Prime Factors That Affect Premium Calculation

The policyholder pays a sum known as the 'premium' when purchasing the policy and then at regular intervals thereafter, depending on the frequency and form of payment. Every insurer's premium calculation is influenced by three key criteria. Due to these considerations, the premium amount for the identical coverage/sum insured fluctuates amongst insurers. The factors that influence premium calculation are listed below.

Factors That Determine Premium Calculation

Following are the factors that will determine your premium calculation: 

1. Smoking History

We're all aware that smoking and drinking are bad for your health and can raise your chances of getting life-threatening diseases. Smokers and drinkers pay a 40 percent to 60 percent greater premium than nonsmokers and drinkers. As a result, not only is smoking and drinking bad for your health, but it's also bad for your money.

2. Age

The price of the policy is also determined by the website through which you acquire it. Thanks to the internet revolution and easy access to the internet via smart phones, all major insurance businesses now have an online presence, allowing for convenient policy purchasing via the internet. Selling insurance policies online is also less expensive due to fewer administrative costs, which lowers premiums. Offline platforms contain a lot of intermediary fees, such as commission, paper work, and administration, which all add up to the premium you must pay.

3. Physical Illnesses 

We all know that smoking and drinking are terrible for your health and can increase your risk of developing life-threatening illnesses. Smokers and drinkers pay a premium of 40% to 60% more than nonsmokers and drinkers. As a result, smoking and drinking are not only bad for your health, but they're also awful for your wallet. You will also be required to produce your personal medical documents as the policyholder. These records will ensure that you do not have any chronic ailments or possible health problems, as well as keeping your premium in check rather than increasing it.

4. Buying Policy Online

The cost of the policy is also determined by the site you use to purchase it. All major insurance firms now have an online presence, allowing for easy policy buying via the internet, thanks to the internet revolution and easy access to the internet via smart phones. Selling plans online is also less expensive since there is less administrative overhead, which lowers premiums. Offline platforms have a lot of intermediate costs like commission, paper work, and administration, all of which add up to the premium you have to pay.

5. Other Insurance Records

Insurance companies generally charge a higher premium to people who have never been covered in their lives. Uninsured people are expected to visit doctors and clinics frequently in order to get the benefits and rewards of medical care, according to health insurance companies. As a result, insurers raise the premium to cover all expenses.

Conclusion

As stated in the above article, the premium you must pay for a life insurance policy is determined by a number of factors, including your age, total coverage (amount assured), medical history, gender, lifestyle, and occupation. When purchasing an insurance policy, it is critical to consult with your insurance agent and to be completely honest about everything.

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.