A family that cares for you through your ups and downs throughout your life is a gift that keeps giving. It is only fair that they are taken care of when an unwelcome situation arises.
In such situations, you can give your family the gift of a term insurance plan. It will provide your family with much-needed financial support in case of unfortunate death.
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Buying term insurance can be a tiresome process, and finding the perfect plan for you can involve a lot of thinking and analysing. It is crucial to know the factors that impact the cost of term insurance premium.
Factors that impact the cost of term insurance premium
Following are the factors that determine the cost of your term insurance plan:
- Age
Age by default is the most obvious factor that impacts the cost of your term insurance premium. In a simple explanation, the higher your age, the more premium you must pay for your plan and vice versa.
The companies usually charge less premium to younger buyers because such individuals tend to be healthy and pay the premiums for a longer tenure. That said, term insurance also needs to be taken at a time when you have dependants on you.
- Gender
This must make you wonder how gender affects the premium cost. The fact remains that women tend to have a higher life expectancy than men in general, which affects their premium costs. Since women tend to live longer, they can pay more premiums, which helps them get insurance at lower premium costs.
- Smoking
Smokers are at a higher risk of developing critical ailments such as cardiological issues and lung diseases than people who do not smoke. Your smoking habits might make you pay a premium almost double the cost that a non-smoker would pay for the same sum assured. Hence, it is one of the most important factors that will impact the cost of your term insurance plan.
- Occupation
It might be a factor that does not contribute that much to the cost of your plan, but it is still important as many people work in hazardous and life-threatening occupations like construction work or drivers. These people are usually at a high risk of putting their lives in danger.
When people of such professions opt for term insurance, they might have to pay a higher premium.
- Premium payment term
Term insurance plans provide you the ability to choose between different payment methods as per your convenience. There are multiple options, such as regular pay or lump sum pay.
Regular pay is usually the most common option used. Here you can pay your premium amounts regularly throughout the policy term. You can also choose to pay a premium till a certain age, which means a shorter premium duration. So, the shorter the duration you choose, the higher the premium cost you end up paying.
- Medical condition
Most term insurance companies will require you to undergo a medical test. These tests provide a complete understanding of your health to your insurance company. If you have high cholesterol or coronary disease, then it means you are at a high risk of fatality, which increases the cost of the premium. A tip can be to maintain your health before you take a medical test.
In conclusion, before you buy a premium that will cover your family’s financial needs, these are the factors you need to be aware of that impacts the cost of the term insurance premium.
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