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Factors Affecting Life Insurance Policy Premium In India

Factors Affecting Life Insurance Premium

Factors Affecting Life Insurance Premium

You have to pay premiums in order to enjoy the benefits of a life insurance policy. But there are many crucial checkpoints to watch for when it comes to the determinants of the cost of life insurance premium. This blog has brought you the list of factors affecting life insurance premiums. So, if you are heading to purchase a policy then read on to remember a few important things.

Factors Determining Life Insurance Premium

Life insurance is an investment that promises to give your loved ones financial protection. It is a smart way to make sure nobody gets financially bothered after an unfortunate event like death. However, premiums make an unavoidable concern to take in account while planning to buy a life insurance plan. 

Nobody wants to hurt their monthly budget and thus, there lay a number of comparisons that help choose the most budget-friendly deal out there. But have you ever wondered what all are the factors that an insurer seeks to decide the premium amount? 

If not then it is time that you take a note of everything that factors the cost of your life insurance premiums. Insurance companies look closely at many checkpoints that can easily lower or hike the premium amount and not to forget, some of such factors are not even in your control to suppress. 

Here are the factors that affect life insurance premiums:

  • Age

Age is obviously one of the important factors that affect life insurance premiums. If you opt for a life insurance policy at a young age then the premium you will pay will be lower compared to someone who is buying a policy in their 40s. It is because young individuals are quite unlikely to contract a serious illness. Therefore, life insurance companies offer plans with extensive coverage to young people at low premium rates.

  • Medical History

Medical history is another important factor determining your life insurance premium. If you are someone with a medical history of any of the serious diseases like cancer or any other, then it will make insurance companies charge a higher premium from you. 

  • Gender

No. It is not gender inequality that impacts life Insurance premiums. Know that insurance companies charge lower premiums from women as they are likely to live 5 years longer than men, as per the stats. This difference in life expectancy between genders results in a longer period of policy for women at low premium cost. 

  • Health Records

Health records help insurers make sure you don’t have any severe ailments or potential health conditions which then enables them to decide the cost of your life insurance premium. Therefore, you need to provide your health records to them in order to let them keep a check on your premium.

  • Smoking

You read that right. Smoking is one of the most important factors that affect your life insurance premiums. Since smoking increases the risk of ailments among policyholders, it alerts insurance companies. If you are a smoker then you will be charged a premium almost twice as much as a non-smoker will be. So yes, smoking makes a huge difference to life insurance premiums.

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  • Drinking

Apart from smoking, it is drinking that can cause you to pay higher life insurance premiums. We all know the effects of consumption of alcohol on health. If you are an alcohol consumer to a high extent then you will have to pay higher premiums for your life insurance policy. 

  • Lifestyle Choices

Lifestyle choices impact the life insurance premiums you pay to much extent. If you are someone who revels in activities that are fueled with risks like trekking up the complicated mountains or speeding cars then you are more likely to pay higher premiums for your policy. 

  • Insurance Policy

The life insurance policy itself is a big-fat factor affecting your life insurance premiums. If your policy is long-term then the premiums will be lower and of course, the benefits will be larger. In case your policy is short-term then the insurance companies will charge you higher premiums.

  • Profession

Then comes your profession. Know that your profession has a lot to do with the premium you have to pay for your life insurance policy. Insurance companies take into consideration your profession to see if you are working in any industry that is prone to danger such as the oil and gas industry, mining etc. If you belong to any of such professions then you have to pay a higher amount of premium for the policy.

Factors Affecting Your Life Insurance Premium: Summary

So the most crucial factors that impact your rates of life insurance premium. It all boils down to the decision made by the insurance company and how they take these factors.