Key Factors Influencing your Life Insurance Premium


In India, the life insurance constituted a majority or 79% of all policies sold, whereas the other non-life insurance policies stood at 21%, as per a Business Today news story, citing data from the 2015-16 annual book released by the Insurance Regulatory and Development Authority of India (IRDAI). Life insurance is a big purchase decision for any individual undertaking financial planning, one that will stick with them for many years, from the time such a contract is entered into till the time the beneficiaries can claim the sum assured. It is, therefore, important to weigh every aspect of the policy in detail so as to ensure that the financial interest of your family is secured once you are gone.

One such important aspect of arriving at the best life insurance product for your needs is knowing the premium amount. So, if you are planning to buy life cover, you must consider using an online calculator available on most insurance portals to know the exact life insurance premium amount that you will have to pay over the years. In addition, you must take into account the following important factors.

Top Factors Influencing Life Insurance Premiums

  • Age of the policy holder – Insurance as a good practice should start as early as possible. Try not to be in constant denial of the inevitable. There will come a time when you will not be there to support the needs of your family and therefore their financial stability has to take precedence over anything else. Starting early will not only help you save over a longer period of time but lower the premium amounts as well, because of the fact that you are in the prime of your health.
  • Current state of health – Insurance providers always factor in the current state of your health before issuing a policy in your name. While someone with a troubled heath record might not be denied a policy, their premium amounts will be on the higher side in comparison to someone who is healthy.
  • Lifestyle habits – You are required to declare some of your lifestyle habits to the insurance provider before taking up a policy in India. Factors such as smoking and drinking will end up impacting the life insurance premium amount that you might have arrived at using a calculator, as can also be verified from an article published in The Economic Times.
  • Tenure of the policy – It is a given that the longer the policy tenure you have, the higher will be your premium amount. This is largely because of the fact that your insurance provider is at a greater risk of covering for your death.
  • Obesity – Obesity is one of the leading causes of health-related complications, such as heart diseases, diabetes, high blood pressure and stroke. If you are obese, you might have to pay a higher premium amount.

The extent of the influence of these factors on the premium calculation would vary from policy to policy and also depend on the insurance provider you are dealing with. Even if these factors are taken into account, the overall benefits of life policies are far more appealing for you to consider it as a long-term and must-have financial planning instrument.

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