Life Insurance is the most important part of your investment pool. It gives your family member a life cover and a protection cover to your tax as well. While doing financial planning managing the cost is smart work for an investor. This requires awareness of the factors which can affect the cost of your investment. And most importantly, timing of your investment. If investor takes little cautions while investing they can not only cut down the cost but also take maximum benefit of their investment.
Let’s see what are the factors affects the cost of your Insurance premium?
Age– The age of the policyholder is very crucial factor. Taking the policy in earlier age implies the rate of premium will be lower but if any one takes the policy in his/her older age it will cost high. The reason why it is so, at young age general life expectancy is high whereas in older age the possibility of passing away is quite high. Insurance companies believe that if you take the policy in your young age you will pay more premiums before the amount will be claimed hence they charge you less premium.
Gender– The cost of life insurance premium depends upon the life expectancy of the insurer. Higher the life expectancy, lesser the cost. It is believed that woman lives five year more than that of man. Hence there is an advantage to the women, if she invests in life insurance at her young age she can get the insurance cover comparatively at lower rate.
Health Record– Being a policy holder you are required to provide your health record and medical history. There may be a chance that an insurance holder is suffering from a serious illness like high blood pressure, cancer, obesity etc. this will increase your cost at a large margin. If you plan to take the insurance at your young age there are chances that your health record will not be that bad.
Habits– If policy holder has a habit of smoking and takes liquor regularly; this will cause you the bad health and make your term insurance premium costly. And make a point that before selling the policy insurance company ensures to cross check about your smoking and drinking habit.
Tenor of Policy– tenure of the policy is linked to the concept of time value of money. Longer the tenure of the policy lesser the cost of premium and likewise greater the capital benefit at the time of death.
Profession– Profession plays a vital role to fix the cost of your life insurance. Suppose an individual works in mining industry, oil or gas industry or any profession which threaten the life increase the premium cost of term insurance.
Now the question arises as to what extent above discussed factors affect your cost of insurance. This depends or variesfrom company to company. Each company has its different parameter to consider the factor or combination of the factors. So money dial suggests before going to buy life insurance better to understand the parameters of the policy this will help you in saving cost.