Rajan, a 30 year old employee in an IT company was looking to buy a life insurance policy. He is the single earning member of his family and is having responsibilities, so he wanted his family to be financially protected in his absence also. Rajan’s budget for buying a life insurance policy was limited due to his financial concerns. He was looking for an economical way of buying a life insurance policy, but was ending up with options of life insurance policies which were out of his budget. That’s why he dropped the plan of buying a life insurance policy and thought that he will plan it after some months or a year maybe.
This is not the situation of Rajan only. Many people in India delay or drop the idea of buying a life insurance policy due to financial concerns. But they don’t know that buying a life insurance can be much cheaper, if they know the factors which can reduce the amount of premium and ways through which they can buy insurance at an affordable price. So through this article, we will look at the various ways through which you can reduce the price of your life insurance premium:
1) Buy Early
Age plays an important role in determining the premium. A young person will be offered lower premium rates of premium by the company, in comparison to an old person. This is because the rate of premium is decided upon the risk of life. High risk of life means higher rates of premium. Young people have a low mortality rate and their chances of contracting a life threatening diseases is also very less. That’s why companies offer low rate of premium for young buyers. You should buy life insurance policy as soon as you start earning to enjoy low rates of premium for the entire policy term.
2) Stay Healthy
As said earlier, rates of premium depend upon the risk of life. A person going for life insurance policy has to undergo medical check-up, so that the company can know the medical condition of the buyer and decide premium accordingly. A person suffering from diabetes will be charged higher rates of premium than a healthy person. Being healthy will not only make your life happy, but will make your life insurance policy cheaper also.
3) Opt for Annual Mode of Premium Payment
While buying a life insurance policy, you get an option to choose your mode of premium payment. There are generally four options to choose from, which are monthly, quarterly, half yearly and annually. While most of the people choose their mode of premium payment according to their comfort but only few of them know that the chosen mode of premium payment has impact on the premium amount. The amount of premium is less if you choose an annual mode of premium payment. This is because companies have to bear an additional cost for giving cover on multiple premium payment (monthly, quarterly and half yearly) rather than single year payment. It is always good to go for annual premium payment to reduce your premium cost.
4) Choose Riders wisely
Every rider you add to your policy, increase the amount of premium. Riders might look very attractive, but it doesn’t mean that all the riders will be useful for you. After understanding the option of riders available with your policy, it is very much necessary to know about each rider in brief. It will make you aware about the use of different riders and will help you decide whether you need any rider or not. If you feel like none of the rider available with your policy will be useful for you then it is better to avoid adding riders to your policy.
5) Buy Online
While buying life insurance through an agent, certain commission is paid by the insurance company to the agent. The company covers this payment of commission to agents by charging high rates of premiums from the customers. But when you buy a life insurance policy online, there is no any involvement of agent because you deal directly with the company. So, by saving on the cost of middleman between company and customer, insurers offer low rate of premium for online insurance policy. So to enjoy low rate of premium, it is always advisable to go through online mode of purchase.
If you know the right means and ways, then you can make your life insurance policy fit into your low budget also. Try to understand your policy terms and conditions carefully, compare and choose the most the best life insurance policy available in the market as per your budget, need and requirements.