When looking for an appropriate life cover for yourself and your family, you will be looking for the best cover at the lowest price. Every individual wants an extensive cover for their family while paying a low premium amount. When comparing the covers, everyone tends to compare the premium payable, but there are some factors which play a vital role in determining the premium payable by an individual. The amount of premium is determined based on the amount assured and the tenure of the cover.
Factors applicable to all insurers
It is essential to gain life insurance policy information before applying for a life cover. Listed below are the factors that play a crucial role in determining the risk on life cover:
- Age: It is a prominent factor which will have an impact on the premium payable for the protection. The younger the insurer, the lower the amount of premium.
- Medical history: Applicants with a history of health issues which have to pay a higher premium.
- Current medical condition: Applicants will be required to go through a thorough medical examination in which the insurers will look into things like blood pressure and other health concerns. These can be seen as future problems, and the premium amount can be high. People who are young with good health will have a lower premium rate.
- Weight: Individuals who are overweight tend to pay more for the cover.
- Occupation: Individuals who are involved in trades that carry a risk to their health will have to pay a higher premium. Dangerous occupations like car racing will increase the premium rate.
- Smoking: Smokers end up paying a higher premium for their insurance because they have a higher risk as compared to non-smokers.
- Drinking: Individuals who consume alcohol have to pay a higher premium since it can take a toll on their health. Insurance companies tend to ask about drinking habits to learn about the current health of the applicants. Frequent drinkers have to pay more for the cover.
- Hobbies: High-risk activities which increase your adrenaline but also increase your risk will lead to a higher premium amount. However, this depends from insurer to insurer and is not equally applicable to one and all.
- Gender: The gender of the applicant is essential when determining the premium amount. Women are considered to live longer than men which means they pay a lower premium amount than men.
- Family history: Individuals with a history of serious illness may have to pay higher for the life insurance cover.
Factors which affect the premium rates
Below mentioned factors affect the premium rates of life insurance plans:
- Previously uninsured: If you are buying a cover for the first time, you might end up paying a higher premium. This is because of the assumption that you will be visiting a dentist or a doctor to receive general wellness and health checkups and the policy will be priced
- Prevailing market rates: The insurance market is regulated by the Insurance Regulatory and Development Authority of India which makes major decisions about the policies. The premium rate will vary according to the rules and regulations that the insurance companies are required to follow. It is important for every insurance company to adhere to the rules laid by IRDAI.
- Insurance company: Different insurance companies treat the factors differently. No two companies have the same criteria. Hence, the premium rates will vary accordingly. Every company makes decisions based on some factors, and the premium will also be determined subsequently. It is advisable to compare the plans and the premium payable on the same before purchasing a life cover.
It is important to note that a minimum rate of premium of life insurance plans also means minimal benefits. Individuals who are looking for an extensive cover will be required to pay a higher premium according to the amount assured. It is essential to buy life insurance plans after thorough understanding of all the related terms. If you choose to opt for a minimum premium, your insurance cover will give you minimal benefits. A higher insurance cover means higher benefits and proportionately higher premium amount. Hence, be prudent while choosing the life insurance plan.