Key factors that affect your sum assured and premium
Age: As age increases premium increases, because with the age, the chance of getting prone to life-threatening illnesses and diseases are more as compared to someone at a younger age. Thus, if you buy a term plan in 30’s the premium you pay will be less than at 40’s.
Gender: Insurance companies take a ‘life expectancy’ into the account while calculating the premium. For this reason, some insurance companies offer a lower premium to women as compared to the men, because as per studies women are believed to live longer than men. Additionally, some companies offer discounts to women on a term plan.
Annual income: Generally, the sum assured in a term plan is more or less 15-20% of the annual income of an individual. Type of job: Depending on the risk factor involved in a job premium will differ. Higher the risk higher the premium. The premium for the same assured will be higher for a person working as a fireman than that of a person working having a desk job.
Smoking habits: Yes, smoking habits affect your premium amount. A non-smoker pays comparatively less than a person who smokes.
Type of Payout: Depending on the type of payout you choose when buying a term plan will affect the premium you pay. You may opt lump sum benefit or income benefit as a payout.