6 Factors That Will Raise Your Premium Rates
Posted: Aug 16, 2018
Insurance policies have become an integral part of life. Just like basic requirements of life – food, clothing and house – life insurance cover is also that significant. In this modern age you cannot guarantee the security of your own and your loved ones without procuring a good life insurance product which not only protects your today but also ensures the security of tomorrow.
Life insurance policies support you financially through your survival and guarantees monetary security of your loved ones in case of any unpleasant turn of life. By paying minimal life insurance premium rates, you can receive lifelong security and protection.
Benefits of Buying Life Insurance
If you have doubts about purchasing a life insurance product, following are the reasons to show you why life insurance is beneficial for you:
- Helps In Achieving Financial Goals – Life insurance instruments are not only beneficial for providing protection to the insured but also helps in achieving future financial goals. The lump sum amount received at the time of maturity helps in building up corpus.
- Secures Future of Loved Ones – You can live in absolute peace when you know your family and near and dear ones are secured. By paying out reasonable life insurance premium rates you insure your present and also stay prepared for any unpleasant turn of life.
- Helps in Building Retirement Corpus – Even though life insurance policies seem to be unnecessary at present scenario of your life, it is actually helpful in long run. You may feel it unnecessary to pay out a good share of money towards life insurance premiums but it can be seen as a retirement investment plan if not as an insurance cover. People, now, have more than one life insurance policies in order to achieve their retirement security corpus and at the same time stayed protected under the security of insurance cover.
- Helps in Saving Tax – Apart from providing protection and building up corpus for future, life insurance products are extremely helpful for saving tax. You could avail the benefit of tax exemption on the life insurance premium rates and maturity and death benefits of the policy. No other investment instrument could provide you three benefits within one plan.
6 Factors That Elevate Life Insurance Premium
Choosing the right life insurance product at right time is very important to avail maximum benefit at minimum life insurance premium rates. It is advisable to know properly about the factors elevating the premium rates of life insurance policies before purchasing insurance plans. 6 major factors that could elevate your insurance cover premium rates are discussed below:
- Age of the Policy Seeker – One of the most vital factors that could affect life insurance premium rates is the age of the policy seeker. Age is directly related to the insurance premium rates. This suggests, young policy holders need to pay lesser premiums while older people have to pay greater premiums towards life cover insurance policy. The main reason behind higher life insurance premium rates for older people is the fact that older people are more likely to fall ill and would require greater coverage than younger people. Since, the insurer has to bear high risk for older policy seekers, higher rate of premium is charged for them. It is, thus, always recommended to buy life insurance cover when you are still young.
- Gender of the Policy Seeker – Although, you can do nothing about your gender and both men and women enjoy equal status in the eyes of law, insurance companies differentiates between the premium rates of men and women policy seekers. For insurance companies, women are more likely to live longer than men so they pose lesser risk on the insurer. Hence, life insurance premium rates are usually lower for female policy seekers than male policy seekers provided both have similar condition.
- Health Status of the Person – Most of the insurance companies ask you to undergo medical screening before providing your insurance cover. This health screening report plays an important part in deciding insurance policy premium rates. Insurance company will decide your life insurance premium on the basis of your current health condition. Therefore, a healthy person needs to pay lesser premium than a person with pre-existing health issues.
- Smoking & Drinking Habits – Insurance companies charge totally different life insurance premium rates for smokers and drinkers in compared to non-smoking and non-drinking people. People with regular smoking and drinking habits usually pay higher rates of premiums, which is as high as 40 to 60 percent more, towards their life insurance cover than non-smokers and non-drinker policy holders.
5. Purchasing Insurance – It is true that if the life insurance plan has been purchased from the online portal of the insurance company, it will cost your lesser life insurance premium rates. The reason behind lesser premium rates on online purchase of policy is that online selling of insurance costs less maintenance and administration, thus, lower premium rates can be offered by the company. Whereas, offline selling of insurance policies costs more due to more expenses towards administration, commission of intermediaries, paper works, etc. That is the reason why you need to pay slightly more premium on purchasing insurance offline.
6. Frequency of Premium Payment – Although insurers provide you several options regarding the frequency of premium payment but your choice of premium payment interval could really affect your life insurance premium rates. Out of four premium payment interval choices – annual, semi-annual, quarterly and monthly – only the annual premium payment could save you from paying out extra sum of money. When you choose to pay premiums more frequently, suppose on monthly basis, you end up paying more amount of premium at the end of the every financial year because monthly payment of premiums engages more administration cost, more expenses towards commission of the intermediaries and a lot of paper work. All these expenditures are included along with your actual premium rate which in turn hikes the overall premium rate of the insurance plan. So, it is wise to choose annual frequency of premium payment of life insurance. This will help in saving a lot of premium.
This is Yash sharma Sr. creative writer. I have written several articles on finance, insurance & loans & I like very much to write insurance articles.