Looking for the right price in term insurance? Here’s how to score the right deal
Did you know you can secure your family’s future without spending a fortune? Getting a term insurance plan at a cheaper price is easier than you think! With a few smart moves—like buying early and online, comparing quotes, choosing the right coverage, staying healthy and more—you can protect your loved ones while saving money. Let’s dive into how you can make it happen!
Tips to help you Buy Term Insurance at a more Affordable rate
Here’s how to get the best price for term insurance:
Buy early
The earlier you purchase term insurance, the lower your premiums will be. For instance, a ₹1 crore term insurance plan for a 25-year-old covering until the age of 60 can have significantly lower monthly premiums compared to the same plan for a 30-year-old with coverage until 60 with other factors remaining the same.
Buy online
Buying term insurance online comes with discounts and special offers. Few term insurance plans also offer special discounts for women. Additionally, you can purchase term insurance from the comfort of your home.
Online premium calculator
An online term insurance premium calculator allows you to compare the costs of different plans. You can enter different variables and find the most cost-effective option that suits your needs. You can also compare quotes from multiple insurance companies using their calculators. This will help you find a policy with the most affordable premium and the best benefits.
Limited-pay option
Unlike the regular premium payment option, the limited pay option allows you to pay premiums only for a few years of your policy term. While each premium amount can be higher (since you are paying for fewer years) compared to the regular pay option, the total premiums paid over the policy term can be lower. This enables you to complete your payments earlier (by the time you retire) and potentially save on the overall cost.
Annual Payments
Some insurance companies provide additional discounts for annual premium payment frequency. So, paying your premiums annually instead of every month makes budgeting easier and can also lead to lower overall costs.
Coverage amount
Higher coverage amounts come with higher premiums. Consider choosing the coverage level that provides the protection you need without straining your budget.
Healthy Lifestyle
Living a healthy lifestyle can help you secure lower premiums, as insurers tend to offer better rates to those with fewer health risks.
Things to know before buying a Term Insurance Plan
Claim Settlement Ratio
The claim settlement ratio indicates how many claims an insurance company successfully settles compared to the total number it receives in a year. A high ratio indicates that the company is reliable and increases the likelihood that your claim will be honoured if needed.
Solvency Ratio
The solvency ratio measures an insurance company's ability to meet its long-term financial obligations. The Insurance Regulatory and Development Authority of India (IRDAI) mandates a minimum solvency ratio of 1.5. You must always check the company’s solvency ratio to ensure its financial stability.
Add Ons
Many term insurance policies offer you add-ons for extra coverage. These add-ons typically come at an additional cost but enhance the protection you receive.
Insurance Cover
You must ensure that the sum assured is adequate to cover your family’s needs in case of your untimely demise. Select a coverage amount that will provide sufficient financial security for your loved ones.
What are the Key Factors that affect Term Insurance Premiums in India?
Age
Your age directly impacts your premium. The younger you are, the lower your premium will be, as younger individuals are considered lower risk.
Gender
Since women generally have a longer life expectancy than men, they may qualify for lower premiums.
Health conditions
You will likely pay a lower premium if you are in good health. However, if you have pre-existing health conditions, your premium may be higher.
Policy term
The length of the policy term also affects the premium. Longer terms tend to lead to higher premiums, as they offer coverage for a longer time.
Occupation
Your occupation can influence your premium. Those in high-risk jobs may face higher premiums due to the added risk.
Add-on Riders
Adding riders will increase your premium. While these riders enhance your policy, they come at an additional cost.
What are the Types of Affordable Term Insurance Plans available in India?
Pure Term Insurance Plan
A pure term insurance plan provides basic life coverage with no maturity benefits. Since they only offer protection, these plans are the most affordable option.
Term Insurance with Return of Premium
A term insurance with return of premium refunds all premiums paid at the end of the policy term. It is an affordable way to save for the long term while securing your family’s future.
Level Term Insurance Plans
Level term insurance plans keep your premium the same throughout the policy duration. This provides affordable long-term coverage with fixed costs.
Decreasing Term Insurance Plans
With decreasing term insurance, the premiums reduce over time. This option helps keep your costs manageable while still providing essential coverage.
Final word
Term insurance is a long-term financial contract. Thus, choosing the right plan is essential to prevent policy lapses. Consider ways to optimise premiums and safeguard your family's financial future without straining your resources.
COMP/DOC/Feb/2025/122/8414
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