Term insurance is the only life insurance premium that comes at a considerably lower price. Earlier, calculating the premium was not so easy. An insurance broker used to analyse your requirements, your medical history as well as the need of the maximum cover. Once all the factors were examined, the broker then could reveal the premium amount. Nowadays, calculating the premium has become hassle-free. The insurance companies and the aggregators offer term insurance premium calculators that allow you to provide the required inputs and showcase the exact quote for your requirements. But, for most of the people, it has always been curiosity that how the term insurance premium is determined? Here are a few factors that determine term insurance premium.
The quote for term insurance majorly depends on your age. You are less exposed to the diseases in the early stages of your life; thus, claims made to the insurer are possibly less. As the age increases, the possibility of getting exposed to the diseases also increases. Hence, the premiums also rise along with the increasing age. The increase in premiums takes place only when you renew the policy or buy a new policy.
The lifestyle is also crucial while deciding the term insurance premiums. If you possess any habit of smoking and drinking on a large scale, you are more likely to adopt the diseases related to the respiratory system. Similarly, inhaling drugs is also hazardous for your health. If you do not possess any of these habits, your term insurance premiums will be less expensive up to 60% of those who practice in such ways.
The term insurance premium is considered to be lower if you are healthy. By analysing the past medical records of you and your family, the insurer determines how much premium would be adequate to cover the chances of loss if the claim is made. If found any medical history hereditarily within your family, you will be supposed to pay a higher premium than expected.
The life Cover and Tenure
When you decide to purchase a term plan, you always determine a figure of sum assured and the overall tenure of the policy. More the sum assured, more the premium. Similarly, higher tenure also tends to increase the premium amount. If the tenure extends your retirement age, you will have to pay a considerably high premium for your term policy.
Aforementioned are a few factors that decide your term insurance premiums. Always analyse your requirements and the factors given above while purchasing any term plan. Stay healthy and minimise your term insurance premiums.