Does Term Insurance
Premium Increase Annually?
  • Term Insurance Premiums
  • Factors affecting it
  • Life Long Security
Does Term Insurance Premium Increase Annually?
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Let's dive in: Term Insurance Premium increases every year

We all love our family and want to live by their side till we take our last breathe. But have you ever thought of a situation where the sole breadwinner of a family meets with an unexpected demise? Where the individual has a responsibility to serve more than 2 dependants, how do they all manage? To overcome this challenging scenario in our family, term life insurance was introduced. And it becomes quite obvious to buy a policy which can support our family in tough times when we're gone.

But the only thing that concerns us vividly is- the increasing term insurance premiums. It's not always the case that your term life insurance premium increases for instance, or anytime without you knowing about the same. In this article, we'll get to know- in which conditions and why term insurance premiums increase, and how we should combat with increasing yearly premiums.

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Do Term Insurance Premiums increase every year?

The premium amount to be paid after purchasing a term life insurance increases in specific circumstances. Based on several factors like- the renewal of your plan, adding benefit riders to it, increasing sum assured amount, inflation or CPI, and more.

Some of the policies have automatic yearly increment options which make it feasible to get a higher sum assured amount.

Aspects of Premium increasing every year

This table illustrates the considerable factors which can affect your premium amount:

Age A young person has low health risks so it becomes a mandate to charge them a low premium unlike senior citizens.
Gender Average life expectancy of women in India is more than that of men. So, the term insurance policies are available for a longer tenure for women but the premiums will be increased as the time passes.
Lifestyle & health conditions Living a healthy lifestyle costs you nothing but a lower premium. A smoker or alcohol consumer policyholder can avail all the benefits of a policy but at a higher premium cost.
Occupation A high-risk job can be life-threatning making the policyholder's life more prone to loss. Hence, that risk of anytime loss might cost you an extended premium.
Sum assured The chosen sum assured is directly proportional to your premium amount. Meaning higher sum assured will cost you higher premium for your policy as well.
Premium tenure The timeframe you choose to pay your premium amount will decide its frequency. If you've chosen to pay until a specific time, the premium will be higher. But if your policy says to pay premums regularly, then you need to pay affordable premiums regularly throughout the policy term.

Differentiating Increasing and Level Premiums

Understand here how should you choose between a level premium or an increasing premium:

Factors Increase in Premiums Level Premiums
Initial affordability Lower at the initial period Higher since the initial period
Premiums increment Gradually increases over time If you choose it, the premiums will be consistent
Financial planning Short-term flexibility Long-term flexibility
Longevity strategy Consider what you want to achieve with this policy Budgeted consistency throughout the plan term

How to Avoid Increasing Premiums on Term Insurance?

Premiums on your term insurance can make you feel irritated or sometimes financially shrinked. But you can avoid the increment of your premiums by following these steps:

  • Young AgeBuying term insurance policy at a young age can help you cut down heavy premiums as you've a low risk of losing your life
  • Longer policy tenureAn elongted policy tenure can impact your monthly premiums to lower it.
  • Add ridersAdd selective riders that you require to your policy to get maximum benefits.
  • ComparisonCompare plans before buying it straight as it will give you understanding of plans that suits you the best.

Bottom Remarks

Every term insurance plan comes in handy and personalized with its given features aligning towards your needs. But you have to pick out which policy you require according to your affordibility and future goals. With a customizable feature, it is tough to manage paying hefty premiums every month, that too with an increasing yearly amount.

But you can gain a confidence of purchasing only the right plan for you at an affordable premium range. gives you the freedom to compare a tailored plan for the security of your loved ones.

Does Term Insurance Premium Increase Annually?: FAQs

1. How much does a premium increase per annum?

The yearly premium increase is dependent on the policy plan you've purchased. Or the sum insured by your policy provider influences the increase rate of your term plan.

2. What if I'm not able to afford increasing premiums at a later stage?

You can explore other policy types or the coverage amount/sum insured may be adjusted in this scenario.

3. What will happen if I miss paying an increased premium for my policy?

If you're unable to pay your premiums even within the grace period (30 days for this instance), your term life policy will lapse. However, it depends upon the insurance providers, in how many days

4. How an increased premium on my term insurance policy may benefit me?

It can help you save taxes under Section 80C of the Income Tax Act, 1961. Eventually, the insured's nominee will get the benefits of coverage amount tax-free.

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May 17, 2024

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May 17, 2024

I bought a Bandhan Life Insurance through PolicyX, and I must say the level of communication and assistance I have received has been truly impressive.

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Yash Tomar


May 17, 2024

After getting advice from the PolicyX experts, I chose a Bandhan Life Insurance term plan. Thank you, PolicyX, for helping me buy a term plan at such a low premium.

Sahil Singh Kathait

Written By: Sahil Singh Kathait

Sahil is a passionate content writer with over two years of expertise in the insurance domain. He uses his knowledge in the field to create engaging content that the customer can relate to and understand. His passion lies in simplifying insurance terminology, ensuring a hassle-free understanding for potential policyholders. With his outstanding collaborative efforts with people, he understands different perspectives and keeps readers' viewpoints at the forefront of his content writing approach.