Top Factors That Increase Term Insurance Premium

A term insurance premium refers to the amount paid at fixed intervals to keep the policy active. Payments are generally made monthly, quarterly, or yearly based on the selected payment option. During the active policy period, the insurer provides life cover, and the nominee receives the sum assured if the policyholder passes away within the chosen term.

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.

Let’s understand what factors can impact your term insurance premium:

Age of the policyholder

The age at policy purchase influences premium costs. Younger applicants often receive lower premiums because insurers may view them as lower risk. Premium amounts generally rise with increasing age due to changing health and mortality considerations.

Medical history and health condition

Health condition plays an important role in premium calculation. Insurers generally review medical records and health status before policy approval. Existing medical concerns or weaker health indicators may result in higher premium costs after assessment.

Smoking and alcohol consumption

Lifestyle habits such as smoking or regular alcohol intake may influence premium pricing. These habits may increase health-related risks, which insurers consider during underwriting. Better health practices often support lower risk evaluation during premium assessment.

Policy coverage amount

The selected coverage amount directly affects premium payments. Higher coverage generally leads to higher premiums because insurers take greater financial responsibility. Lower coverage amounts generally involve comparatively lower premium obligations during the policy term.

Occupation and nature of work

The nature of work may affect premium calculations when occupations involve physical or environmental risks. Jobs involving mining, heavy machinery, transport, or field-based work may receive different risk evaluations due to higher exposure levels.

Gender of the applicant

Gender may influence premium determination because insurers assess long-term mortality patterns while pricing policies. In some situations, applicants may receive different premium rates depending on the insurer’s underwriting process and actuarial evaluation.

Addition of riders^#

Adding riders^# to a policy may increase premium costs because riders provide additional protection under selected situations. Riders linked to critical illness, accidental death, or premium waiver generally influence the final payable premium amount.

Payment frequency chosen

Premium payment frequency may influence the total payable amount over time. Policyholders generally choose monthly, quarterly, or annual payments depending on financial planning preferences, while yearly payment modes may differ in overall cost structure.

Changes in insurer risk assessment

Insurers periodically review underwriting methods and risk evaluation practices. Premiums for new applicants may differ when insurers revise pricing approaches based on mortality trends, claim experience, or updated internal assessments.

After understanding the factors that affects premium of a term insurance plan, let's go through a few 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.