How is Term Insurance Calculated?

What is Term Insurance? 

Before you take a look at how much term insurance cover you need, let us take a look at what is term insurance. Term insurance is a life insurance plan that provides coverage for a fixed period. It promises to pay a certain amount of money to the nominee upon the death of the policyholder during the policy tenure. This is a cost-effective and low-price life insurance policy. 

How Much Term Insurance Cover Do You Need? 

By using any of the below-mentioned methods, you can get to know the approximate value of the term insurance cover that you may need. Let us discuss these three methods in brief. 

1. Human Life Value 

   The present value of your debts, profits, expenses, and savings is calculated using the Human Life Value calculator. It calculates the sum of money required to protect the beneficiary’s future through a term plan in case of an unfortunate event. Age, occupation, employment benefits, gender, retirement age, annual income, and fiscal records of the child, are the factors considered under this. 

2. Income Replacement Value 

   In this, life insurance should replace the missed earnings of the sole earner. The simple way to calculate IRV is insurance life cover = current annual income X years left for retirement. For instance, if you are 40, and your annual salary is 15 lacs, the cover you will require is Rs.3 Crore i.e., 15 lacs X 20. 

3. Underwriter’s Rule 

   The minimum sum assured amount requires to be multiple of yearly revenue, based on the age of the policy aspirant. Let’s say, individuals in the age group of 20 to 30 years must have life coverage 25X of annual salary, whereas those of 40 to 50 years could opt for life cover 10 to 15X their annual income.  

What Is Term Insurance Cover Calculator? 

Term insurance calculator calculates the amount that is to be paid out as a lump sum in the event of a death of the insured during the policy term. However, how much insurance coverage does one need, is a common question. 

Currently, the sum assured amount that is looking huge to you can be not sufficient for your family in the future. This is due to our lack of knowledge about the selection of life cover that can cause financial problems in the long run. Hence, it is very important to know how much life cover you require to ensure that you are not underinsured or overinsured. 

The term insurance cover calculator does the same. It calculates the approximate amount that your family may need in the future as term insurance cover. Resultantly, enables you to make an informed decision of selecting a sufficient coverage amount. 

Most of the term insurance providers offer the facility of this calculator for term life insurance cover calculation. Here is a brief overview to use this calculator and get to know how much term insurance cover you need:

How to Use Term Insurance Cover Calculator? 

You can easily calculate the term insurance cover amount online in just a few clicks. You are required to follow these steps and you are good to go: 

Step 1 – Visit the official website of the insurance company

Step 2 – Click on Term Insurance Calculator 

Step 3 – Enter your details such as age, gender, mobile number, lifestyle habits (smoker or non-smoker), and proceed to customize your term insurance plan 

Step 4 – Select the life cover amount you want to opt for along with the number of years you require it for. 

Step 5 – Choose the best term insurance plan in India and proceed to pay 

Benefits of Term Cover Calculator 

Now that we have understood the benefits of term insurance, let us take a look at the 3 ways to calculate the term insurance cover. 

1. Less Time-Consuming!

   The online term insurance calculator provides term plan quotes in a couple of minutes. No documents are required to be submitted. You are only required to provide certain details and the screen will show the amount of coverage that you may need. 

2. Comparison Is Easy Now! 

   Apart from providing term plans easily, computing term plans’ cover online helps compare the different plans. This makes you take an informed decision as you get the required cover at comparatively lesser premium rates. 

3. You Can Save a Lot of Money On Premiums! 

   Insurers are encouraging the online buying of term plans to decrease the cost of distribution. This benefits the insurance buyer as the premium rates get lowered when you purchase a plan online after analyzing the term insurance cover online.

   * Note: You can consider buying the best term insurance plan for 1 Crore to ensure the financial security of your family.

Wrapping It Up!

A term insurance plan is one of the most low-priced investments for protecting your financial future. Before purchasing the term insurance plan, it is very important to calculate the term insurance cover based on your financial requirements and life goals. Term life insurance cover calculation helps predict the amount of cover you are required to pay regularly. Choose your plan wisely!