupation
Professions like a pilot, firefighter, miner, electrician, soldier or stunt performer are riskier than a 9 to 5 job. The premiums will be automatically higher since there are significant chances of losing your life at any given moment. Further, hobbies like skydiving, car racing or bungee jumping are hazardous as well. Life insurance companies are not too fond of these and can price your premium in the higher range.
Try to maintain a safe and healthy living style. This can help you better handle the premiums and pay a reasonable amount for steady financial protection. You can talk to your life insurance executive to avoid any errors in the process.
