Understanding Premiums for 1 Cr Term Insurance Policies
The premium attached to term insurance makes everyone think twice, especially with high-value policies such as 1 Cr term insurance. However, people often fail to understand how premium amounts for such policies are determined. This article explains what factors determine the premium amount and helps you select a suitable package.
Age and Gender
The major aspects that make the premium unique for everyone are their age and gender. Although the gender difference only slightly varies, the age of the policyholder forms the foundation of the premium.
Known to all, the more you age, the more prone to health problems you get. This is why every insurance provider follows the same rule: The higher the age, the higher the term insurance premium. People are usually categorised based on four major age groups which are:
- Youngsters (18-25)
- Early Adulthood (25-35)
- Middle Age (36-50)
- Late Adulthood (Above 50)
As per these criteria, individuals from the upper two categories have comparatively lower premium rates than the latter ones. Moreover, different policies offer coverage for different life spans. The most common span lasts 75-80 years.
Term Period
A term insurance premium can also depend on the term period you choose. Going for a long-term policy can result in higher premiums than a shorter-term policy. This is because the insurer takes on a longer period of risk. The premium rate for a 1 Cr term insurance plan remains fixed until it reaches maturity. Moreover, it can be customised to be paid monthly, quarterly, half-yearly, or annually.
While deciding the term, you must be clear about your budget and income. However, the plus point is that you do not have to worry about sudden premium increments.
Current and Past Health Conditions
The present status of your health is a crucial factor to consider. Will you be asked the following questions before the premium is calculated?
- Are you currently going through any medical treatment?
- What illnesses did you face in your past?
- Have you had any medical surgery in the past?
- Do you have any pre-existing disease?
- Does your family have any history of certain health issues?
If you have a pre-existing medical condition at the time of purchasing the policy, you will be considered a risky individual to cover. This always leads to an increase in premium rates, making them higher than average.
Smoking and Drinking Habits
Smoking is injurious to your health and your pocketbook. Not only does it gradually reduce your body's health, but it also increases your insurance cost. People who smoke, drink, or use other tobacco products are more prone to serious liver and kidney-related issues. Given the involved risk, the premium amount is raised for such individuals.
Regarding this, you may be asked the below-mentioned questions:
- Do you drink, smoke, or use any other tobacco product?
- How often do you drink or smoke?
- When did you last use tobacco?
Conclusion
Applying for a 1 Cr term insurance plan is a wise decision. Although it sometimes tends to be extra luggage on your budget, it does provide valuable support to your family at unexpected times. Furthermore, it will give you a sense of relief about your family being financially safe even after any unfortunate incident. By taking into account the factors under your control, such as buying insurance while you're young and leading a healthy lifestyle, you can fairly reduce the premium rate.
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