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While searching for a lucrative investment option, you must have come across term plans on multiple occasions. So, what is a term plan? It is an insurance policy that financially protects your dependents in your absence. Not only do you leave your loved ones with a monetary backup but you also secure peace of mind during such uncertain times. But have you heard that term policies are cheaper when bought early in life? Allow us to elaborate on this front and offer some tips on how to take advantage of lower premiums.
How Does Your Age Affect Term Life Insurance Premium?
Learn why term insurance premiums are lower when you are younger, with the following reasons:
- You are perceived as healthier
Insurance companies view younger individuals as healthy when compared to older applicants. This is because as you grow older, age-related ailments begin to show up such as high blood pressure, diabetes, etc. Older individuals also become susceptible to critical illnesses such as cancer and strokes. Thus, as a younger applicant, you are considered as a healthy individual with lower risk. But this doesn’t mean you should or can skip the medical test.
- Younger applicants have fewer responsibilities
Buying a life insurance term plan at an early age allows you to enjoy affordable premiums as you have fewer responsibilities. After a certain age, you shall have a family of your own with home loans and other financial obligations. Thus, you will have to get higher insurance coverage translating to an increased premium amount.
- Lower mortality rate
As a young individual, the mortality rate for you shall be much lower. But as you begin to age, this risk starts to increase. So, the insurer will charge a higher sum for covering the risk of increased mortality rate when you are older. Therefore, you can avail cost-effective premium rates early in life.
How Can You Reap the Benefits of Lower Term Insurance Premium?
Here are some ways you can take advantage of an affordable insurance premium quote:
- Purchase term insurance early
Now that you know as a younger policyholder you can avail lower premium rates, make the most of it. As you begin your first job, purchase a term insurance policy to secure your parents from any untoward mishap. Because you have a backup for your loved ones, you can work towards achieving life goals such as buying a home, higher education, etc.
- Opt for a higher sum assured
Though you are getting a low premium quote, it doesn’t mean you compromise on other aspects like the sum assured. This is the amount that will be paid out to your family; thus, it must be more than enough. So, it is advised to grab the opportunity and get a higher coverage amount at comparably lower rates.
- Select better rider options
Riders are additional components that you can add to your insurance plan for extended coverage. These add-on covers enable you to safeguard your loved ones from various risks. Though you must purchase the rider over and above your policy premium, it comes at a nominal rate. But if you were to buy a couple of riders at an older age, the combined premium would be a hefty one.
With the above pointers, we hope that you have understood why term plans are cheaper at a younger age. Therefore, if you still haven’t secured your dependents with an insurance plan, opt for one today! As a first-time buyer, it is recommended to compare various plans and insurance providers to get the best available policy. Read the terms and conditions as well as the exclusions mentioned in your policy documents thoroughly.
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