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Why Is It Important To Check Your Term Insurance Premium?

Why Is It Important To Check Your Term Insurance Premium?

Term insurance premium

Insurance premium refers to a specific amount to be paid periodically by the insured individual to maintain their insurance coverage, as calculated by the insurance company. For deciding the premium amount, an insurance company examines the type of life insurance coverage being opted, the policyholder lifestyle and health conditions, and the likelihood of a claim being made, among other factors.

For the purpose of accurate analysis of a person’s life and premium calculation, insurance companies employ actuaries. They are responsible for analyzing the risks associated with an event or claim, and then greater the risk, higher will be the insurance premium.

Risk appetite with ULIPs

The sooner you buy a term insurance, the better it is

The usual age bracket for buying a term insurance is minimum 18 years and a maximum age of 65 years. It is a well known fact that buying insurance earlier yields several benefits, including lower premiums and better coverage. This is because, with time and increasing age the risk of falling prey to illnesses increase, so does the premium amount.

Nevertheless, higher premiums do not necessarily mean you should not buy a term plan at all. When you buy a term plan, there may be times when your premiums are revised after your medical examination is done. The insurance company may ask you to pay an extra premium, according to your health conditions or the risks involved, but you should understand that this is a decision made after expert analysis of your profile and health conditions. Therefore, paying higher premium only means that you are closer to securing your family’s financial future.

Take this increase in premiums in a positive manner because it will help you prepare better for the risks to your health, due to conditions that may include smoking, alcohol or a high-risk lifestyle. A little extra premium can therefore go a long way in securing your loved ones, and relieving you from the stress.

Paying insurance premiums

There are several options offered in terms of premium payment against your policy. Policyholders can usually pay the insurance premium in installments on a monthly, quarterly, half-yearly or annually. This premium payment frequency is called the Premium Payment Mode.

Then there is a Premium Payment Term, which determines the duration for which the premium needs to be paid, or number of installments. For the iSelect Star Term Plan, besides payment throughout the duration of the policy, you can choose a single bullet payment for entire policy duration or opt to pay for a limited duration of 5/10/15/20/25 years.

In addition, the plan also lets you choose a Limited Premium Payment Term Option, wherein you pay only during your working years, that is, till you turn 60 years old, while the insurance cover continues to run even after that.

What happens when you fail to pay the premiums? When the policyholder fails to pay a premium by its due date, it causes the life insurance policy to go into a grace period. Grace period is the extra time given to your after a missed premium payment, before the policy finally goes into a lapse. If no premium is payed even during the grace period, the life insurance policy will lapse, causing the policy benefits to discontinue.

Therefore, a term life insurance premiums must always be made by the due date or the policy may lapse.

What happens to the paid premiums if you don’t make a claim?

In case of a term insurance, you cannot ask for a return of your insurance premiums if you don’t make a claim during the policy term. That is the part which makes it even more important to understand your premium. However, if you ever require making the claim, all your premiums will be worthwhile. However, in term insurance with Return of Premium option, the company returns the total premiums paid by you at maturity, in case you outlive the policy term.

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Frequently Asked Questions (FAQs) for Term Insurance Plans

A person can only purchase a term insurance plan till the age of 65 years, and they can choose the risk coverage for up to 99 years of age. One can easily buy the best online term plan between the age of 18 to 65 years.

This being a term insurance plan doesn't offer any payout after maturity or expiration date

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 65 years of age. This is a term plan with return of premium option – that means all the premiums paid throughout the tenure will be paid back to you if you outlive the policy.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly when you buy the best term plan in India.

If your key purpose is to give your Family financial protection, go for the best term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan. iSelect Star is a term plan with return of premium option. All the term insurance premium will be paid back to you, if you outlive the policy term.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, the best term insurance plan pays a part of the sum insured to treat your disease.

Term life insurance plan riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance plan riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term insurance policy remains active until the expiration date.
  • Income Rider: This rider in a term insurance plan ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term insurance plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while Buying the Best Term Insurance Plan?

  1. 1. Are you buying a term plan with return of premium?
  2. 2. Amount of premium you have to pay based on your age, habits, education, and monthly income
  3. 3. The total number of benefits covered in the term insurance plan. Do they include benefits that you care about the most?
  4. 4. How to save money on tax if you pay for the term life insurance plan?
  5. 5. Do they offer regular income options?
  6. 6. Can you change the coverage and premium in the future?
  7. 7. Does the claim consider valid if death occurs outside India?
  8. 8. Which kind of death is not covered by a term insurance plan?
  9. 9. Can NRIs take a term insurance plan? If yes, what are the conditions?
  10. 10. Does the term insurance plan have a cash value if you decide to cancel the term insurance policy?
  11. 11. Under what circumstances can a term insurance plan be cancelled?
  12. 12. Can I pay the premiums online or make electronic payments?
  13. 13. What will happen to the term life insurance plan if the life assured starts smoking after purchasing the policy?
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