When people consider purchasing a policy for themselves, there are different factors they will feel. Among the main factors will be the cost of the policy. Usually, this cost is paid in the form of a premium. The premium is decided depending on the policy type and its tenure. For many procedures, the premium is low, and for others, it is high.
Premium is what keeps a policy operational and prevents it from lapsing. This is also applicable to an endowment policy. However, how does a premium work in this plan? And what are the factors that decide the premium for this plan? Read on to get more information.
What is an endowment plan?
It is a life insurance policy offering the dual policyholder benefits of investment and insurance under the same plan. Investment is made in a fund of your liking. The returns from this fund will be given to you once the policy matures and you survive the term. These returns can help you live a financially secure life.
The insurance part protects your loved ones from life risks in your absence.:
1. Lifestyle of the insured
One of the factors that insurers generally scrutinize when a person is looking to buy a policy is their lifestyle. The type of job you do, the risks involved in it, whether you drink or smoke, and whether you exercise are some indicators of your lifestyle. Believe it or not, lifestyle greatly affects how much you will have to pay for the procedure.
For example, if you opt for a policy of 15 years but happen to be a heavy smoker, the insurer might consider this a risk factor. In such situations, the insurer could charge you a higher premium than a non-smoker.
2. Sex of the policyholder
A factor that many people tend to overlook related to premiums is the sex of the policyholder. Men and women have different lifestyles, which impact the longevity of their life. As per studies done by various experts, it is said that women tend to live five times longer compared to men. Factors such as their occupation and lifestyle help in enhancing their longevity. So, if the policy is in a woman’s name, the insurer might charge her less. On the other hand, the insurer could charge a male policyholder more.
3. Sum assured of the policy
When you purchase thispolicy, your main objective would be to receive a large sum assured amount. Depending on your life goals, you will opt for a policy that offers a good amount of assured sum. However, a higher sum assured means a higher premium. For example, the tip of a policy with a sum assured of ₹50 lakhs would be lower than that of a sum assured of ₹ two crores.
This is the role that premium plays in this policy. When using thebefore purchasing the policy, consider the factors that could impact your premium.