Calculating term insurance premium – 3 factors that can help you reduce the costs

The term insurance premium is the sum you pay to the insurer to keep your life insurance coverage in place. It is a specified amount calculated by the insurance company, which the assured individual periodically pays to maintain the actual coverage of insurance. These premium amounts paid in small amounts over a long period of time are the cost of the insurance service availed under a plan.

There a lot of factors that together determine the amount of premium you will pay under a term insurance policy. Some of them are unchangeable. For example, gender is a determinant of the level of premium. It is generally assumed that women tend to live longer than men. Hence, women are more likely to pay a comparatively higher amount and frequency of premiums than men.

Another factor that goes into the term insurance calculator is your profession. Someone working in industries such as transport, shipping, mining, etc is at a higher perceived risk of accidents than someone with a desk job. This induced a higher premium for the former professions. The family medical history is also a critical element in the term insurance calculator. A person whose family has a history of ailments such as heart attack or cancer has increased chances of contracting these illnesses, which is why more instances of such diseases increase the premiums. The length of the policy will also directly impact the term insurance premium amount. It’s simple logic: if the policy term is longer, the premium shoots up, because that means you are availing coverage for a longer duration in life when you will be exposed to higher risk.

Most insurance providers extend the facility of a term insurance calculator online where you can input your details and get a quote.

There are some factors, however, that are in your control, or that you can use to your advantage at the time of buying life insurance. These can help you reduce the cost of the policy. Let’s visit them one by one.

Age: the early worm gets the bird

The younger you are, the lower will be your insurance premium. At a younger age, we are less likely to be diagnosed with a life-threatening disease, and definitely not as likely as someone at an advanced stage in their career where stress is a part of their routine. The general sense says that someone in their 50s is more likely to develop health problems than someone in their 20s. Further, since the younger person will be paying a greater number of premiums (because of the longer tenure), the premium would be lower.

Smoking and drinking habits: away from vices into lower premiums

This is one of the foremost considerations for every insurer because there are a lot of health-related concerns that these habits are known to cause. Tobacco kills more than 8 million people each year. Therefore, if you smoke it is more likely that a claim will be filed by your beneficiaries.

Health is wealth, literally

While there is little you can do about the family medical history, you can still control your own health to an extent. Someone with known illnesses or diseases like obesity is at a higher risk. Obesity, for example, is well known to elevate the chances of blood pressure and heart problems, even stroke. In fact, heart diseases are reportedly becoming endemic among the younger population as well, with India bearing the largest burden of cardiovascular diseases.

Therefore, in this case, your premium would be a little higher than that of a person who is relatively fit.

Thus, you can make some tweaks in your life to lower your term insurance premium.

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