Smart ways to lower life insurance premiums

Anup Seth, Chief Distribution Officer, Edelweiss Tokio Life Insurance. Credit: DH Photo

A life Insurance plan helps you sail through risks brought on by uncertainties of life and is certainly one of the best ways to take care of your family's future in case of any eventuality. The cost of your life insurance premium should be viewed as an investment in your future. Making a wise decision involves a combination of factors to not only look at a product that provides adequate coverage but also is affordable and cost-effective.

While age is one factor, there are various other factors that insurance companies take into consideration that may impact your insurance premiums. As age is not something that one has control over, the only way to save on premiums is to start early in life. A healthy lifestyle can certainly work in your favor in ensuring a lower life insurance premium. To help you understand better, here are a few thumb rules that you need to keep in your mind to save on premiums while buying a life insurance policy.

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Do your research: Life insurance is not as simple as a consumer product bought and sold over the counter. One cannot switch insurance every year. Each insurance business has its own terms and conditions, as well as techniques for determining the risks and responsibilities associated with providing a certain plan to a specific person. While this process is time-consuming, this method enables one to select the optimal plan for their current and future needs. One can also buy a suitable policy online to lower your life insurance price. Since there is no involvement of a third party, buying a policy online is the most affordable way to obtain insurance.

Choose the ideal policy term: The tenure of your policy plays a major role in determining the amount of premium. The longer the term of your policy, the lower will be your premium. For instance, if you are a salaried person, then it is advisable to take the coverage till the age of 50-60 years so that you can meet all liabilities easily.

Informed decision on premium payment frequency: You have the choice of paying premiums in a number of ways when selecting a life insurance policy. This includes paying premiums annually, bi-annually, quarterly, or monthly. Certain insurance companies allow their customers to pay the payment all at once, which is generally less costly than other modes of payment. Instead of opting for a monthly premium payment, it is advised to choose an annual payment as many insurers offer discounts, thereby resulting in saving significant costs.

Compare policies before buying a plan: Depending on each person's hobbies, profession, health issues and other factors, this could lead to varied premiums for the same coverage. As a result, it is strongly advised that the insurance policies should be compared before making a purchase. Don’t get influenced by ads or swayed by recommendations from your family or friends. The right policy must be chosen based on yours and your family’s needs.

Start early: Rising inflationary pressures and global economic conditions continue to increase the premium amounts. Given this scenario it is recommended to buy the policy at the earliest. Apart from this, an individual’s age has a direct bearing on the premium amount, the younger one is, the lower the life insurance premium will be. It is highly recommended that you buy a policy in your early 20s. The premium amount will depend on several variables, including the policyholder’s health conditions and how soon or probable one is likely to file a claim.

Maintain transparency: You must be completely open and honest about your current state of health. You must specify and document any pre-existing medical conditions you may have. Because it raises the risk for the company, many insurance companies charge higher premiums for applicants who have pre-existing conditions. When you purchase the insurance policy you must maintain transparency with the insurer.

Life insurance is one of the most important pillars of personal finance planning. It is advisable to take stock of your personal financial situation along with your needs and responsibilities while selecting the life insurance policy. An individual must act on some of the easy steps that have the potential to lower their life insurance without any compromise on the insurance cover. By controlling the factors that are within your ability to influence, you can try to become a relatively risk-free customer for a life insurance company, so that they are likely to charge you lower premiums.

(The writer is the chief distribution officer at Edelweiss Tokio Life Insurance)