Here’s how to know the right Term Insurance Cost in India

Buying term insurance at a young age, preferably as soon as you start earning might sound unusual but has a list of benefits that cannot be ignored. Let’s take your through them:

The best and easiest way to calculate the premium for a term insurance policy is to use a term insurance plan calculator. But if you’re wondering how term insurance cost is calculated, here are some factors on which term insurance rates are determined:

• Age/Date of Birth
• Gender
• Annual Income
• Nicotine or Tobacco Consumption
• Medical History
• Current Health Conditions
• Policy Cover/Sum Assured
• Tenure
• Type of Plan

An insurance provider takes your personal information along with a few policy details into account to calculate your term insurance cost. However, you can also feed some of these details into an online premium calculator to get an estimate.

When buying term insurance, the most common query people have is ‘How much term insurance cover do I need?’ While there is no right or wrong answer to this question, the general thumb rule dictates that your term insurance cover should be at least ten to fifteen times your yearly income. Some policy buyers even go higher and purchase term insurance cover that is somewhere around twenty times their annual earnings.

For instance, if you earn rupees eight lakhs per year, your term life insurance cover should be a minimum of eighty lakhs. However, you can opt for an even higher life cover if you wish, but make sure the term insurance cost is affordable and manageable for you.

If you want a more accurate and clear answer, you can try using a Human Life Value Calculator. You will have to enter information such as age, annual income, savings, existing loans & liabilities, etc. to find the right coverage amount and term insurance cost.

The cost of purchasing a life insurance policy i.e. the overall premium payable has historically been a barrier among Indians seeking to purchase life insurance policies. However, the recent Max Life IPQ 6.0 Survey has recorded a shift in this behavior. IPQ 6.0 survey results clearly show that life cover has gained nearly the same level of importance among Indians as life insurance premiums. For more insights into the current protection trends in India, please read the complete Max Life IPQ 6.0 survey report.

A rider is an optional cover that you can add to your existing term insurance plan. By opting for riders, you can avail some extra benefits with your policy Each rider you add to your plan will have an additional premium and an independent sum assured which might increase your term insurance cost.

Here are some of the most popular riders available with term life insurance policies:

The claim settlement ratio (CSR) is an indicator of the number of claims an insurance company has settled against the number of claims received in a fiscal year. You might be thinking, ‘Do I really need to know this?’ - which is something most people think. However, by checking the claim settlement ratio, you can assess whether the insurer is committed to their policyholders.

For instance, if an insurance company receives around one thousand claims in a year and settles nine hundred out of them, then its claim settlement ratio amounts to 90%. The ratio should be a minimum of 80%, but the higher it goes, the better.

So, before you purchase a term life insurance, make sure to go through the insurer’s claim settlement ratio so you know your loved ones’ future is in good and safe hands. Max Life Insurance has a claims paid ratio of 99.65%^ for FY 2023-24.