Life Insurance Premium Calculator

What is a Life Insurance Premium Calculator?

A life insurance premium calculator is a tool that provides an approximate amount of insurance premium according to the policy selected by you and other technicalities like age, policy term, premium frequency, the sum assured, etc. Mostly these tools & calculators are also available on the official website of the insurance companies. 

Usually, you need to fill out the required information which are below mentioned in life insurance premium calculator:

• Policy Name

• Age of Policyholder

• Sum Assured

• Premium Frequency

• Tenure

• Accidental Benefit Riders, if any

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Before discussing the life insurance premium calculator, let’s first understand what is life insurance premium: 

What is Life Insurance Premium?

The life insurance premium is one time or recurring payment that a life insurance policyholder makes towards his/her policy. Any life insurance plan is valid as per the guidelines of the insurance provider and if the policyholder pays premiums on time. Most of the policyholders provide the option of selecting the premium payment frequency like yearly, half-yearly, quarterly, and monthly. The sum assured that a policyholder gets is a factor of this premium that is paid as the sum assured when the policy benefits are activated.

A policy's premium varies and depends on the plan that one selects and his/her credential. Most of the times, a young and healthy person will get the same term plan at a lower premium than a person who is older comparatively. In the same manner, a person who does not smoke gets better premium than a person who is a smoker. Apart from these, there are many other variables that play a vital role in deciding the premium of a life insurance plan, and this is the reason the requirement of life insurance calculator comes into picture.

How to Use a Life Insurance Premium Calculator?

Most of the life insurance premium calculators follow the below steps to calculate the premium of an insurance plan:

Step 1: The prospective policy buyer should enter the following details:

• Age of the applicant

• Gender of the applicant

• Tobacco Consumption Preferences

• Life Cover Amount

• Years of Coverage

Step 2: Click on ‘Check Your Premium’ that appears below the minimum premium rate in the right hand side of the calculator. It takes only a few minutes to fill the form and after filling all these details, the estimated premium figure will be displayed.

Step 3: Enter the rest of your details, like occupation type, annual income, educational qualification and tobacco consumption preferences to view the available plans

Step 4: You can select your preferred plan that appeared as per your life insurance premium calculator results and purchase it.

*You can easily calculate the LIC premiums using LIC premium calculator and term insurance calculator.

Samples of Life Insurance Premium Calculator

Let’s take the example of the LIC premium calculator to understand the process of life insurance calculator.

Step 1: Visit the LIC Premium Calculator page and fill in the following details:

• Monthly or Yearly Premium Option

• Amount that you wish to invest

• Years of Investment

• Years to Remain Invested

• Expected Return Rate

Step 2: The box below shows you the result, i.e. the amount that you invest over the set number of years and how much you receive as return after a stipulated period.

Step 3: You can also click on “View Plans”, and enter your age and current city to view all the available plans.

Step 4: You can further buy the plan that best suits you. 

Step 5: You can always edit your details towards the right side of the page to personalize your experience.

Let’s take another example of the HDFC Life Term Insurance Premium Calculator.

Step 1: Visit the HDFC Term Insurance Calculator page and fill in the following details:

• Age

• Gender

• Life cover

• Coverage period

Step 2: The box below shows you the amount at which your monthly premium starts

Step 3: You can also click on “View Plans”, and purchase the plan that suits your needs best

How to Calculate Life Insurance Premium?

Insurance Companies provide a life insurance calculator on their websites for you to calculate your life insurance premium. You only have to submit your details, like Name, Age, Monthly or Annual Premium Option, Amount wished to invest, Investment years, Expected rate of return, and Coverage period, and you will receive the calculated premium. However, experts say that a reasonable life cover/policy amount must at least be 10-15 times of his annual income.

Moreover, if you want to determine what amount is suitable for you, you can use the human life value calculator and estimate your economic capability. The calculator considers various factors such as income, expenses, future obligations, and the number of years the person is expected to work.

Benefits of Life Insurance Premium Calculator

• Easiest Way to Calculate Premiums: It calculates the amount of premium one has to pay without any issue of manual calculation.

• To Calculate the Actual Amount: It calculates the exact amount that one has to pay for covering his/her life. This gives one an exact idea how much he/she wants to spend on the life cover so that he/she can make financial planning carefully.

• Error Free: Since the process of premium calculation is completely automated so there are very fewer chances of errors in it.

• A Tool to Compare and Select the Most Suitable Insurance Policy: This is one of the easiest ways to compare different term insurance plans. Comparison gives one a clear picture of what to select and what not to select. In this way, one gets a clear picture of the policies that he/she should take.

• Tax benefits:  You can get the tax benefit under the Section 80C of the Income Tax Act.

What is Life Insurance Premium?

The life insurance premium is one time or recurring payment that a life insurance policyholder makes towards his/her policy. Any life insurance plan is valid as per the guidelines of the insurance provider and if the policyholder pays premiums on time. Most of the policyholders provide the option of selecting the premium payment frequency like yearly, half-yearly, quarterly, and monthly. The sum assured that a policyholder gets is a factor of this premium that is paid as the sum assured when the policy benefits are activated.

A policy's premium varies and depends on the plan that one selects and his/her credential. Most of the times, a young and healthy person will get the same term plan in a lower premium than a person who is older comparatively. In the same manner, a person who does not smoke gets better premium than a person who is a smoker. Apart from these, there are many other variables that play a vital role in deciding the premium of a life insurance plan, and this is the reason the requirement of life insurance calculator comes into picture.

Factors that Decide the Rate of Life Insurance Premium

The rate of insurance premium is the amount that one has to pay in order to purchase a life cover. There are many factors that decide the premium of life insurance, these factors are:

• Earnings from the Investments: As the premiums paid are used for paying the claims of life insurance, thus the earnings from these investments are necessary from the point of view of the life insurance provider.

• Rate of Mortality: The age of the policyholder determines the rate of mortality of that age group. This is one of the crucial factors to decide the premium of the policy. The younger the policyholder is the more likely the insurance providers offer the lower amount of premium. The main reason for the same is the lesser chances of claims.

• Sum Assured or Coverage: The more the sum assured, the higher will be the premium that one has to pay.

• Health Record and Personal Habits: The unhealthy lifestyle like alcoholism, smoking, etc. result in higher premium. In other words, those who have unhealthy habits like smoking and alcoholism have to pay more premium (approximately 30 to 70% more) than those who lead a healthy lifestyle.

Wrapping It Up!

Life insurance premium calculators are valuable tools that can assist individuals in making informed decisions about their life insurance coverage. It helps assess your financial capacities and what is the adequate life insurance premium for you. While the premium calculator is a helpful resource, it should be used as a starting point in your life insurance purchase. Taking into account your unique requirements will help you make well-informed choices regarding your life insurance coverage, so that you don’t face financial constraints later in life.

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