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Term Insurance Calculator - Everything You Need To Know

A term insurance calculator can be remarkably beneficial for determining your financial needs. Here's all about the term insurance calculator.

  • Jan 20, 2020
  • 10,519 Views

Key takeaways:

Common Factors that determine insurance policy coverage

  • Age
  • Sum Assured
  • Riders
  • Medical History

Benefits of Term Insurance Calculator

  • Comparing plans
  • Cost-effective tool
  • Saves time

All About Term Insurance Calculator

Term insurance is the most cost-effective and straightforward way to get a life insurance policy. However, purchasing a policy entails a significant amount of paperwork and calculation. To choose the right insurance plan, you must consider the family’s financial needs and future inflation. Based on this information, you can choose the amount of sum assured that is best as per your requirements.

Fortunately, you have an effective and simple method that can assist you in simplifying this time-consuming process. A term insurance calculator can be remarkably beneficial for determining your financial needs.

Read further to learn the different types of term plan calculators and the factors that play a role in deciding your premium rate.

What is Term Insurance Calculator?

A term insurance calculator determines the premium rate you must pay regularly to secure term insurance. The premium amount to be paid depends on several factors your age, health record, the sum assured, and the policy term. The term plan premium calculator helps you learn the future needs of your family and choose the best plan available in the market to fit your budget.

Why a Term Insurance Calculator?

A term insurance calculator is only a basic online calculator that determines the premium amount to be paid for a certain term insurance policy and the insurance amount necessary to safeguard a person’s family. These outcomes are determined by the information an individual provides, such as age, expenses, future objectives, health status, etc.

It is imperative to use a term life insurance calculator before purchasing a policy. It aids in your understanding of your financial situation, enables you to make necessary adjustments, and lists the range of coverage possibilities that are affordable.

Common Factors that determine insurance policy coverage

If you’re using a term insurance premium calculator for the first time, it’s important to understand the factors used to determine the cost of the policy, which are thoroughly covered below.

Age

Age is a key factor in determining a term policy’s premium, making it a prominent field in calculators used to determine term plan premiums. The term plan’s coverage will either rise or decrease as a person gets older because their age directly correlates to their premium payment. The younger you are, the less likely you are to experience health issues, which results in reduced premiums. In addition to being required to undergo medical exams, the premium goes up as a person becomes older. To lock in low premiums, financial advisors always suggest purchasing a term policy before turning 30.

Sum Assured

The benefit amount paid by the term plan assists the insured’s family members in filling the financial void left by the tragic occurrence of the insured’s death, disability, or illness. It follows that this is the main justification for purchasing a term policy because the payout will enable them to pay off any outstanding loans and obligations without putting an undue load on them.

On the other hand, if you choose a policy with less coverage, there is a very high likelihood that you won’t be able to cover the costs, which will put additional strain on your dependents. Therefore, a term plan calculator will assist you in determining the appropriate coverage amount in advance to make the necessary plans.

Loans, Spouse healthcare, Parents’ healthcare, Children’s education and marriage, Spouse retirement, and Daily expenses are the expenses that one needs to consider when determining their worth to choose the sum assured.

Riders

Riders are supplemental coverages that increase the term plan’s protection against particular unforeseen events like accidents, illness, disability, etc. Even if the riders are more expensive, choosing one is preferable to purchasing a new insurance policy. The terms “accidental death rider,” “permanent and partial disability rider,” “critical illness rider,” “waiver of premium,” and “accelerated death benefit rider” are frequently used to describe riders.

Medical History

Do you smoke or use tobacco? Do you currently have any illnesses? Do you have any ailments caused by your lifestyle? These are a few of the crucial inquiries you must respond to on the application form and while utilizing the term insurance calculator when you’re applying for a term plan. The applicant must also go through a medical examination in addition to this.

The insurer conducts all of these checks to determine whether you have any health issues because carrying risks results in higher insurance premiums. Therefore, it is always preferable to disclose your health status to the insurer up front rather than hiding any information to save a few hundred rupees.

Benefits of Term Insurance Calculator

  • Comparing plans
  • A term insurance premium calculator helps you compare various  plans for no cost. An agent would charge for creating several plans with varying premiums, but a term plan calculator does it for free without much hassle.

  • Cost-effective tool
  • This online calculator is cost-effective as you can use it multiple times without paying any additional charges. The calculator isn’t complex and determines your premium within minutes.

  • Saves time
  • The tool saves you a lot of time as it loads smoothly and is easy to operate.

1. Term Insurance Premium Calculator

This type of calculator gives you the premium rate for buying a term plan at a specific age and for a particular amount of coverage.

2. Investment Plan Calculator

Investment plan calculator gives you an analysis of your investments and predicts your growth.

3. Child Insurance Calculator

This calculator gives you the premium rate for buying insurance for your child to secure their future requirements like primary and higher education.

4. Pension Plan Calculator

pension plan calculator aids in understanding the premium amount you have to pay today for a fixed amount of returns in the future and understanding the financial needs of your family in a better way. You can also compare the plans offered by other insurance companies and buy the plan that best suits your retirement plans.

The Working of a Term Insurance Calculator

Before you start calculating the premium rate for term life insurance, you should go through the various types of term insurance provided by your insurer to better predict your premium cost.

Step 1

First, you have to fill in your personal details like gender, smoking habits, age, the sum assured, policy term, etc.

Step 2

In the next step, you are presented with the payment option and the premium term, and you can choose the premium you want. A table with a monthly and yearly premium option shows the premium rate against the sum assured.

Step 3

You can add rider benefits like critical illness rider, accidental death rider, waiver of premium rider, etc. Adding any rider to your insurance plan will increase your premium rate by some amount.

Step

Now, you can view the final quote for premium and check if it fits your budget. You can also go back and re-calculate the sum assured with the help of the calculator

Factors That Affect Your Term Insurance Premium

Though the sum assured of life insurance can be the same, the premium rate depends on numerous factors and plays a huge role in deciding the cost.

1. Age

Your age is a crucial metric in the premium quote which is why it is advised to buy insurance when you are younger; as you grow old, the premium rates keep rising. At a younger age, you can get a good term plan at an affordable cost.

2. Coverage amount

The coverage amount also decides the premium, where a higher cover means a higher premium

3. Gender

Though gender should not have much control over the price, insurance companies use statistical data to determine the life expectancy of the two genders. This can mean that one of the genders can tend to have a higher premium when compared to the other. Generally, female policyholders are more likely to pay higher premiums.

4. Policy Term

The policy term means that you have coverage for that many years, and it can be chosen by you. For term insurance, the premium rates are lower when the term is longer. Hence, if you choose a longer policy term, you can get a less expensive premium.

5. Purchasing mode

You can buy term insurance offline and online. When you buy the insurance policy offline, you have to pay for the agent and the policy, making it an expensive option.

Wrapping Up

As you can see, term insurance calculators are useful tools that may save you a lot of time and money. So, you should not compromise your family’s financial security when you have a nifty little tool to assist you. Therefore, before buying a term insurance policy in the near future, make sure you consult a term plan calculator. It can make your job infinitely easier and provide you and your loved ones with adequate cover to keep you both safe and protected.

FAQs

What is a term insurance premium calculator?

Purchasing a term insurance policy is among the most affordable solutions to guarantee your family’s financial stability following your passing. Term plans are more appealing than any other insurance product since they offer a high life cover and other practical features like numerous saving methods, maturity benefits, riders, etc., for a reasonable price. Additionally, using a term insurance calculator makes it simpler to determine the precise amount you must pay for your family to live comfortably, even in your absence.

How does the term insurance calculator work?

Your insurance coverage equals your current yearly salary times the number of years till retirement is one of the simplest ways to determine your income replacement value. For instance, if you are 40 years old, make ₹15 lakh a year, and expect to retire at 60, the amount of insurance you’ll need is ₹3 crore (15 lakh times 20).

h3 style=“font-size:16px;”>What type of details will I have to enter on the premium calculator?

    To use the premium calculator, all you have to do is enter the following details

  • Contact details
  • Cost-effective tool
  • Preferred add-ons
  • After entering the details, choose the sum assured amount, and the results will be out in a couple of minutes.

What are the benefits of using the term insurance premium calculator?

    Term Insurance calculator have a lot of benefits, some of them are as follows

  • Affordable Premium with High Sum Assured
  • Simple to comprehend/li>
  • Preferred add-ons
  • Various Options for Death Benefit Payment
  • Additional Riders
  • Income Tax Advantages
  • coverage for critical illnesses
  • Coverage for Accidental Death Benefits
  • Premium Option Refund

Will I have to pay any charges to avail of the premium calculator?

No, you don’t have to pay any charges to avail of the premium calculator.

Kotak e-Term Plan

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Features

  • Nominal Cost
  • Multiple Plan Options
  • Flexible Payout Options
  • Critical Illness Rider
  • Tax Savings
  • Long term Coverage

Ref. No. KLI/22-23/E-BB/492

T&C

- A Consumer Education Initiative series by Kotak Life

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