By Prashant Nimgade · Published · Updated
Your term insurance premium isn't arbitrary. It is based on your age, health, habits, cover amount and policy term. There are lots of little decisions that add up to a lot. The cost of waiting for 5 years is ₹30,000 over the life of the policy, and the cost of smoking is ₹2,16,000 over the policy's life in the worked example below.
Each pricing factor is explained in a simple manner in this guide. It indicates which of them are under your control, the changes to GST in 2025 and any errors that could result in a rejected claim. All numbers are either referenced or worked out.
There are three recent events that help to understand today's pricing.
Private life insurance companies such as HDFC Life, ICICI Prudential Life, Bajaj Allianz Life and Max Life raised term plan premiums by 4-7% in July 2024. Lower bond yields and reinsurance cost changes were given as reasons. (Business Standard, Jul 2024)
The individual life policies, such as term plans, became GST-free from 22 September 2025. They used to have 18% GST earlier. However, a LocalCircles survey of 18,706 people revealed that 43% did not reap the full benefit. Some were still being charged 18% GST, while some insurers had increased base price. (Outlook Money, Nov 2025) Insurers also lost input tax credit on their own expenses, and some are reported to have raised base prices to make up for it.
A consumer commission in Kolkata directed the insurance company, IndiaFirst Life, to pay ₹99.41 lakh to a son under the name of his mother, who had taken a ₹1 crore term insurance policy. The annual premium she paid in the first year was ₹58,509. The insurance company initially alleged that the paper she submitted with her earnings had been falsified, and later stated that she concealed ailments. The commission found no evidence for either. (Outlook Money, Oct 2026)
The lesson to be learned is obvious. Price is important, but so is a thorough and honest application.
A term plan pays your family a fixed amount if you die during the policy term. The insurance company uses these factors to calculate the insurance rate.
Age. This is the most important factor. The older one is at purchase time, the greater the risk and the greater the premium. Typically, your rate is fixed for the duration of your policy, so purchasing early means that you will pay a lower rate for decades.
Smoking and tobacco. People who smoke are paying much more than people who don't smoke for the same cover. Insurers frequently test for nicotine, so answer truthfully.
Health and family history. Diabetes, high blood pressure or obesity can increase the cost. Some can result in a medical test or an additional charge over the base rate.
Sum assured. This is the sum that your family gets. The bigger the cover, the higher the total cost, but sometimes, the higher the cover, the lower the cost per lakh.
Policy term. Cover till 85 costs much more than cover till 60. Most people only require cover until their loans are repaid and their children are independent.
Gender and lifestyle. Generally, women pay less due to longer life expectancy. The premium can be increased by risky jobs or hobbies.
Riders. They include add-ons like critical illness, accidental death or premium waiver. Each one adds cost.
Payment mode. Typically, annual payments are lower than monthly payments. Limited pay options mean paying more each year for a shorter period.
GST on Term Insurance. Since 22 September 2025, individual term plans have been exempt from GST. Verify your renewal receipt that there is no GST on it.
Age and family history are not something you can change. You can control when you buy, your habits, your cover and term, and your riders.
These measures reduce costs without compromising the safety you need.
Buy early. The base rate rises every year you wait. A large savings over 30 years can be realized by locking in at 28 or 30.
Select the appropriate cover, not the largest. One guideline is 10 to 15 times your annual income, plus your loans. Calculate what you actually need, rather than what you think you might need.
Match the term with your requirements. Often, covering till 60 or 65 is sufficient. Cover till 85 is an extra expense for years when it may not be needed.
Avoid tobacco; re-apply. Some insurance companies will even provide non-smoker rates after a certain amount of time, usually 12 months or more. Please check before applying.
Pick riders carefully. A critical illness or premium waiver rider may be helpful. Do not automatically add all the riders. Compare the price of the rider coverage with a separate policy.
Pay annually. Generally, the annual payment is lower than the monthly payment.
Compare several insurers. The cost of the same profile can vary significantly. Look at the claim settlement ratio and the way in which each insurance company processes claims.
Check your receipt. Be sure no GST is applied to an individual term plan, and the amount is the same as on your policy schedule.
Do not reduce your premium by withholding information. That can save you money now, and it can cost your family the claim.
As an illustration, the following example shows the cost of waiting and smoking.
Ankit is 30 years old and would like to have a ₹1 crore cover till he turns 60. These are only assumptions and not an actual quote. The actual premiums will differ based on the insurance provider, health and city.
Assumptions
Non-smoker premium at 30: ₹12,000 a year
Rate if he waits and buys at 35: 30% higher than at 30
Smoker loading: 60% above the non-smoker rate
Cover ends at 60 in every case
Case A: non-smoker, buys at 30
Yearly premium: ₹12,000
Years of payment: 60 − 30 = 30
Total paid: ₹12,000 × 30 = ₹3,60,000
Cost per ₹1 lakh of cover each year: ₹12,000 ÷ 100 = ₹120
Case B: non-smoker, waits and buys at 35
Yearly premium: ₹12,000 × 1.30 = ₹15,600
Years of payment: 60 − 35 = 25
Total paid: ₹15,600 × 25 = ₹3,90,000
Extra cost vs Case A: ₹3,90,000 − ₹3,60,000 = ₹30,000
Ankit pays ₹30,000 more and gets five fewer years of cover. His family is also unprotected from 30 to 35.
Case C: smoker, buys at 30
Yearly premium: ₹12,000 × 1.60 = ₹19,200
Years of payment: 30
Total paid: ₹19,200 × 30 = ₹5,76,000
Extra cost vs Case A: ₹5,76,000 − ₹3,60,000 = ₹2,16,000
Double-check: For Case B, ₹15,600 × 25 = (₹15,000 × 25) + (₹600 × 25) = ₹3,75,000 + ₹15,000 = ₹3,90,000. For Case C, the extra is 60% of Case A's total: ₹3,60,000 × 0.60 = ₹2,16,000. Both match.
The GST effect: Before 22 September 2025, Ankit's ₹12,000 premium would have carried 18% GST: ₹12,000 × 0.18 = ₹2,160, for ₹14,160 a year. Today he should pay ₹12,000 flat.
Covering health issues or smoking itself. The insurer may use the provisions of the Insurance Act to deny a claim for the first three years based on deception or nondisclosure. The claim remains protected as long as the answers provided are honest.
Not revealing other insurance policies. Many claims are rejected on the basis that earlier insurance policies were not mentioned in the proposal.
Missing payment of premium. There may be a grace period allowed under the policy; however, if that is lapsed, no cover will be available. In the Kolkata case, the death occurred during the grace period, making the policy valid.
Getting extra riders in the plan. Any addition of riders will increase the cost of the policy quickly.
Selecting a policy only based on the prices. The cheapest plan may not be suitable if the insurer appears to be slow with claims.
Not informing the nominee. Your family must be aware of your insurance policy and the location of the insurance policy documents.
Here are some of the ways SimpliInsure can help you pay the right price.
It takes time to compare term plans on price, riders and claim record. SimpliInsure is an IRDAI-registered insurance broker that enables you to view multiple life insurance plans from various insurance companies at a single place. On the life insurance page you can check out the options. LIC, HDFC Life, ICICI Prudential, SBI Life, Tata AIA and Axis Max Life are some of the partners listed.
A broker serves the client, not any one insurance company. This includes assistance in selecting the correct cover and term, completing the proposal form correctly and following up if the claim gets stuck.
Normally, a high term insurance premium is due to a mix of the following reasons: age, tobacco, health, large cover, long term, and too many riders. Purchase early, be truthful on the application, select an appropriate sum assured and term, and only take the term insurance riders that are necessary. Then ensure that no GST is applied. Your family stays fully protected, and you pay less.
Stop overpaying for term insurance. Compare term plans from leading insurers, get the right cover for your age and budget, and lock in today's rate before your next birthday pushes it up. Contact SimpliInsure now to talk to an advisor, or call +91 95133 55661 today and get the right term plan in place.
Disclaimer: This content is for informational purposes only and should not be treated as financial, medical, or insurance advice. Policy terms, exclusions, and benefits vary across insurers. Please review official policy documents and seek professional guidance before making decisions.
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