A term insurance policy is vital for everyone as it allows you to give your family a financial cushion against uncertainties. It enables you to safeguard the family’s financial future even in your absence. While term insurance is known to have the lowest premium compared to other life insurance products in the market, the premium varies based on various factors, which are discussed below:


Your age at the time of buying term insurance plays a vital role in the premium you pay. Generally, most insurance companies in India offer term insurance at lower premium rates for younger people. This is because when you are young, you are less likely to contract a life-threatening condition, and the chance of filing a claim is minimal. 

Lifestyle habits

It is a known fact that smoking or alcohol abuse can be detrimental to health, and it puts you at high risk of being affected by several diseases that can be life-threatening. Hence, if you are a chain smoker or consume alcohol regularly, the insurer will consider you a high-risk customer, and you may have to pay twice as much premium as a non-smoker. Thus, your lifestyle habits can affect your term insurance premium to a large extent. 


Many insurance companies consider your occupation or profession one of the critical factors while determining the term insurance premium. If you work in a high-risk environment like coal mines, oil and gas rigs, there is always a threat to your life because of the working conditions. Hence, the insurance companies charge a high premium to mitigate the high risk in offering you a life cover. 


Although the insurance companies do not promote or practise gender inequality, they believe that the life expectancy rate for genders is different. According to research on life expectancy, women tend to live longer than men. For insurance companies, this means women insurance buyers are likely to file for a claim, and so they charge a lesser premium for them than men for the same plan. 

Health history

This is another vital factor that affects the term insurance premium rate. If your family has a history of any chronic illness like cancer, the chances are high that you may be diagnosed with cancer in the future. Hence, the insurer may charge you a high premium to cover the risk. 

Type of insurance policy

The type of term insurance policy you purchase significantly affects the premium rate. The premium varies based on the sum assured you choose. The higher the sum assured, the higher the premium and vice-versa. Similarly, if you buy a regular term plan, the premium will be lesser. But if you are purchasing a term plan with a return of premium, you must be prepared to pay a slightly higher premium. 

Now that you know the different factors that affect the premium, do your diligence, and choose the policy carefully. The policy premium must be affordable so that you can pay it easily without compromising on your other financial goals.