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7 Key Factors That Can Affect Term Insurance Premium

Deepika Sivadas
By Deepika Sivadas
Content Writer at Beshak
1 user ratings


Have you ever seen a weather forecast? You might have often noticed them saying that a change in the wind has led to a sudden shift in the weather. Weather patterns are usually affected by changes in temperature, wind, atmospheric pressure, etc.

Term insurance premiums and weather forecasts may seem like entirely unrelated topics, but they share a common trait: both are influenced by several factors. Just as numerous factors like temperature, air pressure, etc. influence the weather, term insurance premiums are affected by a range of factors, including age, health, occupation, lifestyle choices, etc. 

In this article, we will take a closer look at 7 key factors that can affect term insurance premiums and how they can impact your coverage. Let’s dive right in!

7 Key Factors that Affect Term Insurance Premiums

If you want to secure your family's financial future, then it is a no-brainer that you should buy term insurance. It is a simple and straightforward product. The insurer promises to pay a fixed sum of money to your family if you pass away during the policy term. This money will help your family cover their financial needs and maintain their lifestyle without any compromise. 

In return, you pay a premium to the insurer. As discussed before, term insurance premiums can be affected by a range of factors. Let’s talk about that - 

1️⃣ Your Age

When it comes to term insurance, your age plays a crucial role in determining your premiums. Basically, the younger you are, the lower your premium is likely to be. 

The reason for this is pretty simple. Young people are generally healthier and have a lower risk of health issues, leading to less chances of them passing away as compared to older people who have certain health issues. Insurance companies take into account such factors when calculating the risk of insuring you.

The premium is calculated based on the age at which you enter the term insurance policy and it remains the same till the end. So, buying early, when you’re younger, can help you save money over the long term. 

But remember - this shouldn’t be the only reason to buy term insurance. It is only useful when you have or envision people who are dependent on you financially, like say, retired parents, children, spouse, etc. If this isn’t the case, you frankly don’t need term insurance.

For example, Maya and Lekha are looking to buy a term insurance policy with a sum assured of Rs. 50 lakhs for a period of 20 years. Maya is 25 years old, while Lekha is 40 years old. Let’s assume both are in good health and have similar lifestyles. Maya can expect to pay a lower premium than Lekha for the same coverage as her age is less. Lekha, on the other hand, might be required to pay higher premiums for the same policy. 

2️⃣ Your Gender

Did you know that your gender can actually have an impact on how much you will pay for term insurance? Insurance companies take a lot of factors into account when calculating premiums, and gender is one of them. Since women are statistically more likely to live longer than men, they're typically seen as a lower risk by insurance companies and can enjoy lower premiums. 

Let’s look at the premiums for males and females for a few term insurance plans -

PlanAnnual Premium For Males (INR)Annual Premium For Females (INR)
ABSLI DigiShield Plan12,00810,308
HDFC Click 2 Protect Super13,49911,474
ICICI Pru iProtect Smart13,39111,756
Max Life Smart Secure Plus11,55310,191

The premiums are taken on 25.10.2023 for a 30-year-old non-smoker individual opting for a sum assured of Rs 1 crore for 30 years with regular pay. These are yearly premiums with tax.

3️⃣ Health

Your health is another significant factor that has a say in how much your term insurance premiums will be. For this purpose, they might require you to undergo medical tests, before the term insurance policy is issued to you. If you are in good health, you will be charged the standard premium. But, if you have pre-existing medical conditions, the insurer can charge you an extra premium (also called a ‘loading’). This is because someone with an existing medical condition is considered riskier to be covered by the insurance company.

4️⃣ Lifestyle

The way you live your life and your lifestyle choices can impact how much you will pay for your term insurance. 

If you have a risky job or are likely to participate in adventurous sports or activities, you may end up paying more premiums, because these activities increase the chances of you getting into an accident. Similarly, if you smoke, drink, or have other unhealthy lifestyle habits, you may have to pay higher premiums. These habits tend to increase the risk of developing health problems that could impact your life expectancy.

Let’s have a look at the premiums for non-smokers versus smokers under various term insurance plans -

PlanAnnual Premium For Non-Smokers (INR)Annual Premium For Smokers (INR)
ABSLI DigiShield Plan12,00820,164
HDFC Click 2 Protect Super13,49921,334
ICICI Pru iProtect Smart13,39121,424
Max Life Smart Secure Plus11,55318,486

The premiums have been taken on 25.10.2023 for a 30-year-old male opting for a sum assured of 1 crore for 30 years with regular pay. These are yearly premiums including tax.

5️⃣ Occupation

Have you ever thought of your dream job impacting your term insurance premiums? Insurance companies take into account the risks associated with certain occupations while calculating premiums. 

For instance, if you have a job that involves a lot of physical risks, such as being a firefighter or a pilot, you will be required to pay higher premiums. Similarly, mining, fisheries, chemical, oil and gas industries are known to have adverse health effects, which can also impact your premium. If you work in one of these industries, you may end up paying more for your policy due to the increased risk of health problems that you may face.

6️⃣ Amount of coverage

Choosing the right amount of coverage is an essential aspect of term insurance, but it can also affect your premium. That's right - the more coverage you need, the more premiums you will have to pay for your policy. The cover amount is the money your nominees will receive if you, unfortunately, pass away during the policy term.

If you choose a high coverage amount, you will generally have to pay a higher premium. This is because the insurance company is taking a higher risk of claim payout in case you pass away. On the other hand, if you choose a lower coverage amount, your premium will likely be lower since there is less risk involved for the insurance company.

Want to the right cover amount you should go for? Check out Beshak TruMatch - the first-ever term insurance recommendation engine that recommends the right coverage and customisations - so you can find a term insurance plan perfectly tailored to your and your family’s requirements!

7️⃣ Payment Frequency

When you buy a term insurance policy, you will have to decide how often you want to pay your premiums. And this payment frequency you choose can affect your premiums. Generally, if you opt to pay your premiums annually, you end up paying less than those who choose to pay premiums on a monthly, quarterly, or half-yearly basis. For instance, choosing the monthly premium payment frequency might cost you 5-8% more than the annual premium payment frequency.

Ultimately, the payment frequency you choose should depend on your individual needs and financial situation. And make sure you put standing instructions on your bank account and not a credit or debit card, no matter the frequency you choose. These cards come with an expiry date; if that happens, your payment may not go through.

Term insurance is an important financial tool that can provide security for your family in case of an unfortunate event. Understanding the key factors that can affect term insurance premiums is essential to make sound insurance decisions. By considering these factors and choosing the right policy, you can ensure that your family is financially protected when you are not around.

Key takeaways
  1. Term insurance is a pure risk insurance cover that protects your family's financial future if you unfortunately pass away while the policy is active.
  2. Premiums for term insurance plans can vary depending on several factors.
  3. The younger you are, the lower premiums you’ll have to pay - since the likelihood of you incurring health issues is lower.
  4. Factors like your gender and lifestyle choices also play a big role in determining your premiums. 
  5. If your occupation is high-risk, you’re likely to face higher premiums.
  6. Your health status also impacts the premiums. If you’re healthy, this means lower premiums compared to someone who has a serious medical history. 
  7. Next, the higher the cover amount you choose, the higher your premiums will be. The inverse holds true as well.
  8. Even the frequency of your premium payments affects your premiums. Annual payments result in lower premiums compared to monthly, quarterly, or half-yearly payments.
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Deepika Sivadas
Deepika Sivadas, Content Writer at Beshak

Deepika is lively, organized, and passionate about words like a kid in a candy store. She's the kind of person who can turn even the most boring topic into a page-turner, and she does it all with a smile on her face and a spring in her step. But don't let her bubbly personality fool you - when it comes to deadlines and organization, she's a force to be reckoned with.

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