Money-saving tips: Here are five ways to lower life insurance premium

It is necessary to have a policy. But it need not be a burden on your budget

If you have dependents, having life insurance is a necessity. But most people end up buying an expensive one because, either they do not understand the policy or buy for tax filing purposes. If you plan it wisely, the same scheme will come at a lower cost. Some tips:

Choose the right tenure: Say, if you are 30 and will retire at 60, buy a 30-year cover. Many people buy a cover for a longer tenure and end up spending more. Taking policy for additional years will only increase your current premium, which remains the same throughout the policy term. “Don’t over-insure yourself and choose the right cover,” says Naval Goel, chief executive officer (CEO), PolicyX.com.

Opt for best-suited payment option: Your insurer allows you to pay premium in several ways, including monthly, quarterly, half-yearly and annually. Alternatively, the premium can also be paid as a single premium in a lump sum. “Payment plan does affect the premium outgo. The premium will be less for the annual and single-premium mode compared to premium on a monthly basis,” says Goel. Those for whom affordability is an issue, periodic payments might be easier to manage instead of a large, one-time outgo. 

Regular premium payment is the most recommended mode, whether it is paying monthly, quarterly, half-yearly or yearly.

Start early: The earlier you opt for a life insurance policy, the lower will be your premium. Besides lower cost, there will be lesser chances of rejection. “The moment you are financially independent and have dependants, it becomes crucial to have life insurance. Buying life insurance at a lower age leads to the benefit of a lower premium and it stays the same throughout the policy tenure,” says Rakesh Goyal, director, Probus Insurance Broker.

Choose riders wisely: Check with the insurer whether riders are attached to the policy. There can be riders that may not be of use to you but are added to your policy. The additional cost of these riders increases your premium amount unnecessarily. For example, many policies have in-built riders such as waiver of premium, critical illness, terminal illness, and so on. “Check term plans for whether they have in-built riders. Having riders is a wise choice. But opt only for those that you require, or those that are related to your lifestyle or profession. For instance, one can opt for an accidental death benefit rider if you commute daily by bike or car,” says Goyal.

Maintain a healthy lifestyle: The healthier you are, the lower will be the premium charged by the insurer. Insurers give utmost attention to the policy seeker’s medical history while approving a life insurance cover. “Life insurance companies want to insure healthy people who are at low risk of passing away early. Insurers may require a medical test and access to your health records before issuing a policy. A history of health conditions, especially serious illnesses such as heart disease, will increase your premium,” says Goel.

Goyal further points out that difference in premium paid by a smoker and a non-smoker can be huge. “Being a non-smoker can reduce the premium by 50 per cent. The premium for a 25-year-old non-smoking individual buying a 40-year plain vanilla term plan of Rs 50 lakh will be in the range of Rs  3,000-5,500. For a smoker, the same plan will cost Rs 5,000-9,000,” he adds.