Life Insurance Premiums: Everything you need to know

Age: Age of the policyholder is one of the most crucial factors. In most cases, younger individuals do not constitute high risks. Therefore, their premiums usually remain low.

Sum Assured: This sum would be given to the nominees in case of the policyholder’s death. This implies, the higher the sum assured, the higher the premium.

Policy Term: The length of the policy coverage period is also a factor affecting the premium. Premiums could be higher on longer-term policies.

Medical History: A major role is played by the health condition of the person. Insurance companies often ask for a medical examination as a way of understanding the overall health and any pre-existing conditions. Poor health may lead to higher premiums.

Lifestyle Habits: Some lifestyle choices such as smoking or consuming too much alcohol can increase the risk for the insurer. This consequently leads to higher premium.

Occupation: The premium depends on the nature of one’s job. This can lead to higher premiums for riskier occupations.

Gender: Sometimes, gender can also affect the premium. This might have reflected the historical fact that women have traditionally been regarded as low risk, which might have contributed to slightly lower premiums.

Riders and Add-ons: The policy can also incorporate additional features, or riders, such as accidental death benefit or critical illness, which offer even further protection. However, additional riders can increase your premiums.

Premium Payment Frequency: The amount of premium can also depend on how frequently the premiums are paid, whether they are monthly, quarterly, annually, etc.

Discounts and Bonuses: Some insurance companies give discounts or bonuses. For example policyholder’s loyalty, good health, or other criteria. Such discounts can help reduce the overall premium.

Visit the Insurance Company's Website: Visit your insurance company’s website. Navigate to the ‘Login’ or ‘Customer Portal’ option.

Login to Your Account: Sign in by using your policy details if you have an online account. Otherwise, you may have to register first.

Select the Premium Payment Option: Go to the payment page. Select your payment method (credit/debit card, net banking, UPI, etc.).

Enter Payment Details: Make sure you input the payment details like amount and your card or bank details correctly. Verify the information before proceeding.

Confirm Payment: The company will send you an email or SMS in confirmation.

Login or Register: If you are a first-time user, register or log in using your existing credentials.

Navigate to Payments: In the app, search for ‘payments’ or ‘premium’.

Choose Payment Method: Choose your preferred payment option and supply the required information.

Verify and Confirm: Check the details and confirm the payment. Receive confirmation through the app.

Visit Your Bank: Use internet banking or visit your bank.

Choose NEFT/IMPS: Click on NEFT or IMPS transfer.

Enter Details: Provide the insurance company’s account details, policy number and the premium payable into their account.

Initiate Transfer: Start the transfer and preserve the transaction reference number for future use.

Submit ECS Mandate: The ECS mandate form should be filled and given to your insurance company.

Select Bank Account: Selecting the bank account from which premiums will be automatically deducted.

Regularly Monitor: Monitor your balance for sufficient funds for the auto-debit.

Risk Pooling: Insurance as a big collective hug to your money. You are a member of the pool with the other policyholders and paying your premium. This constitutes a safety net for every member of the society who experiences any unexpected events like the accidents and illnesses.

Claims Settlement: When an unfortunate event occurs and you need to claim, the insurance company collects the premiums and uses them to pay for claims. The essence of insurance, in particular, is to support your family financially when something unfortunate happens, like death.

Operational Costs: There are numerous costs that come with running an insurance company, such as wages, rent, and technology. Premiums help to defray these operational costs so that the company operates smoothly and serves its policyholders in an efficient manner.

Investments: Insurance companies use these funds to buy stocks and bonds. The yields from these investments offset the claim costs and stabilise the premium rates.

Product Development: New insurance products are also influenced by premiums. The companies channel the money collected into research and create policies which are able to meet the changing needs of the customer.

Reserve Funds: Reserve funds hold a small fraction of a premium. These funds act as a cushion towards times when there is a high number of claims made or sudden financial obstacles. It also acts as insurance for the ability of the company to fulfil its obligations to the policy holders.

Regulatory Compliance: Insurance industry is regulated and companies must meet some financial standards. The regulatory requirements for the insurance sector are also met with the provision of premiums thus, stabilising and making the insurance sector reliable.