The primary goal of any life insurance is to secure your family’s finances if you pass away. It is a way to ensure that your family can carry out their day to day expenses, pay bills, pay rent or EMIs and pay child’s school fees even in your absence. But a life insurance policy can have secondary benefits as well, like tax savings and as an investment.

Below is the list of people who need to buy life insurance:

• New families
• Existing families
• People with home loans
• Parents
• Senior Citizens & retired persons
• Business Owners
• Working Persons for tax saving

Life insurance premium refers to the specific amount of payment that the policyholder needs to pay to the insurance company monthly/ quarterly/ half-yearly/ annually (as defined in the policy) in order to keep the coverage in place. Periodic premium payment till the end of the policy term keeps the life insurance in force. Your life risk primarily decides if your premium will be higher or lower. The amount of the life insurance premium depends on some factors like:

• Age: With increasing age, the life insurance premium rises. Because younger individuals generally have low mortality rates and are less likely to die unexpectedly. But with increasing age, the life risk rises with chances of attracting common diseases like blood pressure, diabetes, etc., resulting in a higher premium. So if you are buying life insurance early, then you can access a lower premium.
• Gender: Generally, life insurance premiums for men are higher as compared to women. Because historically, males have shorter life spans than females. For example, if a healthy, non-smoking 30-year-old female buys an ABSLI DigiShield Plan with a life cover of ₹1 Cr for 25 years of term period, the monthly premium will be ₹729³. But if a male same age and habits chooses the exact same plan then he will have to pay a monthly premium of ₹837³.
• Smoking Status: If you have a habit of smoking, then you are putting your life at risk. Mortality increases when people smoke. Hence the life insurance premium is higher for smokers than non-smokers.
• Sum assured: Sum assured is the amount that the insurance company has to pay out to the nominee if the life insured passes away during the policy period. You will get to choose this amount while purchasing the policy. Choosing a higher sum assured will result in higher premium rates.
• Premium payment frequencyYou will get to choose the frequency in which you can make the premium payment while purchasing the policy. Options are: Yearly/ Semi-yearly/ Quarterly/ Monthly. If you choose a yearly payment mode then you can enjoy the cheapest rate. On the other hand, for the monthly payment mode, premium will be on a higher side.
• Policy period:Mortality rate increases with increasing age. The risk of death is higher when the insurance company covers an older policyholder. So the premium rate increases with increasing policy period. Simply put, coverage for 30 years will be costlier than coverage for 20 years.

If you are planning to buy a life insurance policy, make sure to keep these things in mind:

• Check whether the sum assured or the product you are buying matches your requirements. For example, if you want a low premium product, then the term plan is an apt cover. But if you are looking for long term investment and returns, ULIPs can be the best option.
• Ask for the expert’s advice if you are new to financial planning.
• Check insurer’s claim settlement ratio. Aditya Birla Sun Life Insurance has a claim settlement ratio of 98.08%¹.
• Do not skip any information in the proposal form. Fill it carefully and try not to hide any information because it impacts the coverage.
• Always keep a copy of the completed document, like a proposal form, with you for your future reference.
• Understand the procedure of claim to simplify the processing at the time of need.

Choosing the right type and coverage amount (sum assured) of the life insurance is possible by determining how much money your dependents will need in your absence. As a general rule of thumb, financial experts suggest everyone to choose a sum assured 8-10 times of the current annual income.

For example, if your yearly income is Rs. 12 lakhs, then you must buy life insurance with a sum assured of at least Rs. 1 crore. Considering everyone’s situation is unique, the following are the factors that can help determine the minimum amount of life insurance required.

• Current debt: The outstanding loans and liabilities in your name become a burden to the family in your absence. So you should pick a sum assured that is enough to pay off the debt along with interest in full.
• Expenses of dependents: If you are the sole income provider of your family, then you need to choose an assured sum large enough to cover the minimum monthly expenses of the family. Please consider the inflation and ageing of the dependents in the family while deciding on this.
• Premium paying capacity: Life insurance policy pays out only when the policyholder pays all the premium in time. Otherwise, the policy will lapse, and the investment will go in vain. Against the chosen sum assured, you have to pay the premiums in the chosen interval; please make sure that falls under your premium paying capacity.
• Financial goals: At different stages of life, everyone has different financial requirements. You need to consider your financial goals like children’s education/ marriage, buying a house, medical expenses, retirement, etc., while deciding on the sum assured of the life insurance policy.

You can always use our human life value calculator where you can put your details and check how much life cover you need.

Yes, you have different options to pay the premium. You can pay the premium monthly, quarterly, semi-yearly or yearly. There is also an option to pay the bills in one lump sum. Different insurance products have different premiums depending on the development and coverage.