Variation of Premium in Term Insurance in India

Term insurance is a very straightforward form of life insurance. However, there are some variations within term insurance. This is why it is very important for you to understand the basics of term insurance and know what factors affect the premiums of your chosen term life insurance policy. In this article, we discuss the various components of the term plans that set them apart from one another. Take a look.

Reason why the premiums vary for Term Insurance in India

Let us now look at some of the reasons that set one term plan apart from the other. The most common reasons for this are:

  • Type of plan: There are variations within term insurance. You can buy a level term plan, which is the most common and widely sold type of term insurance. Here, the value of the sum assured remains fixed throughout the duration of the policy. Next, we have the increasing term plans where the value of the sum assured increases as the policy progresses. Then, we have the decreasing term plans where the sum assured decreases with every passing year. And finally, we have the TROP plans that offer to give your premium back if you outlive the policy period. Since the core objectives of all these types of term plans are different, you have a variation in their premiums as well.
  • Duration of plan: Term plan can be bought for one year or for thirty years. Understandably, you have to pay a higher premium for a plan that has a longer duration, as compared to a shorter plan. So the duration of a term plan also has a bearing on its premium.
  • Size of the cover: This is a very obvious reason why the premiums of the term plans vary. A term plan that has a cover of INR 1 crore will definitely have a higher premium than a plan that has a cover of INR 25 lakhs. So keep an eye on the size of the cover to ensure you have a premium that suits your pocket and your overall budget.
  • Riders: Last but not the least, riders push up the premium of a term plan. So if you have one or more term life insurance rider attached to your base plan, you will notice a variation in the premium amount. It is therefore crucial for you to analyse the riders and only buy the ones you actually require.

How do medical reports affect term insurance plan?

Apart from the reasons mentioned above, another significant reason for the pricing of the term insurance premium is your health. If you are healthy, you pay a lower premium and vice-versa. The logic behind this is easy to comprehend – a term plan covers the risk of your death. A person who is fit is less likely to die than a person who has unhealthy habits like smoking.. With the risk becoming low, a healthier person is therefore offered a term plan at a lower premium.

Your insurance provider may ask you to undergo a health check-up before issuing the term plan to you. Please agree for the tests, as then a correct evaluation will be done and your premium will be fixed thereafter. Even if you have to pay a higher premium due to certain health conditions, you won’t lose anything. This is because your insurer will be compelled to pay the death benefit after your demise. If you buy the term plan without a health check done, your insurer may raise a dispute and even reject the claim. This may lead to severe problems for your family and you won’t even be there to help them! So go for the health check and only then buy your term insurance plan at the premium your insurer proposes.

The final word

If you are looking to buy a term plan, make sure you understand the kind of term plan that you would need. This will help you get a comprehensive cover and would also help you to understand why you being charged that particular premium amount. If you have any doubts, you are always welcome to clarify them with your insurer. Never buy a term plan until you are completely sure of the plan’s feature as well as its pricing. There should not be any room for complaints later. So take some time, find the ideal term insurance plan and buy it after you are completely satisfied with its clauses.

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