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One of the main reasons for the growing popularity of term insurance in India craze is its low premium. There are many factors that keep the premium of a term plan considerably lower than other forms of insurance.

Factors that keep the premium low in term insurance

• Minimum Bifurcation, Lesser Cost: There are several insurance plans which have a dedicated investment component attached to it. This component comes at an additional charge which is over and above the insurance and administrative cost. Naturally, this additional cost in investment-based plans tends to increase the overall price of the insurance premium. However, term insurance only has two components – the insurance and administrative – associated with its premium cost. 
   
• No Maturity Benefits:Life Insurance plans come in many forms, and most of them have maturity benefit, along with the death benefit. But a term insurance plan only provides a death benefit. This keeps the premium cost exceptionally low. The premium amount is used only for covering the sum assured in case of policyholder’s death.
   
• Duration of the Plan: Another crucial factor that limits the premium cost is its restriction on terms. Unlike other life insurance plans, a term plan only provides a financial cover to your life for a stipulated term. So, the premium you need to pay is only for the term, which can be 10, 20, 30 years, and not the whole life.
   

These are just specific parameters that keep the premium low, but term insurance premiums are also impacted by other factors that can considerably reduce your premium burden.

Factors that influence your term plan premium

1. Choice of Lifestyle
   Having a healthy lifestyle goes a long way to keep you safe and secure, not just physically but financially as well. When you opt for term insurance, you need to declare your lifestyle habits, such as drinking or smoking. Moreover, a fitness certificate may also be required to be submitted, which must be duly vetted by a doctor authorised by the insurance provider (medical underwriting depends on the insurance company’s internal policy and procedure and vary from insurer to insurer . Since this insurance is solely related to the death benefit, the policyholder’s chances of death need to be included in the premium calculation. Smoking or drinking regularly would entail higher premium cost than a non-smoker or a non-drinker.
    
2. Your Profession Matters
   Just as a healthy lifestyle reduces the premium, a safe workplace would also minimise the cost of the premium for your term insurance. Individuals who are associated with hazardous work, which may include working with chemicals, oil & gas, heights, and so on, have to pay high premiums. Here the rationale also boils to the single aspect, which is the high chance of death.
    
3. What’s Your Age?
   You must come across many instances when the first question asked by your insurance agent is your age. Here the young benefit the most because they are charged the minimum premium. The older you grow, the higher is the premium. The young are considered to be the fittest. As you get old, you get more prone to catching a disease or even move closer to death. Since age is not our hands, it is advisable to get term insurance as early as possible. Getting a term plan in your early adulthood can prevent you from paying higher premiums.
    
4. Gender
   The difference in premium for different genders is not something related to gender bias; rather, it is backed by life expectancy data. It is found that women tend to live more than men. So, this fact is considered by the insurance providers in calculating their premiums as well. Women pay lower premiums than men for their term life coverage.
    

Conclusion
However, this low premium is just one portion of the term insurance that makes it attractive. There are numerous other advantages that come with term insurance. However, choosing term insurance that suits you can be very confusing because of the large number of insurance providers in the market. To find the best term insurance and not be swayed away by their tall claims, it is important that you have a thorough reading of the policy document.

Disclaimer: 
The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision. 
 

PNB MetLife India Insurance Company Limited
Registered office address: Unit No. 701, 702 & 703, 7th Floor, West Wing, Raheja Towers, 26/27 M G Road, Bangalore -560001, Karnataka
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