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What factors can impact your term insurance premium?

10 Oct 22      |       | ShareShare Share Blog Or copy link Copy Share this link via

Authored by: Anurag Ainapurapu
Reviewed by: Krupa Kenia

The Long Read


Everything you *need to know* is right above this. Scroll down, only if you'd still like to read more (honestly, why?)

When you are applying for a term insurance plan, the life insurance company will assess a lot of factors before offering you a term plan at a certain premium. This process is called underwriting in insurance. Depending on those factors, the premium amount can be different from the applied premium.

 

 Let’s look at these factors:

 

●     Age - The younger you are, the cheaper are your premiums likely to be. Find out if you should buy term insurance now or wait.

●     Gender - Women typically have a good chance of getting term insurance at a low premium

●     Medical history - If you have any medical conditions such as diabetes, cancer, or heart disease, your premium may increase

●     Unnecessarily long policy duration - If you opt for a policy duration beyond your age of retirement, you will end up paying a higher premium. Find out until what age you should ideally be covered.

●     Unhealthy lifestyle - Unhealthy habits such as smoking, drinking, or a sedentary lifestyle can affect your health and increase your premium

●     Occupation and vocation - If you are in a high-risk occupation, say as a stuntman or a pilot, etc. or you pursue high-risk hobbies like rock climbing, racing, etc, it can increase your premium

While a lot of factors are out of your control, there are some things you can do to make sure your term insurance premium is low. 
 

  • Buy term insurance as early as possible in life

  • Lead a healthy lifestyle so that you are at low risk of suffering from health disorders

  • Avoid poor lifestyle habits like smoking, drinking, drugs, etc

  • Stay covered only till your retirement age

Your term insurance premium will not increase after making your first payment, provided that your life cover and any policy benefits remain unchanged.

Yes, of course! If your age of retirement is say, 60 or 65 years, but you plan to stay covered till 85 years of age, you will have to pay a higher premium. That’s because your policy duration is longer than necessary.

Yes. That’s because women tend to live longer than men. And if you live longer, the insurer perceives it as a lower risk, and charges a lower premium!

Yes, your personal medical history and current health status have a direct impact on your term insurance premium because it increases your mortality risk aka your chances of dying, compared to a healthier person.
 

Depending on your condition, the insurer may offer you a term plan with an increased premium. 


Will your family health history affect term insurance premiums? Not necessarily. Read more to explore the details.

Yes, of course! If you love risky adventure activities, your chances of meeting with life-threatening accidents are much higher. Living life dangerously makes you a high-risk insurance customer. Result: An increase in premium.

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