*Please note that the quotes shown will be from our partners

In a nutshell, life insurance policies cater to monetary benefits of the dependents of the policyholder in the case of his/her unforeseen death. This is, however, just a facade of life insurance plans, as these plans also doubleas pension funds, investment and saving tools, endowment funds etc. And, you will also receive tax benefits on the premiums paid towards a life insurance plan. Life insurance plans are designed to efficiently offer financial protection to the insured and for the future of his/her dependents.

Life Insurance Premiums:

Life insurance is a one-time or recurring payment made by you towards your life insurance plan. A life insurance plan is valid only if you make payment of the premium on time and in accordance with the guidelines of the insurer. In general, you will have the option to select the frequency of payment of premiums such as single premium, yearly, half-yearly, quarterly, or monthly. A part of this premium is paid out as assured sum when the policy’s benefitsgettriggered.

Any life insurance policy’s premiums vary depending on the plan that you choose along with the applicant’s credentials. Generally, a healthier, younger individual will possibly be quoted a lesser premium than an individual who has attained the age of 50. In the same way, a non-smoker will receive a preferential premium ratewhile a smoker is probably quoted a higher amount. There are several variables, which play an important part in ascertaining the premium amount that you have to pay and make all the calculations on your own. This is where the LIC Calculator comes to your rescue.

LIC Premium Calculator:

An LIC Calculator is a tool, which gives you an approximate amount of the premium in accordance with the policy chosen by you and its technicalities such as premium frequency, sum assured, age, tenure, etc. This life insurance premium calculator is made available by the official insurers for their complete product list. For example, the LIC of India has its own tool to calculate the premium for life insurance policies. Usually, LIC calculator includes the following fields where you have to provide all the information:

  • Name of the plan
  • Applicant’s age
  • Sum Assured
  • Frequency of the premiums
  • Tenure of the Plan
  • Riders (if any)

It takes less than a minute to fill the whole form, and once you have entered all the prerequisite information and preferences, the tool will display a rough figure of the premium. The result displayed is an approximation as the insurance company may go for more details regarding your background, which can have an effect on the calculations of the premium.

Sample LIC Premium Calculation:

LIC premium calculations are a bit complicated and cannot be done by potential customers on their own because of the numerous fundamental variables. A premium calculator is the best tool for you in this scenario. Let us take an example of Life Insurance Premium Calculations to illustrate the calculations of the premium.

The LIC calculator has 4 to 5 fields depending upon the chosen plan. For this illustration, we have selected a New Endowment Plan, which has the maximum number of fields that include:

Type of the Plan:

New Endowment Plan

Age of the Insured:

38 years

Tenure/Term of the Plan:

20 years

Sum Assured of the Plan:

INR 10 Lakhs

Accident Benefit/Rider:

Yes/Selected*

*The Accident Benefit rider offers an additional cover for the accidental death on the top of base life insurance plan, by adding upa little amount of insurance premium on base premium. Other insurance companies may or may not offer the option of adding riders.

The inferencesof this calculation are as under:

Monthly Premium:

INR 4, 250/-

Quarterly Premium:

INR 12, 750/-

Half-yearly Premium:

INR 25, 235/-

Yearly Premium:

INR 49, 940/-

The premium figures are illustrated in four different types. Usually, yearly premiums are lesscostly in the long run as compared to monthly, quarterly and half-yearly options.

LIC Premium Calculator - FAQs

What are the factors that determine the premium rate of a life insurance policy?

While purchasing the life insurance policy, there are many factors which determine the premium rates of the policy. Based on the sum assured amount is chosen by the insurance buyer, tenure and age the premium of a life insurance policy is calculated. However, apart from this, there are many other factors that determine the premium rate of the policy. These are as follows:

  • Gender
  • Weight and Height
  • Dependents
  • Medical History
  • Marital Status
  • Income
  • Occupation
  • International travel
  • Debt
  • Smoking and alcohol consumption
  • High-risk hobbies

How often do you pay an insurance premium?

There are many different modes through which the insured can pay the life insurance premium.  There are generally two types of premium payment options offered by the policy i.e. single premium payment, where the insured can pay the entire premium of the policy at one go and regular premium payment,  where the insured can pay the premium in yearly, half-yearly, quarterly and monthly installments. 

How to calculate life insurance premium?

One can calculate the life insurance premium with the help of LIC premium calculator. By entering the sum assured amount, age and income in the premium calculator an individual can determine the premium amount of the policy.

What happens if you stop paying life insurance premiums?

It is very important to pay the premium of the policy regularly in order to avail an uninterrupted coverage of the policy. In case, the insured fails to pay the premium of the policy within the due date then a grace period of 30 days is offered by the insured during which the policyholder can clear all the due premiums. 

In case, the policyholder stops to pay the life insurance premium then the coverage of the policy will cease and the policy will lapse.

Are insurance premiums paid monthly or annually?

The insurance premium can be paid annually as well as monthly.

What is the current rate of insurance premium tax?

The rate applicable to the current insurance premium of the policy has been increased from 6.5%-8.5%.

Can I lower my life insurance premium?

Generally, life insurance policies do not offer any option to reduce the premium of the policy. However, if the insured wants to change the premium amount of the policy then they can forward an application to the concerned branch office or customer service center and ask to lower the premium rate of the policy.

Can I cancel my life insurance policy at any time?

No, you cannot cancel the policy at any time. In case, you are not satisfied with the terms and conditions of the policy and wants to cancel the policy then you can cancel the policy within the free-look period of 15 days offered by the insurance company from the date of inception.

How long do you have to pay life insurance premiums?

For a traditional life insurance policy, the premium payment duration is equal to the policy tenure. However, the premium payment tenure of a plan varies from policy to policy.

Is it worth it to buy life insurance?

Yes, buying a life insurance policy is the best way to secure the financial future of your loved one in case of the demise of the insured. 

What is paid up value in Life insurance?

In case the policy premium is not paid on time and the policy lapses, then the policy acquires paid up value and the policy is considered as paid-up policy. Under the paid-up policy the coverage of the policy stays intact till the policyholder demise.

How much tax do I pay on my life insurance premium?

It is a general concept that the premium paid towards life insurance policy is entirely tax-free. It can be true in most of the circumstances but not for all types of the life insurance premium. Tax exemption on the premium amount is only applicable up to the maximum limit of Rs.1.5lakhs. Any amount above 1.5lkah will be taxable under the Income Tax Act of 1961.

How is the terminal bonus calculated?

Terminal bonus is also known a loyalty bonus which is paid to the policyholder at the time of maturity of the policy along with the maturity benefit.  The value of the terminal bonus is not guaranteed and is disclosed only during the time of policy maturity. 

Can I claim tax exemption on the life insurance premium amount?

Yes, you can claim tax exemption up to the maximum limit of Rs1.5 lakh under section 80C of Income Tax Act 1961.

Do you have to pay taxes on life insurance policy payout?

No, the payout offered by the life insurance policy is tax exempted under section 10(10D) of Income Tax Act