Term life insurance plans are one of the most sought-after life insurance products available in the market today. It can safeguard the family’s financial future in case of any eventualities with the policyholder.
The primary reason for the popularity of term plans is that they offer a high sum assured at economical premiums. There is no other life insurance product in the market that comes at such a low premium. Therefore, anyone can afford to buy a term plan and provide financial protection to their loved ones.
Here are some of the factors that make term insurance premiums the cheapest compared to other life insurance products.
- Pure protection plan
The premiums of traditional life insurance policies are high as they have an investment component and offer maturity benefits. Conversely, term policies are pure protection plans, and they do not have any investment element. Besides this, they do not provide survival or maturity benefits until and unless you have purchased term insurance with a return of premium plan. Therefore, the premiums of term plans are reasonable.
- Healthy lifestyle
While applying for a term insurance plan, many insurers ask you about your lifestyle habits like smoking and drinking. Besides this, they may tell you to undergo a medical test. This allows the insurer to ascertain whether you have any medical conditions or not. The premium of your term plan is dependent on your lifestyle habits and medical test report. If you are a non-smoker and do not consume alcohol, there are low chances of you getting affected by lifestyle-related diseases. Thus, the premiums of term policies are nominal in this case.
- Age
When you purchase term life insurance right from an early age, the premium amount is lesser compared to buying it at an older age. The rate of mortality is low when you are young and healthy. Besides this, there is a low possibility of getting diagnosed with life-threatening conditions like high blood pressure, diabetes, cancer, and cardiovascular diseases. So, you can avail of a term plan at a cost-effective premium when you are young.
- Duration
Term insurance provides life cover to the policyholder for a specific duration which is why it is called ‘term’. The policy period also plays a major role in ascertaining the premium. It rises if you opt for a long tenure. On the other hand, it is low if you invest in a policy for the short term.
- Occupation
Your profession can also influence your term plan’s premium. When you apply for a term plan, the insurer ensures that your profession is not hazardous. For instance, if you are working in the mining or oil and gas sector, or as a marine engineer, then such professions are dangerous, as accidents can happen often. The risk of mortality is high in such jobs. Therefore, the premium is on the steeper side. However, if you are not exposed to such risks during your professional life, you will end up paying an affordable term insurance premium.
To sum it up
Now when you know what is a term plan and the aspects that can influence its premium, it is time that you select a policy that can meet the needs and life goals of your loved ones. You can seek the help of a term insurance plan calculator to calculate the approximate premium you need to pay for a large sum assured. Remember to pay the premiums on time if you want to continue reaping the benefits of the policy and keep your family protected from any uncertain eventualities.
