One of the safest ways to protect your financial future is by investing in term insurance. If you start early in life, you will be able to enjoy the benefit of paying a small premium and yield good returns after a few years. However, several factors influence your premium that may be hard for a novice to comprehend.
But they are essential to understand because life insurance companies take them into account when they calculate your premiums. While a lot of these factors are beyond your control, there are some life choices you can make that can positively affect your premiums, thereby your decision to invest in the best term insurance plan.
Let us talk about what is term plan and factors that can help you buy the best term insurance plan coverage.
Table of Contents
Age
Needless to say, age is one of the leading and most decisive factors when it comes to availing the lowest possible term insurance premiums. Simply put, if you are young, your term insurance premiums will be much lower than someone older. Besides, the possibility of a young individual contracting a life-threatening disease or a critical illness is much lower than an older person.
From an insurance provider’s standpoint, they want to believe that you will make several premium payments before they have to pay the death benefit to your family. A young individual is an attractive low-risk investor because they are less likely to pass in their youth due to a life-threatening disease.
As a result, a young and healthy individual will be able to enjoy lower term insurance premiums and higher rewards from their online term insurance plans.
Your income and as well as your profession also plays an essential role in the premium you end up paying. For instance, an individual working in high-risk jobs such as pilots, mining industry, oil and gas. will have to pay high premiums for their online term insurance plans.
At the same time, your income also plays an essential role in determining the term insurance premium. Insurance companies prefer salaried employees, as opposed to freelancers, business owners, or entrepreneurs who have an unsteady source of income, therefore higher possibility of defaulting on premiums.
Other factors related to income and profession that can influence your term plan buying journey include years of service and designation. Someone with a steady work history with fewer breaks in employment will be able to enjoy lower premiums for the online term insurance plans.
No. of Dependents
The higher the number of dependents, the more you will have to pay in term insurance premium. You have to take the dependents, their lifestyle, and requirements into account when you compare online term insurance plans. The sum assured from your policy should be able to cover the household expenses, pay for liabilities such as home loans, education loans, and personal loans, and allow your dependents to maintain their lifestyle.Â
The rule of thumb is to take at least 15-20 times your annual income plus the liabilities as the sum assured when reviewing the best online term insurance plan. It would help if you also accounted for savings such as fixed deposits and assets while calculating the premium online. Assessing these factors will help you compare and determine the best online term plan for your needs.
Existing Liabilities
While assessing and comparing the best online term insurance plan, it is necessary to calculate the existing liabilities to determine how much premium you can afford to pay. Since the premium is linked to the sum assured, you will have to assess your payment ability before choosing online term insurance plans.
Take your loans, debts, and other such liabilities into consideration and opt for a more substantial sum assured so that your family can pay off the debts without any trouble, in case of an untimely demise. However, if you live a debt-free life, then you can choose a lower sum assured and enjoy lower premiums.
Health
As a policyholder, you are also required to provide your health records. Your health plays a very crucial role in determining the online term insurance plans that you are eligible for. With the help of these records, the insurer will be able to assess if you have any potential health issues or a chronic disease.
Based on this evaluation, your term insurance premium will be decided. People with a history of smoking are considered high-risk and end up paying twice the premium than non-smokers. Other health factors affecting your term insurance premium include obesity, family history of medical illnesses such as cancer, heart disease, and diabetes.
You can now buy your family’s financial security and your peace of mind by the click of a button. Compare the best term insurance plan options and choose the one that suits you best. You can also renew premiums online.
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