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All about Life Insurance Calculators

A life insurance premium calculator can assist potential buyers in choosing the best life insurance plan for their needs. Read this blog ahead to know more about it.

  • 22,920 Views | Updated on: Jan 18, 2024

An online insurance premium calculator is the first thing you look for before buying a life insurance plan. Use calculators to know if an insurance policy fits your budget before buying it.

Life is unpredictable, and having an insurance policy can assure your family’s future. You must research thoroughly before buying any plan and choose a plan that fits your needs. A life insurance calculator is the perfect device in your journey of looking for a perfect insurance plan. To better understand a life insurance premium calculator, let us look at how you can use it, the benefits of the calculator, and the factors that decide your premium.

What is Life Insurance Calculator?

A life insurance calculator helps determine the amount of premium you will have to pay regularly for a certain insurance plan. There are factors like your age, health, tenure of the plan, the sum assured, rider benefits, and the plan chosen by you to decide the exact premium amount.

Let’s check out how Insurance Calculators work.

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What is Life Insurance Premium?

A life insurance premium is a recurring or a one-time lump sum payment made to the insurer to secure an insurance policy. You must pay your premiums regularly for the insurance plan to stay valid. You can choose the frequency for the payment, which can be quarterly, monthly, half-yearly, or yearly, according to your convenience. The amount of premium that you decide on also plays a role in determining the sum assured to be received on maturity.

How Does a Life Insurance Calculator Work?

Users of the term plans with the return of premium calculator are prompted to enter a few details to obtain an estimated premium cost for the chosen insurance coverage. Your annual income, projected years of employment, anticipated personal expenses, and estimated yearly growth in income are all requested.

Age, gender, date of birth, kind of insurance, length of the policy, and intended payout are also taken into consideration. A few other factors are also taken into consideration, including the user’s lifestyle and whether or not they smoke.

Tips to Reduce Life Insurance Premium

There are certain ways in which you can reduce the premium amount and can have the insurance plan of your choice; follow these tips:

Online Purchase

Premiums for life insurance policies purchased online are comparatively less than purchasing life insurance policies offline as it requires no additional premium cost of purchasing them directly from the insurance company.

Avoid Consumption of Tobacco/Alcohol

Health is considered the most important factor when calculating the premium for life insurance. The premium rates for non-tobacco/alcohol consumers are lower than those who consume tobacco/alcohol.

Choose the Best Possible Policy Term

The period of the whole policy term plays an important role in calculating policy premiums. Purchasing a life insurance policy for a longer period of time will result in lower premiums.

Add Riders if Required

Choose the riders wisely and opt for them only if you require them because additional coverage riders increase the number of premiums.

How to Use Life Insurance Calculator?

Most life insurance calculators ask you to select the plan you want to opt for on their website. You can view and go through the multiple plans to understand what suits your requirements before calculating the premium rate.

  • Step 1

The first step is filling in your personal details, such as your:



-Date of birth

-Marital status

-Annual income and

-Tobacco use preferences.

  • Step 2

After filling the details, click on “Proceed” option given below.

  • Step 3

Based on the results of the insurance premium calculator, you can decide which plan to purchase.

Benefits of Life Insurance Calculator

The life insurance premium calculator is a simple tool that makes it easier for potential insurance policy buyers to make educated decisions about their life insurance. Some advantages of using a life insurance premium calculator are listed below.

Cost-Effective Option

The online life insurance calculator does not charge you and enables you to compare and assess the premium cost before buying it. You can also add riders to your plan to see if the insurance policy fits your budget.

Convenient Solution

The calculator is very efficient and convenient as you can go back to it repeatedly, which is impossible with an agent. The calculator is always available, allowing you to use it without restriction. The steps for using it are easy and simple to follow if you are aware of the plan you want to buy

Easy Comparison of Plans

You can also use the life insurance premium calculator to plan and compare the various available plans. With this, you are able to buy the best plan that suits your future needs.

Crucial Factors that Decide the Rate of Life Insurance Premium

The following elements are taken into account when calculating the life insurance premium.

Age and Gender

Your age is an important factor in determining the rate of premium. If you are younger, you are likely to have a lower premium price when compared to buying an insurance plan at an older age. This holds true because there are fewer claims at a young age.

Insurance companies use statistical data to determine the two genders’ life expectancy. Such a factor benefits one of the gender resulting in a lower premium rate.


Your health record helps the insurer understand your illnesses and potential diseases you can develop. You also have to undergo a medical test, but if you opt out of it, the insurer can charge a higher premium. Smoking and drinking habits also play a significant role in deciding the rate.

Sum Assured

The sum assured plays a direct role in calculating the premium amount. As the coverage amount increases, so does the premium. Insurance companies use actuarial data to specify the likelihood of a claim and adjust the premium accordingly.

Your sum assured should align with your financial obligations, such as outstanding loans, mortgage payments, and future expenses. If your coverage is inadequate, your loved ones might face financial hardships, while excessive coverage can lead to unnecessarily high premiums.


The life insurance premium calculator premium increases if your lifestyle is risky, i.e., smoking, drinking, or consuming tobacco.

Suppose you smoke or drink often, which are regarded as dangerous behaviors in the life insurance underwriting procedure. In that case, the online insurance premium calculator is meant to raise the premium or direct your proposal to the underwriter. The chance of losing one’s life is high when people smoke, drink, or consume alcohol; this increases the mortality ratio where people have these habits.

Hobbies / Occupation

The life insurance premium is also determined by the prospect’s line of work. Certain vocations are categorized as hazardous in the insurance industry and present a significant amount of risk for insurance companies in terms of mortality claims. Examples include people working in the chemical, firecracker, army, and police services. These occupations have higher mortality rates and, thereby, higher life insurance premiums.

Hobbies such as Scuba diving, Paragliding also attract the special attention of the underwriters as there is a high mortality ratio in people having these hobbies. After taking into account the prospect’s interests and professions, the life insurance premium calculator calculates the prospect’s premium.

Type of Policy

The major factor determining life insurance premiums using the term plan with return of premium calculator is the type of life insurance plans you choose. Life insurance policies come in a variety of forms, including insurance plans, endowment insurance plans, child plans, pension plans, etc.

All these types of life insurance policies have different premiums, but all of them cover the life of the insured. Opting for a life insurance company that provides better service and extensive insurance coverage at the most affordable premiums is advisable.

Other Types of Life Insurance Calculators

There are different types of calculators available on the official websites of life insurance companies, such as:


Calculating the policy premium rates is a detailed process that term plans with the return of premium calculator support. For calculating the insurance premium, this online calculator takes a wide range of factors into account, including age, gender, sum assured, and more. An online tool can be highly trusted because there are no chances of inaccuracy as compared to manually calculating premiums.

While human error might be anticipated when calculating life insurance premiums manually, a calculator can be trusted to produce the most accurate results. Additionally, life insurance premium calculations yield results in seconds, reducing the policy buyer’s work and time. As a result, using an online life insurance premium calculator is strongly advised.



How accurate are the premium calculations from these calculators?

Premium calculators provide a close estimate, but actual premiums may vary based on underwriting decisions and specific policy details.


Can I change the inputs to see how they affect the premium?

You can adjust inputs like coverage amount or term length to see how they impact your premium, helping you find a policy that fits your budget.


Is using a premium calculator free of charge?

Yes, most insurance companies provide free premium calculators on their websites to help potential customers make informed decisions.


Are the quotes provided by the calculator binding?

No, the quotes are not binding. They serve as a preliminary estimate, and the final premium may differ after a thorough underwriting process.


Can a premium calculator recommend the best policy for me?

Premium calculators estimate costs but do not consider your unique financial situation. It is wise to consult an insurance professional to find the best policy for your needs.


Do premium calculators work for all types of life insurance policies?

Premium calculators are generally designed for term and whole-life policies, but their applicability might vary based on the insurance company.


Is my personal information safe when using a premium calculator?

Reputable insurance companies take data security seriously, but it is best to use calculators provided by established and trusted companies.


Can I use the calculator to estimate premiums for multiple beneficiaries?

You can adjust coverage amounts to see how they impact premiums for different beneficiaries.


How often should I revisit the premium calculator?

It is a good idea to use the calculator whenever your life circumstances change significantly, like getting married, having children, or experiencing changes in income.


Are the premiums calculated annually, or are other payment frequencies available?

Most calculators provide annual premium estimates, but some may offer monthly, quarterly, or semi-annual payment options.

Key Takeaways

  • Life insurance calculators are a helpful tool for estimating the cost of a life insurance policy.
  • They can be used to compare different plans and find the best fit for your budget.
  • The factors that influence life insurance premiums include age, gender, health, lifestyle, occupation, and type of policy.
  • Online life insurance calculators are convenient and easy to use.
  • They can help you save time and money when shopping for life insurance.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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