Term insurance plan is one of the prime financial tools that families need in order to protect their dependents’ future. It pays a sum of money to the nominee in the event the policy holder dies before the terms of the policy have been fulfilled. However, choosing the right cost of term insurance in India may not be a very easy decision because so many factors have an influence on the premiums being offered. Find below a detailed guide on how possible it is to come up with the right term insurance cost.

1. Learn the Basics about the Term Insurance

However, for the purpose of further discussion into costs, one must first know what term insurance is. It is what we may refer to as a plain vanilla product as it provides a LOA policy for a given time, which is usually between 10 and 30 years. During this term if the policyholder dies, then the nominee will be paid the predefined sum assured amount. If the policyholder remains alive by the end of the term of this policy then the insurance is deemed to have run off without making any payments.

2. Factors Influencing Term Insurance Premiums

Many things determine the cost of term insurance in India. These can help you measure what to expect:

a. Age

Age is the largest parameter when it comes to determining your premium because of the risks associated with your age. Usually, it is young people who benefit from receiving lower premiums because they are considered unlikely to pose a risk to their insurance companies. This makes your chances of developing health complications higher as you grow older causing your premiums to rise.

b. Health Status

Insurance companies evaluate your health by way of medical underwriting, in the purchase of insurance. An energetic person will for instance, be eligible to pay less premium than a person with health complications. This should be done if so advised by a doctor, as this can often lead to better pricing.

c. Coverage Amount

The coverage amount commonly known or sum assured influences the amount of premium you are expected to pay. This indicates that the extent of coverage will cost the insured a higher premium. However, it is necessary to address the information mentioned in regard to the balance between coverage and the necessity of the payments to family, including the debts, education, and other; financial plans.

d. Policy Term

The next factor that has influence over the premium is the term of the policy. Ceteris paribus a policy with longer term will attract higher premiums than the one with relative short term. But it can help in knowing that your family is shielded for a long time, especially if you are in another region.

e. Lifestyle Choices

Your choice of habits such as smoking, drinking or participating in risky activities will definitely influence your premium. For instance, smokers are charged a penalty of 2 - 3 times more than those who do not smoke due to high premiums occasioned by their high health risk category.

f. Gender

Women normally have a longer life expectancy than men and therefore attracts lower insurance premium rates for female applicants. Insurance organizations, therefore, set premiums on the basis of this longevity factor.

3. Use Online Calculators

Almost every insurance company has their online premium estimate tools which can be used to determine the cost of Term Insurance. To get just a rough idea of what could be in the ballpark, you have to input your age, coverage amount, policy term, etc.

4. Evaluate Additional Riders

First of all, plenty of insurers provide riders or options, which can modify basic term insurance and make it more suitable for you. As these can lead to a high premium, these can offer a great extra protection you may require. Common riders include:

- Critical Illness Rider: Pays a fixed amount of money in instance of a catastrophic health Bill.

- Accidental Death Benefit Rider: Provides for an extra amount to be paid therefore in the event of an accidental death.

- Waiver of Premium Rider: Exempts the future premiums if the policyholder is diagnosed with any critical illness.

The factors that affect the premiums of the term insurance plans and how it is suitable to your pocket is the right term insurance cost in existence within the India market. So considering your age, health, coverage amount you want or can afford, and your lifestyle choices one can compare the insurance companies and make a wise decision. 

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