A life insurance policy is not just a backup plan but a smart way to secure one’s future. In India alone, there are 360 million insurance policies and numbers never lie.
It is estimated that by the year 2020, there will be a rise in savings at a projected rate of 35% as against 26% in the year 2010. This is an interesting shift as the growing uncertainty of the economy is reflected in the saving habits of individuals.
However, the key to making more money is to know how to save money. Some of the smart ways to reduce life insurance premium include:
- Get insurance cover if you haven’t now
- Select appropriate policy period
- Invest in health
- Buy insurance online
- Make payments on time
Each of these points has been discussed in detail in the following sections.
Get Insurance Cover if You Haven’t Now
It is never too early to start investing and ideally it will help if one starts saving from day 1. Most investors are unaware of the fact that life insurance premium is lower for those who are younger since one has a productive life ahead the risk associated with it is relatively low.
Investors need to understand that with time, and age, the amount of risk goes up and for this reason, it is better to invest now rather than repent, and pay more, later. For example, taking an insurance plan 5 years later would mean that it may cost Rs 1.5 lac more.
Remember to compare policies before zeroing in on one since you will be able to get the best possible deal this way. Also, look at add-on plans or riders that can help make your insurance plan more complete and provide added coverage without opting for a different insurance scheme.
Select the Appropriate Policy Period
Another key feature that one needs to take into consideration is the tenure of the life insurance plan. This is an often overlooked factor due to which investors end paying more.
A misconception that investors have is that the safest option is to opt for the longest time duration. However, this is not the best idea since one must select the appropriate policy period that will cover the investor, at least during the earning years.
Furthermore, this will help one avoid paying a premium amount that is unnecessary and that eats into one’s savings post-retirement.
Invest in Health
Health is an important aspect,sincethe premium amount is calculated based on one’s health. So, the healthier and fitter you are the more reasonable the insurance premium will be.
Since lifestyle diseases are on the rise due to a sedentary lifestyle one must invest in one’s health. If one is unable to keep blood pressure and diabetes in check will have a significant impact on the premium amount to be paid.
Also, a history of drinking and smoking can cause the insurance premium to go up since these are risk factors. One may assume that these factors are overlooked but they are quite important while calculating the insurance premium.
Buy Insurance Online
Considering the general trend these days, insurance companies are marketing their online products, including life insurance, for a number of reasons. To begin with,it helps one save on cost when compared to the offline policies.
On an average, online term insurance plans are 30-40% cheaper when one purchases it online.At the same time, investors are more active while making investments.
Also, online policies are hassle-free both for the investor and the insurer. However, one must not neglect to ask queries before opting for an insurance plan and make an informed decision.
Make Payments on Time
Another smart way in which investors can reduce life insurance premium is by making payments on time. It may seem harmless but the late payment fee will add an extra cost to the insurance premium, which is completely avoidable.
If the late fee is not daunting enough, on missing paying the premium on time the insurer may ask the investor to undergo a thorough medical examination. As mentioned earlier on, if one is not healthy then the insurer can raise the premium amount to be paid.
Always aim to pay the premium on or before time and remember that foreven one default in payment you won’t get a free pass. If you have defaulted a few times then you can be certain that you will be added to the defaulter’s list, which can ruin one’s financial standing from the policy perspective.
A smart investor will always keep these points in mind in order to clinch the best life insurance plan. At the same time, investors can secure their future and save some money at the same time.