Factors that Affect your Term Plan Premiums  

There is no dearth of options when it comes to choosing an insurance policy for your family’s financial security. When buying term insurance for your family, you may, however, want to consider the extent of the coverage as it will affect how much premium you pay towards the plan. To understand how much premium you should pay, see what affects its calculation. This is important because paying very low premiums can result in low coverage while spending too much on the premiums can leave you with poorly managed expenses.

Insurance companies fix premium rates based on the risk that a policyholder carries as this signifies the probability of filing a claim. Hence, policyholders with less risk end up paying lower premiums. Certain factors are good indicators of this risk and hence, affect the premium. Even while choosing from the best term insurances, these are some factors that will be considered by any insurance company.

What affects your term insurance premiums?

  1.   Medical history:

If you’re suffering from an ailment or are likely to develop a health condition due to your medical history or that of your family’s, then be sure to inform your insurer. The state of your health is a risk for an insurance company, and so, they will have to determine the premium accordingly.

It is always better, to be honest about your health problems with your insurer as it will ensure adequate term plan coverage for your loved ones and a higher likelihood of claim settlement, even though it means that you’ll be paying a slightly higher premium.

  1.       Age:

Buying a term insurance policy at a young age means paying a lower premium. In most human beings, health problems generally show up during the later stages of life. This is when you carry more risk, and therefore, insurance companies will have to consider charging a higher premium for the term plan. While it does mean that older people should not buy term plans at all, it does signify the importance of procuring a term plan earlier in life. Most insurance companies have an entry age of 18 years, which means one can start planning as early as possible.

  1.       Profession:

Your profession can also affect how much premium you pay towards the policy as it is a determining factor of the risk you carry. Certain occupations such as construction, mining, firefighting, etc., are considered to be riskier than sedentary desk jobs. Naturally, working in a safe environment indicates less risk, making insurance companies offer you a low premium.

  1.       Location:

Where you reside will affect your term insurance premium to a certain extent as some locations are more prone to natural calamities like earthquakes and floods, and can endanger your life. If you already have a term plan and happen to shift your place of residence, do ensure that your insurer is informed about the same as it will lead to an adjustment in the premium rates.

  1.       Lifestyle habits:

Your daily lifestyle habits can have a direct impact on your health and thus, can lead insurance companies to consider your term plan premium rates. If you lead a healthy lifestyle without drinking or smoking and generally follow a healthy routine, your insurance provider will offer a low premium on the policy.

  1.       Gender:

Though this may not strike as a likely factor that affects your premiums, your gender plays a role in determining the term plan premiums. Most insurance companies consider women to carry less risk than men and hence, offer lower premiums to women policyholders. However, gender is not the most important determinant and is considered in conjunction with other factors as well.


Insurance plans are considered to be among the best investment plans for the short term in India, and that makes term plans and term plans with return of premium ideal choices for most policyholders. However, one’s primary aim of getting a term plan should be to protect one’s family more than anything else.