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. For example, LIC has its own calculator on their official website.

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

  • Age of Policy Holder

  • 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

How to Use 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

  • Number of children of the applicant

  • The annual income of the applicant

  • Marital status of the applicant

Step 2: The policy buyer should enter some of his/her expectations from the policy:

  • Type or name of the policy

  • Tenure or premium payment term

  • The desired sum assured

  • Additional riders that one wants to add in his/her base plan

Step 3: It takes only a few minutes to fill the form and after filling all these details, the estimated premium figure will be displayed.

Sample of Life Insurance Premium Calculator

The calculation of premium is a complicated process and the prospective customers cannot do it by themselves. Let us take the example of LIC premium calculator to understand the process through life insurance calculator:

Most of the calculators have four to five fields, which are dependent on your selected plan. Let us take the example of some endowment plan that has a maximum number of fields in it.

  • The Type of the Plan: New Endowment Plan

  • Term: 20 Years

  • Age: 38 Years

  • Accidental Benefit Rider: Yes

  • Sum Assured: 10 Lakh

Note: The accidental benefit rider gives the additional cover of accidental death by paying some additional premium. This rider is provided by LIC, other insurers may not offer this insurance cover.

Let us see the result:

  • Monthly Premium: Approximately Rs.4, 250

  • Quarterly Premium: Approximately Rs.12, 750

  • Half Yearly Premium: Approximately Rs.25, 235

  • Yearly Premium: Approximately Rs.49, 940

Benefits of Life Insurance 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 in 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.

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