Cost of Life Insurance

The cost of buying a life insurance policy depends on:

  • Your age, gender, health, occupation and hobbies
  • The type of policy you select
  • The sum assured i.e. amount you choose to insure yourself for
  • The term i.e. number of years you propose to remain insured
  • The premium paying term i.e. number of years you choose to pay premium
  • The mode i.e. frequency with which you choose to pay premium (single payment, annual, half-yearly, quarterly, monthly or via the Salary Saving Scheme)
  • The riders i.e. additional benefits you select, their term and premium paying term.

Here is an example of a term life insurance plan for a 30-year old male.

Typically, a term plan for a sum assured of Rs.10 lakh for a duration and premium paying term of 30 years costs about Rs.3,430 per annum. In the event of death of the policy holder during the term of the policy, the nominee receives the sum assured immediately. If the insured survives the term of the policy, she/he does not receive any money.

There is a variety of life insurance policies out there – some offer a refund of the premium to the insured while some offer a portion of the sum assured. There are yet others who offer the full sum assured to the insured at the end of the term. The trick is to ensure that your insurance plan achieves the primary goal of providing for your family in the event of you not being there.