Life insurance is an important policy that provides financial security to the policy buyer. It helps the buyer to provide safety to his loved ones in his absence.
Therefore, people must purchase life cover policies for themselves. At the same time, it is also important to find ways to reduce cover expenses and utilize more benefits from the policy. One may find numerous ways and tips to save on the life insurance premium without compromising the coverage.
Tips to Save on Life Insurance Premium Payment
Start Early
A person should start buying life insurance premiums at a young age. Life insurance plans charge lower premiums for young people as compared to older persons. Young people are not vulnerable to health issues. Therefore, they may buy policies at a lower rate.
Let us understand it with an example - Mr. Vikas is 20 years old and wishes to buy a life cover policy to provide coverage to his loved ones. Mr. Aman is a 50-year-old who wishes to save income for his retirement. So, he also wants to buy the life cover policy. A 50-year-old person is prone to many health risks as compared to a 20-year-old person. Therefore, the insurance company shall charge more life insurance premium payments from Mr Aman as compared to Mr. Vikas.
Also Read: Why Get Health Insurance Early in Life?
Regular Health Check-ups
The policy buyer must get regular health check-ups. This helps maintain a healthy lifestyle. This leads to lower insurance premiums. The insurance company generally offers discounts for people who have a clean bill of health. Therefore, a person must maintain a healthy lifestyle to avail discount on the policy.
Example: A 40-year-old individual may qualify for a lower premium if he maintains a healthy lifestyle and contacts the doctor in case, he feels any health issues. At the same time, a 40-year-old person with health issues may have to pay more insurance premiums.
Compare Policies
A person must compare the options available before finalizing a policy. Different insurance companies offer different kinds of coverage with different features and prices. Therefore, it is important to understand the policies of different companies and choose one wisely.
Example: Mr Sharma compared different kinds of policies which shows that company A offers a Rs 1 crore term plan at Rs 9,000 per year. At the same time, company B provides the same coverage at Rs 7,500. Mr Sharma may choose the plan offered by company B if he wishes to save on insurance premiums.
Also Read: Comprehensive Checklist For Health Insurance
Term Insurance Plans
The policy buyer must choose a term cover plan. This plan offers pure life insurance coverage as it does not have any investment features. At the same time, it also charges lower insurance premiums as compared to the normal or traditional life insurance policy.
Example: A person may buy the term plan that offers a coverage of Rs 1 crore at a Rs 10,000 premium per year. At the same time, the traditional plan may cost Rs 15,000 with similar coverage. Therefore, choosing a term insurance plan is beneficial as compared to other plans.
Also Read: Top 10 Term Insurance Plans
Online Purchase
It is beneficial for a person to buy a life insurance policy online. The insurance companies offer different kinds of discounts which leads to reduced premiums when people buy the policy online. The insurance company also encourages people to buy the policy online to reduce the administration cost. The saving on such costs goes to the customer.
Example: Buying a term insurance plan may provide a discount of 20%. A life insurance plan which offers Rs 1 crore coverage may cost Rs 8,000. The same coverage may cost Rs 10,000 insurance premium while buying off-line.
Choose Right Coverage
A policy buyer must understand and assess the need for insurance accurately. He should select the coverage based on his policy needs which may protect his family and loved ones. In short, he should avoid unnecessary coverage which may cost more life insurance premium payments.
Example: A family with 4 members may only need Rs 1 crore life insurance coverage. However, people generally purchase coverage of Rs 2 crore which costs them more insurance premiums. Therefore, it is always advisable to choose sufficient coverage and fulfill the insurance needs. This helps lower the insurance premium.
Policy Tenure
A policy buyer must select the tenure that fulfills his financial goal. Selecting longer tenure may cost a lower premium as compared to shorter tenure.
Example: A 24-year long-term insurance plan may cost a person Rs 12,000 per year. In this case, a 30-year long-term insurance plan should cost him Rs 15,000. However, the insurance company considers the buyer to get a discount on buying a long-term plan. Therefore, the insurance company may charge less than Rs 15,000 for such people.
Also Read: Limited Pay vs Regular Pay in Term Plan
Avoid Add-ons
Add-ons generally increase the insurance coverage. People buy add-ons to enhance the coverage of their policy. However, such add-ons also increase the premium. Therefore, people must assess the needs of add-ons and purchase the policy accordingly. Sometimes, they may buy add-ons without any need which may lead to more insurance premiums.
Example: Mr Sharma is 35 years old and has a wife and one child. Rs 1 crore coverage is sufficient for him. However, if he includes an add-on, the insurance premium is likely to increase. Therefore, the policy buyer must avoid unnecessary expenses by excluding add-ons.
Policy Lapses
The policy buyer should not let his policy lapse. He must make a timely life insurance premium payment to ensure continuous coverage. Policy lapses may result in higher premiums. Many times, people forget to renew their policy. This leads to restarting the policy process which also increases the administrative cost. Therefore, it is important to make timely payments to avoid policy lapses and higher premiums. Insurance companies also give a grace period under which the policy buyers must renew their plans.
Bundle Policy
Bundling insurance policies is a valuable strategy to save on life insurance premiums. This approach involves purchasing multiple insurance policies from the same insurer. This often leads to discounts or reduced premiums.
Quit Smoking
Quitting smoking can considerably impact life insurance premiums. This leads to cost savings for policy buyers. Insurance companies categorize smokers as high-risk people due to the well-established health risks associated with smoking. As a result, smokers typically pay higher premiums compared to non-smokers.
Example: A 35-year-old smoker might pay ₹15,000 annually for a ₹1 crore term insurance plan. However, if the same individual quits smoking and applies for the same coverage as a non-smoker, the premium could drop to ₹9,000. Insurers consider non-smokers to be at lower health risks, leading to reduced premiums.
Review and Update
A policy buyer must stay updated with the recent changes and developments in the insurance industry. Insurance companies generally launch numerous kinds of life insurance plans with different terms and conditions. The policy buyer must understand such plans when they launch and analyze how the plan could be beneficial for him. He should buy the plan that aligns with his needs and requirements.
Annual Premium Payment
A person must pay his premium annually. A person may prefer paying a premium monthly. However, he must understand that paying the premium yearly can be beneficial for him. The companies often offer discounts for the policy buyer who pays a premium yearly. This also helps in avoiding administrative costs. For example, insurance companies generally incur administrative costs in processing and managing the premium payments. The policy buyer can reduce such costs by paying the premium annually. This shall reduce the cost of the company and lead to lower the cost of premiums.
Also Read: Difference between Sum Insured and Sum Assured
Avoid High-Risk Activities
Avoiding high-risk activities can help in saving on life insurance premiums. The insurance companies assess the risk factors while determining the insurance premium. A person has to pay more premiums to buy the policy if he engages in high-risk activities. Avoiding such activities can also help reduce the likelihood of claims. The policy buyer is more likely to raise the claim if he is engaged in dangerous hobbies or sports as compared to the policy buyer who lives a simple life.
Contact PoSP Agent
PoSP (Point of Selling Person) also works as a normal insurance agent. IRDAI (Insurance Regulatory and Development Authority of India) introduced this concept to meet the unique demand of people. A person may become a PoSP agent by attending the training session and clearing the PoSP exam. The PoSP also sells policies like normal insurance agents. However, there are some differences between the two. A PoSP may sell different kinds of policies for many insurance companies. At the same time, a normal agent can work for only one company. Therefore, the earning scope is high in the PoSP profession.
Nowadays, people also prefer to become a PoSP as compared to normal agents. A PoSP may work from home. He does not need to open an office or hire a staff. He can work at his convenience. A PoSP agent may advise a policy buyer about the savings on premiums. A policy buyer may contact a PoSP agent to learn how to save on insurance premiums.
Also Read: Why buy insurance from PBPartners?
Conclusion
There are many ways to save on life insurance premiums. A policy buyer should buy the policy at a young age. He should maintain a healthy lifestyle and does not smoke. A smoker is more prone to health risks. So, the policy buyer must quit smoking to reduce the insurance premium. He should also choose the right coverage and try to invest in a term insurance plan. The policy buyer can also choose a long-term policy and pay the premium annually. He can also buy group insurance which shall cover all the family members and reduce the insurance premium. The policy buyer may also compare the life insurance plan that the companies offer. He may review the policy and choose one accordingly.
FAQs
What is a life insurance premium calculator?
A life insurance premium calculator is an online tool that helps the policy buyer calculate the amount he needs to pay to the insurance company.
What is the full form of PoSP?
Point of Selling Person is the full form of PoSP.
What are some benefits of becoming a PoSP?
One may find many benefits in working as a PoSP agent.
- A person can work at his convenience. He may work as per his choice and need.
- A person does not need to complete a diploma to become a PoSP. He needs to clear the exam.
- A may sell different kinds of policies and earn a reward on them.
What are the life insurance schemes in India?
Here are life insurance schemes in India.
- Child Plan
- Retirement plans
- Whole life insurance
- Term life insurance
- Money back plan
Who can become a PoSP advisor?
Here are the persons who may become a PoSP.
- Home-maker
- Self-employed
- College student
- Retired employees
What document do I need to become a PoSP?
A person needs to have the following documents to become a PoSP.
- 10th Class Marksheet
- Aadhaar Card
- Bank Account
- PAN Card
How to file a claim for a life insurance policy?
Here are the steps that one may follow to file a claim for a life insurance policy.
- Contact the insurance company: The nominee must contact the insurance company if the policy buyer dies.
- Fill in the form: The nominee should fill in the claim form that the insurance company provides.
- Surveyor: The insurance company shall appoint an agent who shall confirm if the policy buyer dies.
- Payment: The insurance company shall make the payment of the policy to the beneficiary after confirmation from the agent.
Who is the nominee?
A nominee is the person who shall receive the death benefit if the policy buyer dies. The policy buyer may choose a nominee who shall receive the benefits of the policy if the policy buyer dies during the tenure of the policy.
Here are the persons who may become a PoSP.
- Home-maker
- Self-employed
- College student
- Retired employees
What document do I need to become a PoSP?
A person needs to have the following documents to become a PoSP.
- 10th Class Marksheet
- Aadhaar Card
- Bank Account
- PAN Card
How to file a claim for a life insurance policy?
Here are the steps that one may follow to file a claim for a life insurance policy.
- Contact the insurance company: The nominee must contact the insurance company if the policy buyer dies.
- Fill in the form: The nominee should fill in the claim form that the insurance company provides.
- Surveyor: The insurance company shall appoint an agent who shall confirm if the policy buyer dies.
- Payment: The insurance company shall make the payment of the policy to the beneficiary after confirmation from the agent.
Who is the nominee?
A nominee is the person who shall receive the death benefit if the policy buyer dies. The policy buyer may choose a nominee who shall receive the benefits of the policy if the policy buyer dies during the tenure of the policy.
