Factors Determining Premium Of A Life Insurance Policy

Calculating Premiums: Factors To Consider
Conclusion

When acquiring a policy, the policyholder pays a sum known as the 'premium,' which is subsequently paid at regular intervals depending on the frequency and type of payment. Three important criteria influence the premium calculation of every insurer. Because of these factors, the premium amount for the same coverage/sum insured varies amongst insurers. The following are the factors that influence premium calculation.

Calculating Premiums: Factors To Consider

The following are the elements that go into calculating your premium:

Smoking History

We all know that smoking and drinking are bad for your health and can put you at risk for serious illnesses. Nonsmokers and drinkers pay a 40% to 60% higher premium than smokers and drinkers. As a result, smoking and drinking are not only harmful to your health, but also to your bank account.

Age

The cost of the policy is also decided by the website where it is purchased. All major insurance companies now have an online presence, allowing for convenient policy purchasing via the internet, thanks to the internet revolution and easy access to the internet through smart phones. Because there are fewer administrative costs associated with selling insurance products online, rates are lower. Offline platforms have a lot of middleman fees including commission, paper work, and administration, which all add up to the premium you have to pay.

Illnesses

We all know that smoking and drinking are bad for your health and can put you at risk for life-threatening illnesses. Nonsmokers and drinkers pay a 40 percent to 60 percent higher premium than smokers and drinkers. As a result, not only are smoking and drinking terrible for your health, but they're also bad for your bank account. As the policyholder, you will also be asked to present your personal medical documents. These records will ensure that you don't have any chronic illnesses or other potential health issues, as well as keeping your rate from rising.

Buying Policy Online

The cost of the insurance is also decided by the website from which you purchase it. All major insurance companies now have an online presence, enabling for convenient policy purchasing via the internet, thanks to the internet revolution and accessible internet access via smart phones. Due to lower administrative costs, selling insurance plans online is also less expensive, lowering premiums. Offline platforms have a lot of middleman fees, such commission, paper work, and administration, which all add up to the premium you have to pay.

Other Insurance Records

People who have never been insured before pay a higher premium. According to health insurance providers, uninsured persons are expected to visit doctors and clinics regularly in order to get the benefits and rewards of medical treatment. As a result, insurers hike premiums in order to pay all costs.

Conclusion

The premium you must pay for a life insurance policy is influenced by a variety of factors, including your age, total coverage (amount assured), medical history, gender, lifestyle, and occupation, as indicated in the above article. It is vital to contact your insurance agent before purchasing a policy and to be absolutely honest about everything.