How to Lower Your Life Insurance Premiums without Compromising on Coverage?

Almost all popular insurance companies that deal in life insurance products carefully mull over certain vital factors in order to decide the policy premium. While some of these factors are beyond human including the age and gender of the insured, there are many that aren’t.

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There will be times when an insurance company will reject the application all together based on their health conditions, habits, hazardous jobs, and so on. It is important to read the policy terms carefully before going for any life insurance policy. Additionally, declarations need to be made with the policy application mentioning these habits, health conditions, etc.

Let’s turn our attention towards those which can increase the premium rate and on which we can work on to lower our insurance premium.

1. Refrain from Excessive Drinking and Smoking

Both these factors deteriorate your health and consequently increase the risks of mortality. And that’s why almost all insurers require you to 

This is the reason why insurers require you to disclose these habits at the time of buying the policy. It has been widely noticed that regular smokers, and in some cases even occasional smokers, are required to pay more premium than a non-smoker. Smokers are defined by most insurance policies as those who consumer nicotine or tobacco in different forms. This could be smoking a cigarette or chewing nicotine gums. 

If you end up ticking yes to questions like ‘have you consumed tobacco in the past x years?’ then you will be classified as a smoker irrespective of whether you are a frequent smoker or an occasional one. As a result, the insurance premium quoted will be a lot higher for them as compared to non-smokers. 

This is generally because those who smoke have a lower expectancy ratio as they become more susceptible to diseases like bronchitis, lung cancer, throat cancer, etc. This makes their life span a lot shorter than those who don’t smoke, and insurance companies may not want to take up such a risk. 

For example, Bharati AXA will offer a premium of Rs 5,328 for a smoker and Rs 3,077 for a non-smoker. Similarly, Max Life Insurance offers Rs. 7,752 for a smoker and Rs 5,130 for a non-smoker. Also, if you drink too much, the same process will be followed where the insurer will charge more to insure you. 

It should be noted that lying about these habits in one’s policy application is not a good idea. This will result in a losing the policy all together. It’s always better pay higher premium, avail the benefits, and stay secure and protected.

2. Be Wary of Occupational Risks and Hobbies 

Sometimes your choice of hobbies such as scuba diving, boxing and skydiving can make life insurers apprehensive about the risk factors involved. Quite expectedly, insurers consider you as a high-risk investment. You may be denied insurance or charged high premium, if the insurer thinks your hobbies are dangerous, no matter how well your health is.  

A lot of life insurance companies will also hesitate if there is an occupational hazard or risk. The nature of the job becomes crucial for insurance companies since they will assess the risk involved before providing the policy premium rates. Those with sedentary jobs are more likely to develop some form of heart disease or the other. Generally, basic premium is calculated keeping in mind mortality. Higher the risk, the higher will be premium. Insurance companies will already have a list of occupations, risks associated with the job, and their respective premium rates.

Dangerous hobbies and hazardous jobs will either result in higher premiums or no insurance coverage whatsoever.

3. Current Health State and Pre-Existing Conditions 

For insurers, your health condition remains a major indicator of the mortality risk involved and they take into account your present health conditions, when it comes to determining your premium. It is only fair as those suffering from diseases such as diabetes and heart related ailments are at an obvious high-risk as compared to the healthy ones with no diseases at all. 

Before the policy issuance, insurers may quiz you about your and families present health conditions. They do this to closely check the possibility of genetic diseases. In addition, undergoing a medical test is a mandatory clause for any applicant who is above 45 years of age, or if he/she is asking for a higher coverage. 

When it comes to pre-existing medical issues, there are various health insurance plans available. The premium will be higher in these cases. However, no plan can reject one with pre-existing ailments. No additional amount will be charged beyond what has been quoted in the policy. There will also be covers and benefits that will be offered. If the insured has been enrolled, the plan will not raise the rates based on one’s health condition.

Many insurance policies also cover pregnancy even if the application was made during the pregnancy. Some cover expenses incurred a few months before and after childbirth as well.

4. Longer Policy Tenure and High Sum Assured

Insurers charge high premium if you opt for a longer policy tenure and higher sum assured. 30-year policy tenure means that the insurer is covering the risk of your dying for a longer period. Likewise, high coverage could mean that the insurance company will incur heavy losses, in case of your demise during the term of the policy. In case, the premium quoted by the insurer is high, you can either reduce any of these two factors or check out the insurance quotes provided by other insurers to lower down your premium amount. 

Critical illness covers are a good example of policies with longer tenure and high sum assured. Policies like ICICI Prudential’s Crisis cover protects against 35 diseases and premium paid for it is not more than Rs 2500. A policy like Bharati AXA’s Smart health covers 20 ailments while 12 ailments are covered by Aviva’s Health Secure.

Considering the total cost of treating these diseases without any insurance, the adequate sum assured is a lot higher and helps in financial relief in the long run. When choosing the sum insured, make sure take into account inflation.

5. Get Rid of Obesity 

In 2012, WHO health report revealed that one out of six adults is obese. Obesity is an issue that an increasing number of Indians are facing today. This is a medically recognized condition defined by excessive fat content in one’s body. If one’s Body Mass Index or BMI is 30 or higher, they are considered obese. Someone between 25 and 29.9 will be considered overweight. This is calculated based on one’s body weight and height.

Obesity can lead to a number of diseases, such as heart diseases and diabetes, if left unchecked. As a result, insurance companies may increase your premium amount, in case your weight is more than the stipulated weight or you’re overweight. Therefore, in order to So, to reduce your premium you will have to work on your weight.

6. Explore the Potential of Riders 

Riders such as premium waiver and critical illness come at an additional cost, making your policy dearer. For instance, Under the Life’s online term policy offered by Max Insurance, a 30-year old would need to pay Rs 6,375 as premium for Rs 75-lakh coverage. The premium shoots to Rs 8,265, if he buys a comprehensive accident benefit rider. So, it makes sense to carefully comprehend and understand the requisites of the rider, before shelling out more. 

However, riders offer extra protection and in comparison the additional premium charge is a lot lower than buying another standalone policy to get the same benefits at a higher premium rate. The rider’s premium is used solely to cover the cost of the risk associated with the cover; the premium tends to be lower than the base premium. If a base policy is maintained with the rider cover, the administrative cost is considerably lower.

One can add more value to their life insurance cover by:

  • Adding accident, critical illness, and disability riders from an early age on.
  • Adding term insurance and critical illness riders with long term plans and policies.
  • Taking waiver of premium rider for a child (for example) during one’s middle age.

Read also : Increase Your Coverage with Life and Term Insurance Riders

7. Buying Online or Offline 

Policies that you buy online are often cheaper than when purchased via offline channels. The reason is that online sales help insurers save on the distribution and administration costs and they eventually pass a fair percentage of these savings to the policyholders by the way of low premiums. 

In the End!

It is important to not just have a health insurance policy, but also to ensure one is leading a healthy, risk-free life. After all, that affects your chances of getting insured and at what cost. 

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