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How do I Calculate My Term Insurance Premium

A term insurance premium calculator is an easy-to-use tool that will give you premium quotes in less than 10 minutes. Read ahead to know more about it.

  • 11,966 Views | Updated on: Jun 05, 2024

Out of the numerous life insurance options available in the market, term insurance is one of the best-suited options for those looking to cover themselves for a fixed period. A term plan, as the name suggests, provides insurance for a specified period. In case of an unfortunate death during this period, the policyholder’s beneficiary is entitled to receive the sum assured amount, as per the terms and conditions of the policy.

How does a Term Plan Calculator Work?

A term insurance calculator is a tool you may use online to determine how much you’ll need to pay in premiums for the selected life insurance and plan benefits. A term insurance premium calculator takes into account a variety of variables, including age, gender, income, and health status.

Your insurance coverage equals your current yearly salary multiply the number of years till retirement is one of the simplest ways to determine your income replacement value.

Additional benefits of a Term Insurance Plan

The advantages of term insurance are numerous. You should be aware of the following examples:

Low-cost Premiums

By paying a low price of ₹540/- each month, you can purchase a term insurance plan that will provide high-value life insurance. Payments for premiums can be made monthly, biannually, or annually. The cost of your term insurance premiums decreases the earlier you purchase

Lifetime Coverage

Plans for provide noticeably longer coverage. Plans for whole life insurance provide protection up to age 99.

Payment of Insurance Sum

The family members of the insured person will get the sum assured as a payout in the terrible event of their passing. A lump payment, a monthly or annual income, a combination of a lump sum and an income, or an escalating income at the start are all options available to the policyholder. This will assist in meeting financial necessities and cost of living obligations, among other charges.

Benefits of a term plan

The importance of a term insurance plan cannot be articulated. A term plan helps a family recover from the financial loss associated with the death of a loved one. Your family may use the sum assured amount to meet financial obligations such as payment of existing debt, household expenses, child’s educational fees, and other lifestyle costs, among others. Besides, the policy acts as an income replacement in case you are the sole breadwinner of the family.

Moreover, a term insurance policy allows you to enjoy a higher sum assured amount at the lowest premiums. Additionally, you may avail of tax benefits under the Income Tax Act 1961. Under Section 80C, you may reduce your tax liability in proportion to the premium amount paid. Additionally, the maturity amount may be claimed as a tax deduction under Section 10(10D). This applies to term plans with the return of a premium option. With such benefits, one definitely cannot undermine a term insurance policy.

About term insurance calculator

Insurance providers these days offer a wide range of term plans, with varied features and benefits. It is necessary to compare such plans and choose the one that meets your coverage needs. A term insurance calculator is a great tool that helps you select the most economical and best-suited policy.

A term insurance calculator is a digitized tool that helps you calculate the premium amount based on the desired sum assured amount. Most insurance providers have an insurance calculator on their websites. By entering basic details about yourself and the policy, you may easily determine the term insurance premium that you need to pay.

An insurance calculator offers a host of benefits.

Benefits of a Term Insurance Calculator

1. Saves time

Manual calculations are a time-consuming process. Besides, the figures may be large, and calculations may, therefore, take a longer time. A however, helps save an ample amount of time. You may simply fill in the necessary details and get a quote within minutes.

Kotak General Insurance, a well-known insurance provider, has an insurance calculator on its website. You may use the Kotak term insurance premium calculator to generate your quote quickly.

2. Quick comparisons

In the conventional mode, you may need to visit agents from various companies to select the best policy. However, an online insurance calculator helps you compare various insurance plans on a single platform. You may compare the sum assuredly offered against the premium paid and make a choice among multiple insurance providers.

3. Cost-effective

In today’s highly competitive world, insurance providers offer customers various benefits. Some insurers even allow customised plans based on the customer’s coverage needs. Insurers provide alluring discounts online to help attract customers. You may, therefore, use a premium calculator to determine the most cost-effective plan. You may also make your purchase online and enjoy lower premiums. Insurers offer lower premiums due to the reduced cost of paperwork and the non-involvement of intermediaries.

4. Accuracy

Human beings are prone to make errors. While performing the task of manual calculations, you may unknowingly make a calculation error. This, in turn, may affect the calculation of the premium amount, affecting your purchase decision. A term insurance calculator, however, provides accurate results. As it is a digitized tool, you rest assured of getting the insurance quote free from any mathematical error.

5. Easy-to-use

Quite contrary to the popular notion that insurance calculators are difficult to use, the same is not true. The process is quite simple, and it will help you get a quote easily. You may simply follow the below-mentioned steps to get a quote from a term insurance calculator.

1.The first step is to fill in basic personal details. This includes information about your age, gender, income, and occupation, among others. It is also necessary to furnish information about the preferred mode of payment. You may choose from among various options such as demand draft, check, Electronic Clearing System (ECS), credit card, or net-banking facility.

2.Once you have provided basic personal details, you may now furnish information about the term plan. For this, you may enter the sum assured amount, premium-paying term, the term of the policy, and the desired frequency of premium payment. You may opt for a single payment or regular such as monthly, quarterly, half-yearly, or annually.

3.Upon successfully entering these details, the calculator will display the premium amount. You may then go ahead and purchase the term plan.

Determinants of a term insurance premium amount

The premium amount rates of a term plan vary from individual to individual. Along with the risk factors, insurance providers determine the premium amount based on numerous other factors.

Basic determinants of the insurance premium amount:

1. Age

Your age is one of the most important aspects of determining the premium amount. The lower the age, the lower the premium and vice versa. Individuals in the lower age group carry a lower risk than those in the older age group. Older individuals have a greater risk of being prone to the occurrence of the insured event due to their declining health.

2. Occupation

Another determinant of the premium amount is the nature of work. Gas industry workers, miners, soldiers, and those employed in dangerous occupations carry a greater risk than those working in offices, such as teachers or shop workers. Those working in safer environments, therefore, pay a lower premium amount.

3. Lifestyle habits

Most insurance providers ask applicants to provide details of their health while filling out the insurance form. Those with good lifestyle habits tend to live longer than those without. You may, therefore, avail of lower premium rates in case you do not have any bad lifestyle habits.

4. Medical history

Your past medical history, along with your family medical history, is another major determinant of the premium rate. If you have suffered from any illness or disease in the past, your premium rate may increase. Besides, if you have a family history of life-threatening diseases, chances are that you may get affected in the later stages of life. This, in turn, would affect your term premium amount.

Besides the aforementioned factors, other aspects that impact the premium amount include your gender, geographic location, financial status, and the number of dependents, among others.

A term insurance plan provides much-needed protection in case of an unfortunate event. Therefore, it must be a part of your financial portfolio. By investing in such a plan, you may enjoy peace of mind knowing that your family’s needs will be taken care of in case of an unfortunate event. So, calculate your term insurance premium now and secure your family today.

FAQs

How to use the term insurance premium calculator?

In less than 10 minutes, a term insurance calculator can provide you with premium estimates. Your personal information, including your birthdate, gender, marital status, annual income, and other information, must be entered. It is crucial to state the amount assured you want to be paid out over time, as well as whether you want the beneficiary to receive a lump sum payment, regular payments, or both.

Following these actions, you must make up for the anticipated annual increase in revenue. Based on the data you have provided; the calculator will present you with various term insurance plan possibilities. You can then compare policies and pick the one that best suits your needs.

How does your age affect your premium calculation?

The premium amount typically rises by 8% to 10% for every year of age; if you’re in your 40s, it can be as low as 5% annually, and if you’re over 50, it can be as high as 12% annually. When you get term life insurance, your premium is predetermined and constant over the course of the policy’s term.

What factors determine your term plan premium?

Factors that determine Term Insurance Premium Increase are:

1.Age

2.Health Condition

3.Gender

4.Smoking Habits

5.Occupation

6.Lifestyle Habits

7.Chosen Sum Assured

8.Premium Payment Tenure

What is the impact of the premium calculator on smokers?

Regular smoking can lead to chronic diseases like heart disease, bronchitis, lung cancer, and throat cancer, among others, which can shorten a person’s life expectancy compared to a non-smoker. Because people who smoke frequently are thought to have a low life expectancy, the premium for their life insurance policy rises because the death rate is an important factor that is considered when calculating the premium for a life insurance policy.

- 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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