What you can do to pay lower premium for your term life insurance By controlling the factors that are within your ability to influence, you can try to become

a relatively risk free investment for a life insurance company so that it charges you lower

premium. Companies selling life insurance policies take into account various factors to

arrive at a price i.e. the premium charged for your life insurance policy. Some of these

factors are within your control while others are not.

Here are the main factors that you can control to some extent.

1. Drinking in excess or smoking tobacco:

If you smoke, you would pay much more premium for a life insurance policy than if you

drink too much the insurer will charge more to insure you. Both these bad habits

negatively impact your health and consequently increase your mortality risk. This is the

reason why insurance companies ask about these habits before fixing the premium

chargeable for your policy.

2. Your occupation:

In fact, in some cases insurers may not be willing to insure you at all. Obviously, a

dangerous profession ups your mortality risk substantially as compared to people who

have regular office jobs. If the type of job you do is a risky one such as deep sea diving,

firefighting, bomb demolition etc. then your insurance premium is likely to be much

higher than if you work is a regular office job.

3. Your health:

Medical examination would also be required if a very high cover is asked for irrespective

of the age of the policy applicant. Your state of health is a major factor determining your

mortality risk and therefore your life insurance premium. Obviously, someone suffering

from diabetes and high blood pressure is more at risk of passing away early than a

person without any such health issues. Most insurers ask about your health status when

issuing a policy because this is a premium-determinant. Further, majority of insurers

insist that the policy applicant get a medical examination/test done in cases where the

applicant's age is above a certain limit. Some may require this even for young

applicants.

4. Tenure and value of policy:

If you find that the premium being quoted for your policy is too high then you can reduce

one of these factors to lower the premium payable. The longer the policy tenure and the

larger the life cover being bought, the higher the premium will be. A 20-year policy

tenure means that the insurance company will be covering the risk of your dying for a

longer period. A higher cover or sum assured under the policy means that the company

runs a higher risk in case of your death during the policy.

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5. Obesity:

This is likely to result in the insurance company raising your insurance premium.

Obesity i.e. being overweight beyond a certain level often leads to a number of diseases

such as diabetes etc.

6. Premium payment mode:

The company not only saves on administrative costs with annual premium but also gets

the money in advance for the full year, Vis a Vis the monthly payment option, which

translates into a lower total outgo for you. Generally insurers offer you a choice of

frequency of premium payment - single one-time payment, annual, bi-annual, quarterly

and monthly. Your total premium outgo is likely to be less if you choose the single or

annual payment options as compared to say the monthly option.

7. Riders increase premium:

Riders are additional benefits on policies which can be bought for extra premium.

Obviously these increase the policy cost. Therefore, carefully evaluate the need for a

rider before deciding to buy it.

8. Purchasing online or offline:

This is because online sales help insurance companies cut down on agent

commissions, distribution and administrative costs. Purchasing online or offline depends

on how much of customized advice you need in choosing a suitable policy.

Premium charged for policies bought online tends to be less than what you would pay

for the same policy bought offline via an agent or other intermediary.

Factors, which affect the level of your insurance premium but are beyond your

control include:

1. Your age:

The older you are when you buy a term life insurance policy the higher the premium.

This is because the chance of dying or mortality risk increases with age. By and large,

younger people are healthier but the probability of their health deteriorating increases as

they get older. This is why your age is one of the first questions asked by an insurance

company when calculating your premium.

2. Your gender:

This also one of the main determinants of your policy premium. As per statistical

studies women generally tend to live longer than men. This obviously impacts the

female gender's age-related mortality risk. Therefore, other things being equal, a

woman is likely to be charged lower premium than a man of the same age for the same

policy.

3. Genetic factors:

Your life insurance premium likely to push up in case you are being genetically

susceptible to certain diseases such as diabetes, heart problems etc. Insurers ask

questions about your family's medical history in order to see if such negative hereditary

factors exist.

How much each factor affects your premium depends on the rating and underwriting

method of each insurer. Therefore it is always advisable to compare premium quotes

from different insurance companies. However, you should also compare the companies

on parameters such as policy coverage, reputation, customer service record, claims

settlement ratio etc. and not base your decision on premium rate alone.

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