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Coverage from
₹25 lakh to ₹100 crore
Adjust your coverage
when you need
When you look at a life insurance policy, the first thing you notice is the premium you’ll need to pay. But what really decides that number is the premium rate. Simply put, the premium rate is the cost you pay for every unit of coverage, usually shown as the amount charged per ₹1,000 of the sum assured.
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Here’s What to Keep in MindHow It WorksA simple real-life exampleWhy Premium Rate Makes a DifferenceConclusionFAQs 
By knowing and fully understanding how premium rates work; you can choose the right coverage and makes sure you’re only paying for what you actually need.
The insurer first checks your risk profile, which includes your age, health, job, habits, and medical history.
Insurers use mortality charts (statistical tables showing life expectancy) to estimate how long a person in your category is likely to live.
Based on mortality data, the insurer calculates the basic cost needed to provide the promised coverage.
Administrative costs and other overheads are added to the base premium.
A small margin is included so the insurer remains profitable and sustainable.
After adjustments, the insurer arrives at the final rate you’ll be charged.
For example, if the premium rate is ₹5 per ₹1,000 of coverage and you choose a policy of ₹10 lakhs, your base annual premium would be ₹5,000.
Let’s say, for example, two friends, Raj and Amit, both want to buy a term life policy worth ₹50 lakhs.
Both have the same coverage, but Amit ends up paying more than twice as much because his risk factors are higher. Note: The exact premium rates (₹3 and ₹7 per ₹1,000) are illustrative only.
The premium rate is a main part of life insurance. It shows you the cost of protection and explains why the amount can be different for each person. Ultimately, understanding premium rates isn’t just about knowing the math; it’s about making sure your family gets the right protection without straining your finances.
Written by
Neviya Laishram
Senior Editor
A senior editor with years of expertise, she fine-tunes content that connects, converts, and builds trust. She transforms heavy insurance concepts into clear, aha-moment reads. Writing is her passion, and thinking ahead is second nature. When not wrangling words, she’s crushing game levels because every challenge is a puzzle waiting to be solved.
Reviewed by
Vaibhav Kumar Kaushik
Senior Director – Life Insurance Strategy
Senior Director – Life Insurance Strategy at Acko, I drive customer-centric, digitally led strategies that shape the future of Life insurance. With expertise in new business development, D2C growth, and investment management, I’ve helped build and scale Acko’s Term Life offerings by aligning customer insights with innovative product strategy to fuel sustainable growth.
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