How To Evaluate Term Insurance Quotes: Key Factors To Consider

 

3 ways to evaluate term insurance quotes

 

There are different ways for the evaluation of term insurance quote. Some of the ways are as follows:

 

1. Check the premium vis-à-vis the coverage

 

When evaluating the term insurance quote, always check the corresponding coverage of the plan too. Term plans which have inbuilt riders or a wider scope of coverage, like return of premium option, can have higher premiums compared to regular term plans which provide basic coverage against the risk of death.

So, remember the simple rule—the wider the scope of coverage, the higher the term insurance premium and vice versa.

So, if you wish to opt for a higher coverage, such as base or rider coverage, your premium could rise. Hence, keep your coverage in mind when deciding on the optimal premium.

 

2. Compare the premium across plans

 

Different plans have different premiums based on the benefits they offer. So, even if the coverage is the same, the premium may vary across plans, too. Thus, you need to compare the benefits and coverage according to your needs and then opt for the right plan to find the right quote.

 

3. Check the premium based on the other chosen policy details

 

The premium also depends on your chosen policy details, i.e., the policy term, premium payment term and frequency.

Longer policy tenures can give you lower annual premiums based on your age. Similarly, limited premiums can be costlier than regular premiums, while annual premiums can provide you with some discount over monthly, half-yearly or quarterly modes.

The premium of a term insurance policy depends on various factors. Knowledge of these factors would help you in Term insurance quote evaluation. Some of these factors are as follows1 –

 

● Age

 

Premiums increase with age because the risk of death also increases as you grow older. Thus, premiums for older individuals are higher compared to premiums of younger individuals.

 

● Medical history

 

Existing or previous medical complications would increase your term insurance premiums as they affect the risk of death.

 

● Lifestyle habits

 

Consumption of alcohol and/or tobacco negatively affects your health and your term insurance premium. Smokers are charged higher premiums than non-smokers.

 

● Gender

 

Women are found to have lower mortality risks compared to men. As such, premiums for women are lower than for men.

 

● Occupation

 

If you are engaged in a dangerous occupation like mining, aviation, defence, etc., your term insurance premiums might be higher.

 

● Riders

 

Riders are optional coverage features that you can add to your term plan for enhanced protection. Each rider comes at an additional premium, and if you choose riders with your policy, the total premium outgo increases.

 

● Policy discounts (if available)

 

Term insurance plans might offer discounts on premiums for buying the policy online, for paying the premiums annually or for any other reasons. If such discounts are available and you qualify for them, the term insurance quotes would become lower.

Term insurance plans might offer discounts on premiums for buying the policy online, for paying the premiums annually or for any other reasons. If such discounts are available and you qualify for them, the term insurance quotes would become lower.

 

Things to keep in mind for evaluation of term insurance quotes

 

Some of the things to keep in mind when evaluating term insurance quotes are as follows –

 

1. Choose the right premium payment term

 

Term plans might allow you to pay the premium in one lump sum (single premiums), for a limited period (limited premiums), or throughout the chosen policy term (regular premiums). Choose a premium payment term which suits your budget and needs. For instance, if you are comfortable paying a lump sum premium, you can choose the single premium mode and pay the premium once while enjoying the coverage over the chosen term. Similarly, if you expect to earn an income for a limited tenure, a limited premium payment term might be suitable. So, choose the right term which matches your needs.

 

2. Choose the right frequency

 

You can pay term insurance premiums annually, half-yearly, quarterly, or even monthly. While annual premiums require a lump sum payout, they are usually lower. But if affordability is an issue, you can choose the half-yearly, quarterly or monthly mode too.

 

3. Choose the right sum assured

 

An adequate sum assured would help you provide the desired financial protection to your family in your absence. So, choose an optimal sum assured for the term plan. Even an increase in your rider coverage could enhance the premium. So, you need to choose only those riders that you may need.

You can also opt for the half-yearly, quarterly or monthly payment frequency to reduce the outgoes if the premiums are higher, although annual premiums might be lower.

Alternatively, you can buy a lower sum assured initially and then supplement your coverage later on with additional term plans as your income increases. Basically, you can change multiple parameters to derive the optimal amount of premium that you can comfortably pay for the desired level of coverage!

Ensure that the term insurance quote is affordable so that the coverage doesn’t harm your budget and provides you with the financial security you need.

 

Conclusion

 

Term insurance plans offer affordable coverage. however, it is important to evaluate the term insurance quote and ensure that it is affordable and competitive given the coverage offered. Term insurance calculators are available online to help you calculate and evaluate the term insurance quote for your preferred plan. So, use these calculators for easy evaluation of term insurance quotes. Assess the premium and its affordability and then buy the right policy.

 

FAQs

 

 

1. Is the lowest premium always the best option?

 

The lowest premium might not always be the best option because it might indicate a lower sum assured. An adequate sum is assured  is important for complete financial security. As such, choose a term plan which offers the required coverage. Do not compromise on the coverage by choosing the lowest premium.

 

2. Can I negotiate the premium on my term insurance quote?

 

 The premium is fixed and is usually calculated based on your age, medical history, occupation, gender, policy details, etc. As such, you cannot negotiate the insurance quote. However, if you change the policy details, you can change the term insurance quote. For instance, decreasing the sum assured would reduce the premium and vice-versa.

Reference

• https://www.tribuneindia.com/news/impact-feature/key-factors-affecting-term-insurance-premium-calculations/

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