Quick Tips to Reduce the Premium for Term Plans

tips to reduce term plan premium

Has the thought ever crossed your mind on how your family would cope if you weren't around to take care of them? Life is full of uncertainties and it hits you hardest when least expected. Hence, we need to think about the possible alternatives available to us to deal with the circumstances that are beyond our control. A term insurance is one such instrument which enables you to live stress-free as it takes care of any financial distress emerging in case of your sudden and untimely demise.

A term insurance is a life insurance plan which provides coverage for your life while protecting your loved ones from the impact of financial loss that your family might have to bear in your absence. Moreover, it further ensures that your family does not need to compromise much in their manner of living. However, there is usually no maturity benefit if the policyholder survives till the end of the policy period. Although the premium rates on term insurance policies are very affordable, if you are still concerned about the costs of premium, here are some tips on how you can lower the premium while enjoying the best life insurance coverage.

  1. Be an Early Bird

    Starting at an early age is the key to lowering your insurance premium as premium rates are directly linked to your age. Simply put, the younger you are, lower your premiums would be as there’s lesser risk associated with a young policy holder because of risk indicating factors such as your health and age. The older you get, higher are premiums being charged. So to cut off the cost of the extra rate of premium, it is highly advisable to when you’re in your early 20’s. You can make use of the various calculators to calculate the insurance premium as per your needs, age and life cover expectation.

  2. Maintain a Healthy Lifestyle

    Insurance companies are aware of life-threatening habits and tend to charge a higher amount of premium on the basis of these habits. For instance, if you’re a smoker, you will be liable to pay a higher premium for a than if you were a non-smoker. This is because an unhealthy lifestyle makes you more prone to diseases and increases the risk factor leading to lead to extra premium charges.

  3. Reduced Payment frequency

    Almost all insurance companies offer flexibility in payment by providing options such as annual, quarterly and monthly premium payment options. Although it might sound feasible for you to opt for smaller instalments instead of paying at one-go, the truth of the matter is that premiums tend to work out to be relatively cheaper if you opt for an annual mode of payment. This is simply because the insurance company can save on administration costs while also getting the money in advance for the entire year for them to invest strategically. If you can afford to pay annually, it seems the most viable option as it will almost always be the most efficient way to spend your money.

  4. Opt For The Right Tenure

    Choosing the appropriate cover period is imperative when choosing your term policy. Many individuals make the cardinal sin of opting for a cover up to the age of 75-80 years assuming the risk of death is higher when they get old. However, this will, in turn, increase the costs of your premiums as a higher cover means that the insurance company runs a higher risk in case of your death during the policy thus making you pay higher premiums. Therefore, it makes sense to plan the term accordingly by restricting your tenure to the maximum of up to your retirement age.

AN Oct 34/17

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