A few easy ways through which you can cut down the cost of an insurance plan
Life Insurance is a product that helps you allay all the fears about future financial needs when you are not there. The death benefit, if chosen smartly, should easily work as a replacement for your future income and your family would not have to compromise in any way whatsoever.
Life insurance is a must-have for a family person but if you have been putting off the plans due to any financial reason, then here are a few easy ways through which you can cut down the cost of an insurance plan.
The earlier you buy life insurance, the cheaper the premium would be. With age, the health risk increases and so does the premium cost. There are more chances of anyone making a claim when an individual is older as compared to when young and hence the premium rises with age. For example: A term plan for a 30-year-old non-smoking male for a sum assured of Rs 1 crore would cost on an average Rs 10,000 while a 40-year-old would have to shell out at least Rs 14,000.
Yes, buying an insurance plan online can be cheaper than buying it offline. While traditionally, people prefer the agent route to buy insurance plans, purchasing life insurance online could be cheaper by 5-20 per cent. The digital purchasing helps you save on the agent's commission, documentation costs, and allows you to enjoy discounts. The purchase can be made through web aggregators or the company's website. Apart from cost saving, online purchase also helps you in customising the plan to meet all your demands.
Compare Before Purchase
Another method of saving money while buying life insurance is to compare the products of different companies before making the purchase. The premium cost usually varies from company to company and a comparison would help you get the best value on the deal. This can be easily done through the websites of the insurers.
Premium payments can be done monthly, quarterly, half-yearly, or annually but the cheapest form of premium payment is annual. Insurers generally offer discounts when premium payment is done annually as there's less risk involved in it. In the case of a monthly payment, there is the risk of lapse while the insurer has to provide cover for a long-term (one year).
Choose Right Sum Assured
The higher the sum assured, the costlier the premium. Hence, it is important to carefully arrive at the sum assured you think your family would be needing. If you end up buying a life insurance plan with a sum assured of Rs 2 crore when a Rs 1 crore plan would suffice then you would end up paying more than what you should have ideally.
As a general rule, experts say the sum assured should be about 10 times your annual earnings.
Pick Riders Carefully
Life insurance plans offer valuable riders including critical illness benefits, accidental death benefits and others. However, we need to keep in mind that the addition of riders would lead to an increase in premium cost. You must assess your risks before the purchase and pick only those riders who suit your needs.
The premium cost is a result of your health condition. If you are a smoker or drinker, you are bound to pay a higher premium as there is more risk involved for the insurer. In fact, the premium cost for a smoker could be 40-50 per cent high. So making lifestyle changes like quitting smoking and drinking will not only be beneficial for your health but would also make insurance costs go easy on your purse.