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Life insurance is a contract between two entities one is the insurance company and the other is the insured. The insurance company agrees to pay a lump sum amount in the event of individual’s death or any other critical medical condition that is covered under the policy. The Insured in return pays Premium for the service given by the insurance company.
Life insurance gives financial security to the family in case of Accident or death. The entire family gets collapsed due to the sudden death of the earning person of the family. However, life insurance is a financial tool which protects and allows the family to live the same lifestyle even after the demise of the bread winner of the family. The insured gets lots of confidence as the financial loss due to accidents are covered by the insurance company. One should get life insurance to protect them and their family from unexpected occurrence.
Premium is the money you pay to the Insurer periodically, premium offered is different to different people. The insurance premium calculated takes many factors into account. Basically the life insurance premium calculated considers the Risk associated with a person profile. Insurer notes each and every factor at the time of determining the insurance premium to the individual.
Age: Age is one of the main factors which help to determine the premium. Older people have to pay more premium as they are prone to high risk compared to younger ones. So if you opt for a life insurance at the age of 40 or 45 you would be paying a higher premium which would be less if you had bought it at 20 or 25. Premium increases with age.
The kind of insurance Coverage you choose also has an impact on the premium paid. When compared to other coverage, Term life insurance offer higher coverage at lower premium, but it increases with age. If you opt for longer term, obviously the premium will be higher. Permanent life insurance is costlier than term life insurance as it has the benefit of locking the premium. It charges more as part of the premium is put in other financial investments. This makes your insurance Policy to earn cash value within certain period of time.
Premium rate for women are lower than men as women are expected to live longer than men. It is proven that women have longer life span in most of the countries.
Based on your lifestyle, your insurance premium is set high or low. You may have to answer many questions like whether you smoke or drink; also the insurer will be keen to know your occupation and hobbies and the dangers involved in it. For example; if you are a deep sea fisher or involved in some dangerous work, the premium will be higher as your profile attracts more risk.
Every individual have to undergo series of test before taking life insurance. The test reports include weight, blood and urine samples, blood pressure, Ultra sound and X-rays. For serious illnesses like high cholesterol, diabetes, HIV and others scans are taken. The dependency of nicotine and drugs in the blood are also checked and other factors such as heart diseases in the family are also recorded at the time of taking the policy.
The cost of the policy is not the same in all companies. It differs from company to company based on the insurance benefits offered. Also, you need to go for a reliable insurance company; they should process the insurance claims whenever necessary within the stipulated time. The insurance company should have A+ rating. Check for all these details before going for life insurance policy.