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An increasing number of people are choosing term plans because of their affordability and higher coverage. Insurance companies consider several factors when determining the premium payable on such plans.

A few factors, such as gender and age cannot be controlled by the insured. However, there are certain factors that can be modified to lower the premium on term insurance plans.

• Excessive smoking or drinking – Both of these habits have negative health effects, which is why habitual drinkers or smokers need to pay higher premiums on online term plans. Every insurer requires the details of such habits before selling the plan because these factors affect the premium payable on the insurance plan.
• Hobbies – Certain hobbies like scuba diving, skydiving, boxing, and so on, increase the risk associated with loss of life and disability due to injury and accidents. This makes it riskier for the insurance companies to insure your life. You should not be surprised if you are asked to pay a higher premium or are even refused an insurance policy, if your hobby is perceived as excessively dangerous.
• Present health conditions – Your health is an important determinant of your mortality risk, which directly affects the insurance premium. An individual suffering from pre-existing conditions likes heart trouble or diabetes is at higher risk as compared to a healthy person and must pay more as premium. Insurance companies require details about your present health conditions before issuing the policy. Individuals who are over 45 years of age may require undergoing medical tests prior to availing the online term insurance plan.
• Longer duration or higher sum assured – Policyholders who want to avail term insurance for a longer duration or higher sum assured need to pay bigger premiums. Longer term or higher sum assured increases the exposure and risk assumed by the insurer in case of your demise during the policy period. You may consider reducing the duration or the sums assured, or find another insurance company, if you think the premium is very high.
• Obesity – Being obese increases the risk of other health conditions like diabetes or heart trouble. This increases the risk of the insurance company, which results in obese individuals needing to pay higher premiums.
• Riders – Riders like critical illness covers or premium waiver have an associated cost, which increases the overall cost of availing the term plan. Before you decide to include riders within the policy, it is advisable to take a step back and assess your needs.
• Making online purchase – Commonly, online term policy premiums are lower when compared to offline policies. Insurance companies pass on the reduced administrative and distribution cost reductions enjoyed through online sales to the buyers in the form of lower insurance premium.

Term plans have several benefits and are an excellent and affordable way to avail higher insurance coverage. You can further reduce the costs by considering the factors mentioned above.

About HDFC Life

HDFC Life, one of India’s leading private life insurance companies promoted by HDFC Ltd. & Standard Life Ltd., offers a range of individual and group insurance solutions. HDFC Life’s product portfolio comprises solutions, which meet various customer needs such as Protection, Pension, Savings, Investment and Health.