What are the Factors That Affect Term Insurance Premium Increase?

Your age is one of the fundamental factors that lead to term insurance premium increase during the calculation. In other words, term insurance premium increases with the age of policyholder.

The reason why life insurance companies consider age as a premium-defining parameter is quite easy to understand. With a young individual, there is a lesser risk of them  falling ill due to lifestyle diseases that occur with age or passing away prematurely.

As a result, it makes the policyholder eligible to buy a term plan at low premiums. Hence, if you are young and healthy, now is the right time to buy term insurance without waiting for term insurance premium increase later in time.

Your health is a concern for both you and the insurer you choose to  buy term insurance. This is the reason why most term insurance policies require you to undergo a thorough medical examination.

These medical tests' findings will provide a complete status of your health to the insurer, including the existing illnesses you suffer from. They will also raise flags about the risk of certain diseases that you might contract later in life.

These medical records will then be used to determine the term insurance premium payable for a specific life cover. In case you suffer from certain illnesses, they may cause you to face term policy premium rise compared to a healthy individual.

When you use an online term insurance premium calculator, you will be asked to select your gender as a part of the premium estimate process. This might make you wonder if women get any relaxation from term insurance premium increase.

The truth is - the average life expectancy of women is higher than that of men in India. As said above, this translates to women continuing with their term insurance policies for a longer tenure. Hence, they can avail of lower premiums.

You should also know that the age criteria for term insurance premium cost increase will remain the same for women, i.e., premium will increase as per the age of the life insured.

Most of us have heard the catchy phrase that says – ‘Smoking Kills.’ However, many people do not give it a second thought while continuing with their smoking habits. Research says that smokers are most likely to develop certain diseases like lung cancer and heart diseases than non-smokers. Particularly, for men developing lung cancer, the risk is 25 times higher.

Term insurance premium increase for smokers reflects all these risk factors. If you had once followed the habit of smoking, it would be best to ask the insurer if the current lifestyle will prevent the increment in term insurance premium for you.

Although it is one of the least considered factors, it can have an impact on term insurance premium increase. The reason again is the same – some professions like a construction worker or pilot make individuals handle life-threatening tasks regularly, putting their lives at a higher risk of loss.

When they apply for  className="underline cursor-pointer text-link-secondary">life insurance, the premium charged could be higher. The policies related to term insurance premium increase as per occupation may vary from one insurer to another. So, the next time you witness term insurance premium cost increase while using calculator, your occupation could be the reason behind.

The way you live your life has an indirect impact on the term insurance premium increase. For instance, if you consume alcohol regularly, the chances are high that you would face liver problems in the time ahead. By knowing about these habits of a policy buyer, the insurer gets an idea of the related risk factor.

On the other hand, if you do not have any alcohol or smoking habits, you will live a healthy lifestyle and help prevent increment in term insurance premiums.;

It is the most obvious factor that results in term insurance premium increase as per the policyholder's choice. In general, the sum assured you choose is directly proportional to the premium, i.e., higher the sum assured, higher will be the premium of your term plan.

Use an online insurance calculator, and you will realize that the term policy premium rise occurs as you increase the life cover. Moreover, the choice of sum assured must be based on your individual needs, current liabilities, total income, and similar other factors.

With many term insurance plans, you get the flexibility to choose from different premium payment options as per your preference. The most common way to pay term insurance premium is regular pay, in which you choose to continue paying its premium throughout the policy period.

However, there are other alternatives like limited pay or pay till a specific age that you can select to finish the premium payment tenure early on while the policy continues to cover your life till the end of policy period. Remember that the shorter premium payment duration you choose, the higher will be term insurance premium increase.

Term insurance premium increase happens with age. You can save money by buying a term plan at a young age and benefit your dependents with financial security in the long run.

Think of it this way – a specific insurance premium is divided over the policy period you choose. Assuming the risk factor stays the same at a specific age, the insurer will ask for a certain premium. Reduce the tenure, and the term policy premium rises. Hence, selecting a longer tenure will help reduce the financial burden of premium payable every year.

You can further strengthen a term plan with additional benefits by including riders with the base plan. These riders come at an additional premium but are worth the price for the benefits they offer. The selection of riders will ultimately lead to term insurance premium increase. You can lower the premium by only selecting the riders that you need.

Every term insurance plan is unique, and so are your needs. That is why, the choice of a term plan must be based on a critical comparison between available policies based on different factors like premium, benefits, insurer’s reputation, to name a few.