How To Reduce Life Insurance Premium | ABSLI

Life insurance is one of the many things you'll come across in your quest for the right financial plan. Irrespective of what your long-term goals and short-term dreams may be, life insurance is a necessity. It keeps your family's future secure in the face of unexpected uncertainties.

For example, let's take the case of Mohan, a 30-year old chartered accountant. He is the sole earning member in his family, and his income is their only source of income. He's married, and he has two children and a dependent parent at home. Mohan has many financial goals, but the last thing he expects is something unforeseen – like his own demise.

Unfortunately, if such a thing comes to pass, his family could be left without any financial security. But Mohan, being a smart guy, has a Rs 1 crore term plan in place. So, if anything were to happen to him, his family will have a 1-crore safety net to fall back on.

If you think this is a smart financial move, perhaps you'll want to purchase an adequate life cover too. And while you're at it, if you're looking for ways to make your insurance plan more affordable without compromising on the extent of coverage, there are many things that you can do.

Ways To Reduce Life Insurance Premium

Here are some ways you can reduce your life insurance premiums –

• Live A Healthy Life
  Insurance companies often give lower premiums to people who are healthy. If you don't smoke, maintain a normal weight, and do not have any serious health issues, you might qualify for such discounted rates. By moderating your alcohol consumption and quitting smoking, you can avoid paying higher premiums. This means that prioritising your health not only benefits you but also helps you save more on your insurance premiums in the long run.

  
  

• Start Early
  Your age affects how much you pay for life insurance. The younger you are when you get a policy, the lower your premiums will be. This is because younger and healthy people are seen as less risky to insure. So, it is smart to get life insurance as soon as you need it.

  
  

• Assess Your Coverage Needs
  Think about how much coverage you really need. Sometimes, people buy more coverage than they actually require, which leads to higher premiums. Evaluate your financial responsibilities and decide on a coverage amount that suits your needs. Avoid paying for more coverage than necessary.

  
  

• Choose Only What You Need
  Life insurance policies come with additional features or benefits, like increasing cover, critical illness riders, and other add-ons, etc. While these can enhance your coverage, they also come with extra costs that can raise your premiums. Only select the features that are essential for you and skip the rest. Be cautious of additional features like different payment modes, as they might increase your costs.

  
  

• Compare Policies Not all insurance plans are priced the same. Different policies come with different costs. Take the time to compare various policies available and choose the one that best meets your needs. By comparing, you can find quotes for different plans and select the one with the most competitive premiums. This way, you can find a policy that fits your budget.

  
  

• Choose The Right Payment Frequency
  When you buy a life insurance policy, you will have the choice of how often you pay your premiums: annually, half-yearly, or monthly. Opting for an annual payment can be cheaper than other options, and this can help you save money on your premiums in the long run.

  
  

• Purchase Online
  Buying your policy online can be beneficial. Online platforms make the application process easier, cut the administrative expenses for insurance companies, which may result in lower premiums for you. Also, many insurers offer discounts specifically for online purchases. So, take advantage of the convenience and potential savings by exploring your options online.

Factors That Affect Life Insurance Premium

There are certain key factors that influence how much you pay for life insurance –

• Your Age
  Your age plays a crucial role in determining your life insurance premium. Older individuals tend to have higher premiums because they may face more health risks. This is why it is a good idea to consider getting life insurance at a younger age, especially if you have people who depend on you financially or if you have debts to take care of.

  
  

• Cover Amount
  The sum assured, or the cover amount you choose directly impacts your premiums. If you opt for a higher coverage amount, you will have to pay higher premiums. However, it is important not to skimp on coverage. Make sure you choose a cover amount that can adequately support your family financially if something unexpected were to happen to you.

• Lifestyle Choices
  Insurance companies consider your lifestyle when assessing the risk of insuring you. If you smoke, drink alcohol, or have a history of drug use, you are at a higher risk of developing health issues and having a shorter life expectancy. As a result, you may end up paying higher premiums. Making healthier lifestyle choices can help lower your insurance costs.

  
  

• Policy Tenure
  The duration your life insurance policy remains active also has an effect on your premiums. Choosing a longer tenure typically means higher premiums, but it also translates to coverage for a longer period. Hence, it is important to select a tenure that suits your needs and financial situation.

  
  

• Medical History
  Your own health history, as well as your family's medical background, can affect your premiums. If you have a genetic condition or a family history of certain illnesses, the insurance company may see you as a higher risk. This could mean paying more for your policy or even being denied coverage altogether.

  
  

• Your Gender
  Life insurance companies charge different premiums for men and women. Statistics show that women tend to live longer than men on average. As a result, women may pay lower premiums for the same coverage compared to men, reflecting the difference in life expectancy.

• Your Occupation
  Your job plays a big part in determining your life insurance premiums. Insurance companies check the risks that are associated with your occupation. If your job involves high-risk activities, like working in hazardous environments, you may have to pay higher premiums to compensate for that risk.

  
  

• Additional Riders
  Riders are extra benefits/features you can add to your life insurance policy for enhanced coverage in specific situations. However, adding riders means paying extra premiums. The more riders you add, the more you will pay as premiums. This is because you are expanding your coverage. But you should not let this deter you from considering riders if they are necessary for your needs.

  
  

• Your Policy Type
  There are various types of life insurance, like term insurance, whole life insurance, ULIPs, etc. Each type has its own unique features and benefits. Your premiums tend to vary depending on the type of policy you choose. For example, term insurance tends to be more affordable than other life insurance types.

  
  

Other Features
Additional features or benefits for your policy, such as increasing, decreasing cover options, limited pay, single pay, etc., affect your premium amount.

To conclude,

By adopting a healthy lifestyle, starting early, comparing policies, etc., you can save your hard-earned money. So, take charge of your finances and make informed decisions to secure affordable life insurance. With the mentioned strategies, you can protect your loved ones without draining your finances.