It is not possible to predict the events of one’s life but it is definitely possible to plan and prepare for it beforehand. Life insurance lets you plan your life in case of any contingencies. In addition, it has grown into a smart investment tool too. Among all the other insurance plans, life insurance has been very popular and has been around since a long time.
It is one of the important parts of an insurance plan. Premium is the flexible element of an insurance policy. You can decide on the amount and time interval of insurance you want to pay as per your policy requirement. It is advisable to decide on a yearly premium. Get estimates / quotes from different companies and pick one that caters to your needs in the most suitable manner.
It helps you categories the purpose you want to serve with this policy. Mostly, the primary purpose is protection against risk, but insurance is also used for investment and tax saving purposes. By investing in an adequate insurance policy, you can save on the taxes you pay on your earnings as premium is exempt from income tax.
An optimum premium can be obtained by comparing 2 or more quotes submitted by various insurance companies. Also, within the same company, there are different policies that help you decide on the premium you end up paying.
Life insurance premium is based on three predominant factors:
1. Cost – The expenses of the policy to the insurer have to be considered carefully. It is advisable to keep the costs on a fixed basis rather than on variable basis.
2. Interest – Considering the interest accumulated till maturity is a good parameter that determines the amount of premium payable to you. The eventuality of an incident is fixed, but time is the crucial factor here. And the amount of interest will be a deciding factor for the calculation of premium.
3. Mortality – It is the probability of one’s expected death that becomes a determining factor in the life insurance premium you have to pay out.
Therefore, while insuring life against the unforeseen and unexpected, face-off with reality to look into the matters of life insurance premium.