Term insurance is a way to ensure financial protection for your family in your absence. And it is considered extremely important, especially after the pandemic. Therefore, insurance providers have made efforts to customise life insurance plans to maximise protection at affordable rates. While the premium rates for term plans in India are already affordable, they are based on certain factors such as family history. Let us discuss the important parameters related to family history and understand how it affects term insurance rates.
 

Why is Family History Important for Term Insurance Premium rates?

Insurance providers cover the risk involved in your life that can lead to death and provide the necessary financial support to your family in your absence. Death can be due to an illness, disease, injury, etc. It can be natural and also due to an unexpected accident. While accidents are not predictable, the other factors related to health and illness can be related to family history up to a certain extent. Here are a few pointers that explain this in detail.
 

1. Hereditary Diseases - A hereditary disease can affect you if prominent in your parents. For instance, diabetes is a common disease in many individuals today. It is prevalent in various types and exists even in youngsters. If your parents have been surviving with diabetes and taking regular medications, you are likely to get affected. It is hereditary and difficult to avoid.
   
   You can maintain it at lower levels with regular exercise and diet but not avoid it. Insurers will consider such family conditions and decide on the premium rates. It is because death can be sooner for such people. Some of the genetic diseases considered by insurers include cardiovascular disease, breast cancer, prostate cancer, etc.
   
   
2. Critical Illnesses - Critical illness can develop in a person based on various factors, such as living environment, lifestyle, etc. For instance, if your grandfather has developed cancer, you are highly likely to get affected by it at a certain stage in your life.
   
   To help your family benefit better, you can also choose the optional riders^# that provide additional financial assistance to help you manage medical expenses related to treating critical illnesses when diagnosed during the policy term.  It will affect your premium rate. However, it is a good investment considering the benefits.
   For instance, there are plans to enhance the risk cover and provide additional financial assistance on accidental death, total and permanent disability etc.
   
   
3. Average Life Expectancy of the Family - Insurers also ask for the lifespan of your close family members to predict the risk of death. For instance, if your family members have come across natural death after attaining the age of 90 generally, you have the probability of living longer, reducing the risk consideration for the insurer.
    

How Do Insurers Understand Your Family History?

We have seen how term insurance and family history are linked. Therefore, you will have to undergo a medical examination for life insurance term plans as part of your application process. While insurers provide term plans without a medical test, it is lesser in coverage. Therefore, it is best recommended that you take up a complete medical examination for adequate life cover.
 

On the other hand, insurance providers also have a detailed session with you discussing the family environment, living area, family health history, etc. Based on the results of the medical tests, the discussion can extend longer in varied dimensions relating to the duration of specific diseases, their treatment, and so on.
 

How do Insurers Fix Rates Based on Family History for Life Insurance Policy?

Insurers have definite terms and conditions while deciding on the premium rates. However, here are a few considerations:
 

1. When there is a probability that your family history can affect your life by bringing in diabetes, developing a disease such as cancer, etc., insurers will charge more premium rates owing to increased risk of life cover.
   
   
2. When the life expectancy is high, making it highly likely for you to survive longer, the term insurance plan will be available at a lesser rate.
    

Why Should You Be Transparent About Your Family History?

If you neglect to detail your family history, that can increase the risk of death. Then, there is a probability that your insurer might reject your family's claim on your death later.
 

For example, suppose your family has a history of getting affected due to lung cancer. In such cases, if you have purchased a term insurance plan and neglected to inform your family's history, developed the disease, and later met with death during your policy term, the insurance claim can get rejected on your family's perusal.
 

Likewise, it is the case with pre-existing illnesses such as blood pressure, diabetes, etc. Therefore, your family gets affected at a later stage in your absence. 
 

Conclusion

Purchasing term insurance is the apt way to secure your family in case of your unexpected death. However, multiple factors impact the term plan premium rates. One of the most important ones is family history. Your family's medical history can impact your health condition.

Therefore, if your family's medical history affects your health, increasing the risk of death, your term insurance premium also increases. It is because insurers afford to take up the increased risk and get into the agreement to pay the sum assured to your family in your absence. So, being transparent about your family history might impact the premium rates. However, it will assure maximum protection for your family!

L&C/Advt/2022/Nov/2847