Why do you need Term Insurance Calculator?
Term insurance is the simplest and most common life insurance product available in the market. While purchasing the term plan, the policyholder needs to pay the premium in exchange for the life cover offered by the policy. Various factors determine the premium rate of the policy and they vary from plan to plan. Thus, to help the individuals to calculate the premium rate of the policy, the Term Insurance Calculator comes to the rescue.
Term insurance Premium Calculator is a specifically designed tool that helps you determine the actual premium amount that you are required to pay to the insurer for a term life coverage. With the availability of so many insurance companies offering policies in India, a term insurance calculator facilitates easy comparison of various plans and thus, allows you to choose the best insurance as per your needs.
The Term Plan calculator can be used online free of cost in a simple and hassle-free way. Moreover, an individual can also customize the calculator as per their convenience. By having a proper understanding of the premium amount, one can analyze the amount of coverage they will need to pay to ensure the financial security of the family. But do you have any idea what are the benefits of the Term Insurance Calculator and how to use it? Let’s study in detail:
How Does the Term Insurance Calculator Work?
Term insurance has its own set of advantages that you should understand before using a term insurance calculator. One such important point is the Mortality Charge. At the time of purchasing a life insurance policy, the insurer charges some rate to cover the expenses for offering insurance security in case of an unforeseen event of death. This charged price is called the mortality rate. One can estimate the mortality rate according to the table of standard mortality charges. Generally, these rates are lower for healthier, younger persons who don’t work in a high-risk jobs. So, the premium rates of term insurance vary with age.
The term insurance calculator majorly works on an estimation basis. The simple rule to calculate the term cover in the insurance market is:
10 to 20X of yearly income (take home) is adequate to look after the expenses of dependents.
Therefore, term insurance calculators require your annual income and current age. For example, the yearly income of X could be Rs. 10 Lakhs to 14 Lakhs. So, after calculating, the financial worth of a person can range anywhere between 1.2 to 1.5 crores.
Benefits of Term Insurance Premium Calculator Online
A term insurance calculator is what you may need if you are on the lookout for the right plan. It will help you to do the comparison and figure out the best term insurance plan that can match your needs. Some of the major benefits offered by the term insurance calculator are detailed below-
Time-Saving Technique:
The term insurance premium calculator helps you in saving your precious time. You are not required to submit any hard documents to get premium quotes. It will suggest the right term insurance plan that fits your needs in less than 2 minutes. Once you have selected a plan, you can buy it online also without the intervention of agents.read more
Comparison of Various Plans:
A term insurance calculator is the only tool available in India providing an option to compare term plan offered by different insurance companies on a single platform.
Makes Budgeting Easier:
With various insurers offering term insurance plans, it can be difficult to get a clear idea of how much premium one needs to pay for a term insurance plan. With a term plan premium calculator, the individual will get a fair assessment of the amount of premium one needs to pay in exchange for the coverage they seek for. Thus, it helps the individual to have a clear idea and he/she can easily plan their financial budget accordingly.read more
Provides a Better Idea of Cover:
The term insurance premium calculator provides you an estimate of the term cover that helps fulfill your family’s financial requirements and liabilities and the premium to be paid under the term plan. The choice of life cover depends on different parameters like existing liabilities, annual income, number of dependents and marital status, and various other parameters.read more
Cost-effective:
There are so many companies that prefer to deal with their customers online. They offer exciting discounts to people who buy insurance via online medium. So once your term plan premium calculator shows good plan options, you can do a comparison and buy any of the suitable plans online to save extra bucks. However, with a term plan premium calculator, you can opt for high coverage and term plan benefits at low premium rates.read more
Helps in financial planning:
The term insurance plan premium calculator also helps you estimate the amount of premium to be paid immediately. Once you get to know the amount that you need to pay on a regular basis as premiums, then you can accordingly plan your budget. A good financial plan for your term insurance will help avoid cases like missed payments of premiums.read more
How To Use The Term Insurance Premium Calculator?
Filling out information in the term life insurance premium calculator and getting premium quotes will not take more than 10 minutes.
Here is how you can use the calculator in 4 simple steps:
Step 1: Enter Your Personal Information
The policy buyer will need to enter personal information like date of birth, gender, marital status, annual income, number of children you have, life cover, etc. You may also be asked about your smoking habits. It is important to keep in mind that the annual income shows the earning capacity, thus it plays an important role in determining the premium rates of the term insurance policy.read more
Step 2: Enter the Desired Sum Assured Amount
Then you will need to enter how much sum assured you want and for how many years. You would also need to clarify how you would like your family to get money- a one-time lump sum amount or monthly income. Simply click and wait for results.read more
Step 3: Enter the Estimated Annual Increase in Income
With the increase in age, the income of an individual also increases. The individual will need to fill the estimated annual increase in income to make the right projection.
Step 4: Compare the Plans
The online term insurance premium calculator will recommend some good term insurance plans as per the details you have filled in above. Make a systematic comparison. Choose the best term insurance plan and proceed to buy.
Calculate accurately and compare easily by using Term Insurance Calculator to avoid any ambiguities at a later stage.read more
How to Calculate Term Insurance Plan Premium?
Nowadays having a term insurance plan is very important and paying the premium of the policy is equally important to avail the continuous benefit of the policy. The policyholder can pay the premiums of the policy in different modes like monthly, half-yearly, quarterly, and yearly. The policyholder makes use of the life insurance calculator to get the approximate premium amount of the plan.
The premium rate of the term insurance policy is determined as per the chosen plan and according to the credentials of the applicant. Generally, the premium rate for young policy buyers is less as compared to the person who is in his/her 50s. This is because young policyholders are considered healthy/fit and tend to pose less risk to the insurer as compared to aged insurance buyers. Moreover, many different factors determine the premium rate of the policy.
The insurance seekers can make use of the term insurance calculator to avail the most beneficial plan at a low premium rate. If the policyholder changes the factors used for the calculation, the term insurance premium will also change accordingly. Besides this, the policyholders are required to provide the following information while using the premium calculator:
- Applicant’s age
- Plan Name
- Premium Frequency
- Gender
- Birth Date
- Sum assured Amount
- Rider
- Tenure
- Name of the Proposer
After providing these details, the term insurance calculator will show the estimated premium rate to the insured.
Factors that Determine the Premium Rate of the Term Insurance Policy
The following factors determine the term insurance premium rate of the policy and must be considered before calculating the premium of a term insurance plan:
Insurance Requirements:
The first factor that plays a vital role in deciding the premium through a term insurance calculator is your insurance needs. Different term insurance plans cater to the different needs of the policy buyers. Therefore, according to your stage of life and goals, select a plan that will enable you to achieve your future financial goals.
Age:
They say ‘The earlier you start the lesser premium you have to pay for your term insurance plan’. Age is another important factor to calculate the premium of your term insurance plan. Generally, a term insurance premium calculator calculates a lesser premium for people of younger age. So, start a term insurance plan at an early age and maintain a low-cost insurance cover for a longer tenure.
Medical History
In various plans, you will also be needed to provide information about your medical history when you buy a term plan. Any critical illness records or any family history of ailments such as cancer, Alzheimer’s disease, or cancer can cost higher term insurance premium rates.
Lifestyle
Some term plan premium calculators require you to fill in the lifestyle information such as smoking habits, or alcohol consumption. Individuals with poor lifestyle habits are typically charged a higher premium rate than individuals of the same gender and age who have good lifestyle practices. This is because insurance companies need to secure themselves from the possibility of the policyholder’s event occurring, which is more in the case of individuals with poor lifestyle habits.
Coverage Amount:
The coverage amount of your term insurance plan is another factor that the term insurance premium calculator takes into consideration while deciding the premium. You should select a term insurance plan according to your future needs and the rate of inflation. The amount that is sufficient for you and your family currently may not be enough in the future, so select the coverage amount wisely.
Gender:
Even though they say all women and men are equal, but as per the data of life insurance providers, women live a longer life than men. Therefore, through the term insurance calculator, the premium amount is lower for women as compared to men of the same age.
Selected Policy Term:
The policy term also plays an important role in computing the premium through a term insurance calculator. The longer the duration of the policy the lesser premium you have to pay. Therefore, a term insurance plan with a longer duration is inexpensive than a term insurance plan taken for a shorter duration.
Purchase Online:
Buying a term insurance plan online is not only simple and convenient but also pocket-friendly and cost-effective. The reason for the same is no involvement of the intermediaries.
Occupation:
Some occupations like working in the industry, shipping, fishermen, and miners are considered more dangerous than working in an office. Therefore, people in these occupations may need to pay higher premiums. However, a life insurance premium calculator considers other factors as well, thus it varies with individuals.
Term Insurance Premium Payment Options
The frequency at which the renewal premiums are payable is called the premium payment frequency. The Term Insurance Premium Payment Options can be annual, half-yearly, quarterly, and monthly.
The insurance buyers can determine the premium rate of the policy with the help of a term insurance plan premium calculator. Insurance companies offer a variety of Term Insurance Premium Payment Options to their customers to pay their premium on time. Here are the different term insurance premium payment options:
Online Options
Some of the online options that you can use to pay your premium amount are:
The insurer’s mobile application or customer portal
Offline Options
You can also pay your term premium amount offline through different channels involving:
Cash payments at the insurer’s branches
Others
Apart from the online or offline options, the policyholder has other options to pay premiums to their insurers. Additionally, they can also choose the frequency of paying premiums. Based on the type of term insurance plan you select; you can choose from the following payment frequencies:
Term Insurance Premium Rates
The premium rates of the term insurance policies determined are by the term insurance calculators. This is the cost that one needs to pay for buying a policy. It is calculated by specialists known as actuaries. The term insurance premium charges should be sufficient and reasonable to payout the benefits of the policy. It also depends on the risk that is covered by the insurance company. Term insurance premium rates are governed by the following factors:
Mortality Rate:
It is an insurer’s anticipation of deaths amongst a particular group of insured lives at a certain age.
Investment Earnings:
Premiums are the primary source of funds used to pay term insurance claims. Because most policies are in force for some time before they become payable, insurance companies have premiums to invest in. The earnings from these investments provide the company to charge fewer premiums.
Expenses:
A term insurance policy's gross premium is calculated by the term insurance calculator as net premium + loading. The net premium depends on the mortality rate, investment earnings, and the lapse rate and loading are the company’s operating costs.
Are Online Term Insurance Premium Calculator Estimates Reliable?
Online Term Insurance Plan Premium Calculators have eliminated the lengthy process of finding out premium rates. It offers a hassle-free way to calculate premiums in a couple of minutes. Earlier, the manual calculation was time taking and also includes various human errors. Term insurance premium calculators provide accurate results and also saves time by making a seamless and smooth process. Now you don’t have to spend days researching the different term insurance policies offered by various insurance companies. All that you have to do is to fill the details in the term insurance premium calculator along with your chosen sum assured and policy term to buy a term insurance policy. It enables you to view all plans on a single page and you can choose your plans wisely and smartly.
