Monday, 28 November 2011

Factors decide the cost of your life insurance policy

Cost of life insurance policy is the premium payable for a life insurance policy. The person who joins a life insurance policy should pay premium only. No any other amount you should pay for keeping the police alive, if you pay premium in time.There are a lot of things which decide the premium of a life insurance policy.

Age or the insured: If you are in young age when you join the life insurance policy, you should pay only lower premium than elders. The idea is that when you growing up you are more near to old age and death.

Health of the insured: The insurance company asks you about your health condition. It is not just a friendly conversation. They want to know do you have any illness which may cut your life span. If so the chances of paying claim is more than a healthy person. If you are suffering from any such illness they held a medical checkup with their panel doctors and allow you to join as their recommendations. Sometimes they allow you to join with a high premium with your health condition which increase your cost of insurance.

Occupation and hobbies of the insured: If the occupation or hobby of a person who wish to join a life insurance policy is risky the person should pay a high premium.

Type of the policy: The premium of a life insurance policy differs according to the type of policy you take. If you go for a money back policy you should pay high premium. For endowment policy you should pay fewer premiums than money back policy. For pure term life insurance policy the premium is very low than other policies.

Amount of sum assured: The premium of life insurance policy depends on the amount of sum assured also. If you want high sum assured for any type of life insurance policy you have to pay high premium than lower sum assured of the same type of life insurance policy.

Number years you seek the insurance cover: Premium of the life insurance policy depends upon the term (Number years) of the life insurance. If you want life insurance protection for a long period, you need to pay premium for a long time. Then the total cost of your life insurance will be more than short-term life insurance policies.

Number of premium paying years: Some life insurance policies allow you to pay premium for a fixed several years and the life cover will continue for few more years. In such types of policies, the premium paying term also affect the total amount or premium and the cost of life insurance policy.

Premium paying mode: Life insurance policies normally allow to opting the premium paying mode as monthly, quarterly, half-yearly and yearly. When the frequency of premium increases in a year, the cost of insurance also increases. Monthly option requires more total amount of premium in a year than quarterly premium option and so on.

Riders of life insurance policy: Life insurance policies are available with a lot of riders such as death of parent or guardian, medical treatment etc., and each riders increase the amount of premium and the cost of life insurance.

All the above mentioned factors will affect the premium and cost of life insurance. When you join a life insurance policy, check all aspects and avoid unnecessary aspects which increase the cost of your life insurance.

Factors decide the cost of your life insurance policy

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