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Need assistance in choosing the right insurance plan? Get a call from our Expert.

Need assistance in choosing the right insurance plan?Get a call from our Expert.

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TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in. T&C apply.

Top Factors That Increase Term Insurance Premium

A term insurance plan is the most straightforward and popular way of ensuring the family’s financial security in the unfortunate event of the death of the earning member of the family. If you are planning to buy a term insurance plan to safeguard your loved ones against financial insecurity, term plan premium is one of the most important factors to consider. 
 

The term insurance premium decides the cost of the policy for you. Therefore, it is essential to know what factors of term insurance affect the premium.

What is Term Insurance

Before understanding the factors that affect term insurance premiums, let us briefly understand what a term insurance policy is. 
 

A term insurance policy provides life coverage for a specific period to the policyholder. It provides a sum assured to the policyholder’s beneficiary if the policyholder passes away during the policy term. 
 

You can get high coverage for a low premium under a term insurance plan. This is the most basic and uncomplicated life insurance plan. 
 

Financial experts suggest adding a term insurance plan to your investment portfolio at a young age to get extensive life coverage.

What is Term Insurance Premium

A term insurance premium is an amount you pay the insurer to get a term insurance plan with all its benefits and features. The insurer decides the premium at the time of offering the policy. The term insurance premium increases based on several factors. 
 

How can i Pay my Term Insurance Premium

You can choose between multiple options to pay your term insurance premium. These are:
 

  • Autopay or E-Mandate: Automatic transfer of premium amount on the due date.

  • Scan and Pay: Scan the QR code on Paytm, JioMoney, Razorpay app to open the website payment page and enter policy details to make payment.

  • Digital Payments: Pay through Visa, Master Card, Debit Card, etc.  

  • Mobile Wallets: Premium payment through mobile wallets, like Google Pay and PhonePe.

  • E-Banking Tie-Ups: Payment premium through various banks.

  • Bharat Bill Payment Systems: Internet Banking, Mobile Banking, UPI, etc.

  • Service Centres: AP Online, COmmon Service Centres, and Suvidhaa.

  • UPI: Select UPI and enter UPI ID to verify. Log-in to your UPI account, go to pending requests, and approve to make payment.

  • Interbank Mobile Payment Service (IMPS): Instant payment through a bank account using your mobile number and the Mobile Money Identifier Number.

Factors behind Term Life Insurance Increasing Premium

As stated above, several factors affect the term insurance policy premium. Knowing these factors can help you reduce the policy premium, as several of these factors are manageable. Lower policy premiums make the policy cheaper for you. 
 

Here are the top factors that affect the term plan premium:
 

  • The customer’s age: The policyholder’s age is the most critical factor that affects the term insurance premium and can lead to a significant increase in the premium. A term life insurance policy’s premium increases with the policyholder’s age. 
     

    The main reason behind this is that age directly affects a person’s health condition and life expectancy. An individual is less likely to fall ill or pass away in his younger years than in later life stages. As age progresses, chances of age-related diseases and death increase. 
     

    Note that the qualifying medical exams also become stricter with an increase in the customer’s age. Therefore, buying a term insurance policy when you are still young is better to enjoy higher benefits for a lower premium and lenient qualifying medical tests.
     

  • Prevailing health conditions: Your prevailing health condition is significant to the insurance provider. The underwriting process for most insurers includes a medical examination of the customer. This examination studies and records several of the customer’s vital metrics. 
     

    The insurer uses this information to decide the insurance policy’s premium. The premium is higher for people with an illness. Some insurance providers also offer a ‘no exam’ term insurance policy. However, the premium of such a policy is much higher. 
     

  • The customer’s gender: The customer’s gender also affects the insurance policy premium. In India, the average life expectancy of women is higher than men. It means there is a higher possibility for a woman policyholder to continue with the policy for a longer duration than a male policyholder. 
     

    Therefore, female policyholders can get a term insurance plan for a lower premium than male policyholders, with other conditions remaining the same. 
     

  • Smoking habits: Smoking poses a higher health risk and may lead to several diseases, such as lung cancer and heart ailments. Therefore, it is perceived as a risk by insurance companies. People who smoke occasionally may also be classified as smokers by insurance providers for evaluation. 
     

    As a general practice, smokers have to pay a higher premium than non-smokers for term life insurance. However, lying about your smoking habit is not a good idea, as the insurance company can cancel your policy if they find out about it later. If you have been a smoker in the past but have given up the habit now, you can ask your insurer if it will still affect your insurance policy premiums. 
     

  • The customer’s occupation: What you do for a living may define your health conditions. Your profession may require you to perform life-threatening tasks regularly. For example, a firefighter, a mine worker, or a pilot may have a higher risk than a teacher or a banker. People working in such life-threatening conditions usually have to pay a higher premium on their term insurance policy. 
     

  • General lifestyle: The insurance provider studies your habits to decide your insurance policy premium. People who lead a risky life and have hobbies like racing or rock climbing have to pay a higher insurance premium than others. Additionally, people who regularly consume alcohol are more likely to suffer from liver disease than a teetotaler. In all such cases, the term insurance premium increases. 
     

  • The desired sum assured: The sum assured you choose directly affects the insurance plan premium. If you expect a higher coverage amount to secure your family better, you will have to pay a higher premium. When deciding the sum assured, It is best to consider your coverage requirements, total income, and current liabilities.

How to Reduce Term Insurance Premium

Use the following tips to reduce your term insurance policy premium:
 

  • Get a term plan at a young age: Usually, people think of a line insurance policy after crossing a certain age. As age is the most crucial factor that decides a term plan’s premium, try buying a term insurance policy when you are young. 

  • Opt for a longer policy tenure: Selecting a longer policy tenure will reduce the premium you pay annually for your term insurance plan.

  • Choose the riders# wisely: You can add riders# to your term insurance plan to increase its benefits. There are additional costs associated with these riders#. Therefore, only opt for riders# that match your requirements. 
     

Tata AIA life insurance company offers several term insurance plans with multiple benefits and features, like tax* benefits, multiple coverage and payment options, and low premiums. 
 

Our specially designed traditional riders#, like the Tata AIA Vitality Protect and Tata AIA Vitality Health multiply the benefits of your term insurance plan for minimal additional cost. 
 

Use our online calculator to know the premium for a term insurance policy of your choice for a desired sum assured.

Conclusion

A term life insurance plan provides extensive coverage for a low premium. A premium is the amount you pay to the insurance company to get the term insurance policy coverage. Several factors, like age, gender, occupation, lifestyle, health conditions, etc., contribute to the term insurance premium. You can manage most of these factors to reduce the term insurance premium.

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Frequently Asked Questions

What happens if I fail to pay my term insurance premium?

If you are unable to pay your term insurance premium on time, you get a grace period of 30 days from the original premium payment date. If you fail to pay the premium in the grace period, your insurer will terminate your term insurance plan. However, there will be no legal action against you.

What is a policy term and a policy paying term in term insurance?

The policy term is the entire duration of your term insurance plan coverage. On the other hand, policy paying term is the number of years for which you have to pay the premium for your term insurance plan. 
 

Under the Limited premium payment mode, the policyholder has to pay the premium for a specific limited duration, which is lower than the policy tenure. With Regular payment mode, the policyholder has to pay the premium for the entire policy duration. And, in Single Pay mode, they pay the entire applicable premium as a one-time lump sum payment while buying the policy.

Disclaimers

  • Insurance cover is available under the product.

  • The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.

  • For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.

  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.

  • #Riders are not mandatory and are available for a nominal extra cost. For more details on the benefits, premiums and exclusions under the riders please refer to the Rider Brochure or contact our Insurance Advisor or visit our nearest branch office.

  • Other disclaimers
  •  Tax: *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.

Other disclaimers

  • Tax: *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.