With the rise of life diseases it is important that we have an insurance cover for everyone in our family. The prime reason is otherwise it could be a severe drain on our financial resources, particularly if the earning member passes away. We have to pay a price that is the premium for the insurance regularly. Here are a few factors that would decide the insurance premium.
Sum assured has direct relation with premium.
Sum assured is directly proportional to the premium. If the sum assured is high then the premium is also higher. Again, for a lesser sum assured the premium to be paid is also less. For example, a policy of Rs. 1 lakh will be cheaper than a policy of Rs. 5 lakh.
Health is one of the factor.
It is a known fact that insurers are ready to give insurance cover to healthy people as the risk is less. They consider past and present health history and they charge premium accordingly. The premium amount becomes higher for drinkers, smokers etc.
Women gets discount seldom.
According to statistics women have more life expectancy than men. So sometimes life insurance companies offer discounts to women as they are considered less risky.
Age is another crucial factor.
Age has lots of importance in deciding the premium. Insurance companies charge higher premium for elderly. Medical tests are also necessary for buying insurance. But for younger people seldom medical tests are not mandatory saving that expense.
Charges makes the premium higher.
The premium depends on the type of insurance plan you are buying. Insurance plans can be money back plan, ULIPS, term deposits etc., and the premium depends according to the plan. Policies that give protection as well as returns have higher premium. Moreover, other expenses include things like commission of the agents, distribution costs. Fund management fees etc., are included which makes the premium even costlier. You have to analyse the charges at the time of buying the premium. At the time of surrender you will get lesser returns if the charges are higher.