Here's how you can reduce premium of your life insurance policy

Life insurance policies provide financial security to one’s family in case the sole breadwinner dies. It is a great relief to know that your family’s future is well protected despite the odds. Therefore, the premium charged against an insurance policy is advised to be viewed as an important investment rather than an added expenditure.

However, we can definitely look for ways to reduce the premium amount on the insurance policy through some smart ways. The most recurring advise to get insurance at the lowest premium possible is always to get it early. Why is that?

Start young

“As per the mortality data available with the insurance industry, as one progresses in age, the chances of getting ailments also increase. As the risk factor increases, so does the premium amount. Compare this: Two people, 20-year-old and 40-year-old, buy an insurance for 30 years each. The former is young and less prone to diseases while the latter is at the brink of becoming a senior citizen and definitely more susceptible to diseases,” S K Sethi, director & founder at Ria Insurance Brokers said.

Insurance companies decide the premium after analyzing the risk factor associated with the applicant. Since younger people are less vulnerable to life threatening diseases, the premium charged is also less. But as age progresses, the premium also goes higher. Therefore, it is always advised to get an insurance as soon as one starts earning.

“When you buy an insurance policy at a young age especially as soon as you start working, you will be charged lower premiums. This premium is locked for the entire policy term and helps you save money in the long run,” Kamlesh Gupta, Appointed Actuary at Aegon Life said.

Select mode of payment wisely

When you decide to buy an insurance policy, you can choose to pay the premium amount from various modes available. These include annual, half-yearly, quarterly and monthly modes of payment.

“The premium would be the least in case of annual payment. Meanwhile, if you go for half-yearly, quarterly or even monthly payment, the premium may be slightly more due to interest/administrative cost,” Sethi explained.

On several occasions, people prefer to first save the annual premium amount in their banks and then buy it. More often than not, this plan keeps getting deferred. Therefore, one shouldn’t wait to save the premium amount just to get some discounts.

Its better to go for monthly premiums as its easy and affordable for most people. It should be kept in mind that your policy may lapse if you fail to pay the monthly premiums on time.

Pay online

Policyholders can pay the premium both online and offline.

“Paying premium amounts online is always beneficial as the insurers generally charge a lesser premium as there is no involvement of intermediaries, and customers directly engage with the insurers. Hence, it makes it beneficial for both insurer and insured,” Gupta explained.

Healthy lifestyle

The most important thing that insurers asses in an application form is your health status. If you seem fit and healthy, they assume the risk factor to be lower. This eventually results in lower premiums compared to someone who leads an unhealthy lifestyle that includes smoking and consuming fatty food, alcohol, etc.

“To ensure you are charged a lower premium, make sure you buy a policy when you are young and healthy. Further, a little lifestyle change can help you save some money too. It is observed that generally, non-smokers are charged comparatively lower premiums by insurers,” Gupta pointed.

But if you lead an unhealthy lifestyle, the insurance company might very well offer you a policy but with much higher premium.

“Additional 10-20% charges are levied in case you’re found unhealthy and prone to illness according to the insurer’s parameters. Something as basic as your Body Mass Index (BMI) if found irregular can increase the premium amount,” Sethi said.

Maintaining your health is the primary condition to get a good insurance coverage at a lower premium.