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Calculate and See for Yourself How Starting Young Gives You Lower Premiums

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August 10, 2023

Beginning early has great advantages, especially when it comes to financial planning and future security. This also holds true when it comes to obtaining insurance coverage. Starting young, whether for life insurance, health insurance, or any other type of coverage, can help you lock-in lower premiums and save you significantly in the long-term.

When determining premiums, insurance companies consider a variety of factors, including age. The younger you are when you buy insurance, the lower the insurer's perceived risk, resulting in lower premiums. Let us delve deeper into the reasons why starting young results in lower costs.

1. Better Health Profile: Younger people typically have better health profiles than older people. Health problems tend to accumulate over time, and the risk of developing chronic illnesses rises with age. Because health is an important factor in determining premiums, your premium will be lower, making the policy more affordable. If you are in good health, you may even be exempt from all medical examinations required to qualify for the policy.

2. Insure Your Family: The primary goal of buying insurance is to provide financial security for your family. If something were to happen to you, you would be financially vulnerable because the likelihood of having a contingency plan is much lower at a younger age. A term insurance policy purchased at a young age can protect your family and ensure they can continue to live comfortably without sacrificing their way of life.

3. Longer Policy Duration: When you buy insurance at a younger age, you are more likely to have a policy that lasts longer. Insurers prefer customers who will pay premiums for a longer period of time without filing claims. Because of the longer duration, they can spread out the risk and offer more competitive rates.

Let us see a hypothetical example to show how starting young can result in lower premiums. Consider the following two people: Sameer and Rajiv, both 25 years old. Sameer decides to buy a Rs. 3,75,00,000 term life insurance policy, whereas Rajiv waits until he turns 40 before making a decision.

We can estimate the premiums for both individuals using the Term Insurance Premium Calculator. Assuming they are both in good health and non-smokers and choose a 20-year term policy, their premiums could look like this:

Sameer (age 25): Rs. 1500 per month

Rajiv (age 40): Rs. 3750 per month

In this example, Sameer pays Rs. 1500 every month for 20 years, for a total of Rs. 3,60,000 throughout the course of the insurance. Rajiv, on the other hand, pays Rs. 3750 per month for the same coverage and duration, totaling Rs. 9,00,000 over the course of the policy. Sameer saves Rs. 5,40,000 in premiums over Rajiv by starting young but having the same coverage quantity and duration.

This example demonstrates the substantial financial benefit of starting early. By purchasing insurance early, you can lock in reduced premiums and potentially save thousands of dollars over the life of the policy.

Conclusion

You can see the tangible financial benefits of starting young by calculating premiums at various ages. So don't put it off any longer. Begin planning for your insurance needs today to secure your financial future while benefiting from the lower premiums that come with starting early.

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ARN: ED/07/23/3392

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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