Being the sole breadwinner of his family, Kartar Singh, aged 35, wanted to safeguard his family from any financial peril in the case of any unfortunate eventuality. He wanted a term insurance plan of at least Rs 1 crore. But he often wondered about the affordability of the premium amount. Then, one day, he sought advice from his colleague Sartaj, who already had an existing term policy. The latter explained to Kartar that term policies providing basic life coverage of Rs 1 Crore had affordable annual premium payment options. It depends on the policy and the insurance provider. For example, if Kartar Singh (Age 35, Non Smoker, male) opts for Generali CentralÂ’s Care Plus , Option 1, he will pay a premium of Rs 12,430 (excluding taxes) annually for a policy term and premium payment term of 25 years.

Like Kartar, many individuals defer purchasing a term insurance policy assuming that the premium would be expensive. But, from the example we can make out that individuals can select an appropriate term plan which fulfils their needs. Most insurance providers also have a premium calculator on their website which allows users to fill in their details and find out the premium amount at the click of a button. To know your premium for a plan at Generali Central you can go to the website and click on Calculate Premium.

Usually, women may enjoy a lower premium under a term plan. We can understand this with another example. If we keep all the other details like age, policy term and sum assured similar to Kartar SinghÂ’s example but change the policyholder to Radhika, a 35-year-old salaried female, we find that she can avail the benefits of the basic life cover of Generali Central Care Plus with a relatively cheaper premium payment of Rs.10,570 (including taxes.

How is term insurance premium calculated?

Term insurance premiums are calculated by insurance companies on the basis of risk factors. To put it simply, risk reflects the likelihood of the individual making a claim. The premium amount is lower in the case of fewer associated risks. The following factors are taken into consideration while assessing an individualÂ’s risks :

• Age:The foremost factor for calculating premium amount is age. The premium rate for a younger individual will be lower as compared to older individuals. This is because a higher age means the possibility of onset of various health ailments and mortality rate.
• Gender:Insurance companies charge women with lower premium rates as studies have shown that women usually live longer than men.
• Medical History:The medical history of any individual directly impacts the rate of premium. If an individual is suffering from any illness, including lifestyle diseases like diabetes, obesity, or hypertension, then it can result in higher premiums. Even if an individual had suffered from a critical illness in the past, it would directly affect the premium rates. Insurance companies also seek details about the familyÂ’s medical history. If an individualÂ’s immediate family members like parents or siblings suffer from any debilitating disease, then it can result in higher premiums.
• Lifestyle Habits:Insurance companies charge higher premiums from individuals who are tobacco users. This is because the average lifespan of tobacco users is lesser than people who donÂ’t use tobacco in any form. Insurance companies usually ask whether the individual has used tobacco products in the last 12 months. The premium rates for smokers can be 50 per cent to 80 per cent higher than those of non-smokers.

Conclusion:

Any insurance premium is calculated on the basis of the risk assessment of an individual, which, in turn, is contingent on factors like age, gender, lifestyle habits and medical history. To know more about your term plan benefits and price you can visit our website or talk to our trusted and experienced advisors .

Generali Central Care Plus : This is an Individual, Non-Linked, Non-Participating (without profits), Pure Risk Premium, Life Insurance Plan. UIN: 133N030V06