Term insurance is an integral part of financial planning, providing coverage for your loved ones in case of your untimely death. It ensures that your loved ones are financially protected in case of your untimely demise. However, most people feel that the cost paid for term insurance as a premium is expensive. There are several strategies you can utilise to reduce your term insurance premium without compromising the coverage you require. In this article, we will discuss practical means of lowering your premiums but ensuring adequate protection for the future of your family.
Strategies to Reduce Your Term Insurance Premium
Here are a few simple yet effective strategies to help reduce your term insurance premium so that you have the best investment plan for your family’s future.
1. Buy Term Insurance at an Early Age
One of the best ways through which you can manage the term insurance premium is getting it when you are quite young. Premium rates are directly linked to age, younger individuals generally pay lower premiums because they are perceived as lower risk by insurers. Delaying the purchase of a term plan can result in higher premiums as you age.
2. Select an Appropriate Sum Assured
It is very important to choose an appropriate sum to achieve proper coverage and premium management. While it may be tempting to opt for a lower sum assured to reduce premiums, ensure that it still meets your family’s financial needs in case of your demise. It is, therefore, very important to have a balance between adequate coverage and affordability.
3. Annual Premium Payments
Most insurance companies allow flexibility in premium payments, including monthly, quarterly, half-yearly, and annual payments. Even though the monthly payment might look cheaper, they are usually charged extra since there are administrative fees for the process. Paying your premium annually can save you money in the long run since most insurers offer discounts for lump-sum payments.
4. Compare Policies Before Buying
Compare the term insurance plans of different companies before finalising a term insurance plan. Premium rates vary greatly between providers for the same coverage amount and term. Compare online different plans based on premium, benefits, riders, and customer reviews. This will help you to choose the most cost-effective option.
5. Avoid Unnecessary Add-Ons
While add-on riders increase the benefit of your policy, they also charge a premium. Select only those that you need and can afford. For instance, if you already have other health coverage, then you might not need critical illness riders attached to your term plan.
6. Buy Online
Buying term insurance online can save you a lot of premium amount. This could be much less than the premium you would have paid if you had purchased through an agent or broker. Buying online usually removes commissions and middleman markups, So, insurers keep those savings and offer you lower premiums. Online platforms can also give you discounts and promos that can save you further.
7. Review Your Policy Periodically
Life changes occur gradually such as getting married, having children, and changing jobs affect your insurance needs. Review your term insurance policy periodically to ensure that it still meets your family’s needs. Increase your coverage or update riders when income or family size changes.
8. Maintain a Healthy Lifestyle
Your health is a deciding factor in determining your insurance premium. Most of the insurers conduct medical tests or scrutinise your health records at the time of application. Good health through regular exercise and dieting and no smoking can improve your health and will get you a more favourable rate.
Conclusion
Term insurance premiums can be reduced by some strategic choices and proactive management. You can significantly reduce your expenses while ensuring that your dependents are financially protected by buying at a younger age, leading a healthy lifestyle, proper sum assured, and doing a comparison of various available plans. You can maximise your savings by choosing the annual payment of premium, avoiding the unnecessary add-ons, and getting it online. Regular updates will help you adjust to changing life and ensure optimal coverage. For those considering their options in term insurance, you can try insurers like Tata AIA.
Disclaimer: This article is intended for only information purposes and should not be considered as financial or insurance advice. Term insurance policies are different with special terms and conditions which are stated in the policy document. It is advisable to review all policy details
