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Why was your term insurance premium revised and what to do now?

Why was your term insurance premium revised and what to do now?

Why was your term insurance premium revised and what to do now?

Insurance is a contract where the insurer accepts a specific amount of risk for a specific amount of premium cost. How you enter into this contract with an insurer is a step by step process which involves the assessment of the following two factors: Financial capacity or Human Life Value and Individual risk of illness & death.

Human Life Value

The financial capacity or human life value will define the maximum amount of life cover you can purchase with the life insurance plan. This factor majorly depends on your annual take-home income and stability of your occupation. However, factors like the number of dependents, location of residence etc. may also have a say in the overall value.

Usually, your total human life value is 10 to 15 times your annual take-home income.

Individual health & life risks

Health and life risks are the factors which influence your life-expectancy and thus the chances of claim within the policy term. The higher the chance of claim the higher the risk to the life insurer.

Following factors will influence your health and life risk, or life-expectancy:

  • Pre-existing illness
  • Physical ailments like, disability, dwarfism
  • Congenital deformities
  • Other Health issues including family health history
  • Lifestyle choices like alcohol consumption and smoking habits
  • Occupation type – few occupations like transport, fieldwork into mining, construction etc. carry higher risks than desk jobs such as writing, accounts and banking

Other factors which may have some influence on the general life-expectancy are the state of residence etc.

What does the normal premium include?

The standard premium rate that you will arrive at using the online term insurance calculator is the general premium for a person matching several factors with you.

Factors affecting your premium

The standard premium does not assume or consider any of the personal risk factors which may apply to your life but not others. Few examples would be your and your family’s health history, pre-existing health conditions, etc.

When does the insurer revise your premium?

After you deposit the standard premium, you need to complete the application form and go through a medical check-up. The application form will pick up any information about your personal risks which are known to you. Rest of the health risks will be assessed during the medical examination.

Based on all this information the insurer will assess your personal risk for the life cover and any addon covers you have selected. The insurer may revise your premium estimate, or the life cover provided if:

  • Higher Risk Assumed by the Insurer, due to a health condition or family history, etc.
  • Lower HLV estimate due to occupation or other conditions

If only your HLV is lower, the insurer will reduce the policy sum assured instead of changing the premium amount. However, if the insurer considers you to be higher risk but your HLV estimates are good, you can secure the cover with a slightly higher premium.

What to do when your life insurance premium is revised?

When your premium is revised, you are expected to deposit the difference and avail of the policy. Ideally, this is exactly what you should do, as going to another insurer with the proposal is only going to take time. Chances are the other insurer will also revise your premium quote based on your personal risk profile.

Should you revise your information in the proposal form?

Life insurance is a contract of trust. Unlike a normal business contract, life insurance requires full disclosure from both parties. You can find everything about the life insurance company on their website or with the regulator. While applying for life cover, it is your responsibility to declare every relevant information as correctly as possible for you.

If you happen to hide important facts which may influence your premium or life cover estimates, you may face the following issues:

  • Rejection of proposal
  • Rejection of claim
  • Blacklisting of your application

Rejected life insurance proposals reflect badly on your trust record with life insurers and they may refuse insurance to you at all. Also, if the risk on your life is higher it is all the more important for you to have a life cover as soon as possible.

So, don’t worry about a Rs 1000 increase on your annual term insurance premium, your family would still be better off with this little outflow.

Speak to an insurance specialist now!

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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