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Buying life insurance is now just a matter of a few clicks. However, understanding the life insurance quotes from various insurers for similar looking plans could be tricky. There are various factors that affect the premium quoted by the insurer. If you want to learn more about having insurance, you can enroll in the NSE Academy Certified Financial Planning & Wealth Management course on Elearnmarkets.
Ranging from the plan types to personal habits, given below are some of the major factors determining your life insurance quotes from different insurers:
Type of Life Insurance Policy
This is the first factor that determines the premium of your life insurance policy. There are multiple types of life insurance policies, for example, term plan, endowment plans or ULIPs. While term plan is a pure life cover and does not carry an investment value, endowment and ULIPs do.
Thus, the premium for endowment and ULIPs could be higher than a term for the same amount of benefit.
Age of the Insured
Since it is life insurance, age is the most obvious factor in determining the base premium. Higher age attracts a higher life insurance premium. Age factor affects the premium of every life insurance plan, whether it is term or investment plans from life insurers.
Because of the premium growth with age, it is always recommended to get your term insurance cover at a young age.
Lifestyle – Smoking & Drinking Habits
The lifestyle of a person also affects the life insurance premium that they are charged. Involvement in extreme adventure activities and food habits that can harm your heart, lungs or liver are part of this factor.
A person who is a chain smoker has a higher chance of having lungs problems like lung cancer and throat cancer. Even consumption of alcohol is injurious to the health of an individual. Such activities reduce the life-span of an individual.
Such habits may increase your life insurance quote, but you should provide the correct information as much as possible. Wrong information may get your application rejected, or worse turn your claim void and the settlement will be refused.
Medical History
If a person has had any severe illness in the past, the premium will be high. In such case the immunity system becomes low. They may even ask for a health check-up report to analyse the premium. If a person has high blood pressure, heart disease or diabetes then the premium will be high, or they might even get rejected.
Family Medical History
Due to heredity, there are chances that a person is suffering from a disease. Before taking a term plan a person is asked about the genetic factors and based on the answer the premium is decided. There is a higher risk for a person having a genetic illness history.
Gender
Women are charged less premium compared to men when it comes to life insurance. Statistically, all factors remaining the same, women tend to live five years more than men. Also, women are involved in less risky habits and have better health habits compared to men. Hence insurance companies discriminate based on these reasons and charge a higher premium to men.
Occupation
The type of job that a person has affects the amount of premium. There are various jobs that are considered risky like fire-fighters, pilots, police officer etc. compared to a desk job, teachers, staffs etc. In some cases, the insurance companies may refuse to issue policy where the job is very risky. Some jobs where there is stress is also considered injurious and the premium charged is high.
Additional Covers (Riders)
Additional covers are useful if you are looking for financial protection. For example, adding accidental disability cover to your base term cover offers you financial support in case of disabilities as well.
But adding riders to an investment plan can be expensive and may not even offer adequate protection.
Pay-Out Options
Nowadays, many insurers offer regular income pay-out option with term insurance plans. Based on the features of this option, your premium may go up or down once you opt for regular income pay-out. There are usually three types of regular income pay-out:
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Lump Sum + Regular Income, where Lump Sum = Sum Assured
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Lump sum + Regular Income, where Total = Sum Assured
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Only Regular Income Pay-out
Obviously, the premium for the third option is the lowest of the three, and the first will be the highest.
Consider these factors while buying life insurance online. Some factors can be controlled like lifestyle, policy type while some factors are fixed like age, gender, medical history. It’s always better to compare the premium and coverage from various companies before finalising.
