The recent jump in the mortality rate during the pandemic has spiked the term insurance premium prices by a considerable amount. Since 2020, the life term insurance companies have increased their term insurance prices thrice wherein the latest hike has taken place this month.
According to PolicyX.com’s Insurance Price Index, the average price insurance index of term insurance prices has increased by 8.4% from Q4, 2020 to Q3, 202. It means the average term insurance index price rose from INR 20995 in Q4, 2020 to INR 22750 in Q3, 2021. considering the continuous deaths reported because of COVID19 and otherwise and new variant being spotted that is likely to spread faster than before, the term insurance companies continue to face the burden for a little longer period than expected which can lead to term insurance in 2022 a bit more costlier. However, there are means to purchase a term insurance plan at affordable rates with smart decision-making skills. Here are the things you should keep in mind:
Age: It is true that the increase in the premium prices is not reflected across all age groups. Generally, the hike is imposed on the higher age group categories where a person starts to get affected by some diseases or health starts deteriorating due to age factor. Thus, in order to purchase a term insurance plan under the budget, it is highly recommended to purchase one during the 20s or early 30s. Since the life insurance companies assess the risk of lives on the basis of age, therefore a person in late 20s or early 30s is relatively considered healthy due to which he/she is charged less.
Healthy lifestyle: The regular practice of living life also lays a huge impact on your health. The basic rule of term insurance is that the healthier you are, the lower premium will be. Thus, people having bad practices such as smoking, drinking alcohol or consumption of any other harmful substance can increase your premium wherein living a healthy lifestyle such as regular yoga, walking, gyming or any other practice that promotes healthy living actually reduces the premium for the term insurance premium giving a surety to the insurance company that the policyholder has a long life expectancy. In case, the life insurance companies don’t see a long life expectancy of a policyholder, they charge an extra premium to manage the payout.
Payment method: The life insurance companies offer a variety of premium payment methods to policyholders for their convenience such as monthly, bi-annually or yearly. It is a lesser-known fact that the payment method also adds or subtracts to the premium prices. Premium payments made annually come a little lighter on the pocket of the policyholder as the insurance companies give a large amount of premium together for which they give a marginal discount in return. Wherein, the short-term payments made regularly may see cheaper in amount however, monthly premium payments can add up and can actually prove to be a larger sum than if one were to make a yearly premium payment.
Choose suitable add-on riders: There are several additional riders available in the market that may look fruitful or lucrative but it is important to understand that no matter how great they may seem but their only relevance lies when they are actually useful. Moreover, these additional riders come with additional cost that is added to the final premium of the term insurance plan. Therefore it is highly important to select only those riders that are highly important and of great use to you.
Considering the urgency to protect the lives of loved ones, the premium prices shouldn’t be the reason behind risking the lives of your family members by not purchasing a term insurance plan as it can lead to bigger losses in the future when your family won’t have a source of income to do their errands. Rather a mindful purchase with a greater understanding of market trends and personal needs will help in buying the cheapest term insurance plan in 2022.
(The writer is the Founder & CEO, PolicyX.com, an IRDAI approved web insurance aggregator)
