Life insurance companies take into account various factors to decide policy premium. While some of the factors they consider are beyond our control, such as age and gender, there are some that aren’t. Let’s turn our attention towards those on which we can work to lower our insurance premium.
1. Excessive drinking and smoking:-
Both these factors deteriorate your health and consequently increase your mortality risk. This is the reason why insurers want you to disclose these habits at the time of buying the policy. A smoker pays more premiums for a life insurance policy than a non-smoker (Also read: A Short Guide to Life Insurance For Smokers). Also, if you drink too much, the insurer will charge more to insure you.
Sometimes your choice of hobbies such as scuba diving, boxing and skydiving can make life insurers perceive you as a risky investment. No matters how healthy you are, you may be denied insurance or charged high premium, if the insurer thinks your hobbies are dangerous.
3. Current health state:-
Your health condition is a major factor in determining your mortality risk and therefore, your insurance premium. Someone suffering from diabetes and heart problem is at a higher risk than a person who has no health issues. Before the policy issuance, insurers ask about your health condition and that of your family to check the possibility of genetic diseases. Further, medical tests are mandatory in case the applicant’s age is above 45 years or if a very high cover is asked for.
4. Longer policy tenure and high sum assured:-
Insurers charge high premium if you opt for a longer policy tenure and higher sum assured. A 30-year policy tenure means that the insurer is covering the risk of your dying for a longer tenure. Similarly, a higher cover means that the insurer will incur heavy losses in case of your death during the policy tenure. If you find that the quoted premium is too high, you can either reduce any of these two factors or look for another insurer to bring down the premium cost.
Obesity can lead to a number of diseases, such as heart diseases and diabetes, if left unchecked. As a result, insurance companies are likely to increase your premium if you are overweight. So, to reduce your premium you will have to work on your weight.
Riders such as premium waiver and critical illness come at an additional cost, making your policy dearer. For instance, for a Rs 75-lakh coverage, a 30-year old would need to pay Rs 6,375 as premium under Max Life’s online term insurance plan. The premium shoots to Rs 8,265 if he buys comprehensive accident benefit rider. Therefore, carefully understand the requirements of the rider before shelling out more.
7. Buying online or offline:-
Policies bought online tend to be cheaper than when purchased via offline channels. This is because online sales help insurance companies cut down distribution and administration costs and they pass on these benefits to policyholders in the form of low premiums.