Term insurance plans are crafted to offer coverage for a specific duration, typically between 5 to 30 years. They provide a death benefit to the policyholder's beneficiaries if, god forbid, the policyholder passes away within the policy's term. These plans provide a substantial sum assured at a low premium compared to other life insurance plans. The premium cost is determined by several factors such as age, health status, and the sum assured. Mainly, term insurance plans are designed to grant financial protection to a policyholder's family if they face an unexpected death.
Some of the key factors that affect the premium of a term insurance plan as per IRDAI guidelines are:
Age is one of the biggest influencers when purchasing a policy. Younger policyholders tend to snag lower premiums. The sum assured requested by the policyholder is another determining factor in premium rates. Generally, the more coverage requested, the higher the premium. Duration is also considered, as a longer policy term may result in a pricier premium. Additionally, a policyholder's medical history is reviewed to determine risk, which can lead to a higher premium for those with pre-existing health issues. Insurance companies also view smoking as a high-risk habit, resulting in higher premiums for smokers.
Let's talk about how your gender and occupation can affect your insurance premium. Women typically have lower premiums because they tend to live longer than men. On the other hand, your occupation can play a role in determining your premium. If you work in a high-risk job, you may end up paying more for your insurance.
Just so you know, the guidelines from IRDAI can be different for every insurance provider and the premium can also be affected by other factors that are specific to the policy and company.
