When buying a life insurance policy, a term insurance plan is the most important policy that you should buy. The plan provides unmatched financial security and helps you provide a financial corpus for your family in case you are not around. Just like with any other life insurance policy, you are required to pay a premium to buy a term insurance plan. Don’t you want to know how the premiums are calculated?
To know the premiums payable under a term insurance plan, you can use a term insurance calculator. However, before delving into the calculator, here’s a brief about term insurance plans –
Human Life Value Calculator
Human Life Value (HLV) is a figure that denotes the current value of future investments, income, expenses, and liabilities. The number is generally calculated to analyze the amount of money required to secure the priceless lives of your dependents with the help of term insurance.
With HLV, one vital question that arises is to estimate the value of your life. In the life insurance world, it is essential to measure the economic worth of an individual. Consequently, this worth is indicated in the form of human life value. To sum up, HLV is the rupee value of your life in economic terms.
Moving forward, the Human Life Value calculator is an excellent tool that assists you to gauge the financial constraints that your family/loved ones would come across in your absence. Especially, when it is about family, no one would wish to leave their families in misery and desolation in case of premature death. Hence, adequate insurance cover is essential to ensure that families are not loaded with debts and financial obligations after your sudden demise.
To sum up, this calculator helps individuals to regulate the estimated protection cover that they require to settle the future of their loved ones.
Term Life Insurance Premium Calculator
A term life insurance premium calculator is a free online tool that assists in calculating the total amount of premium that individuals need to pay for the preferred policy benefit and insurance coverage. The term life insurance premium calculator takes a range of factors into consideration. To name a few, it considers the current income, marital status, age, debt, health conditions, and the count of dependents on the primary insurance holder. This is to help individuals choose the correct plan that fits them best and caters to all their requirements and future family goals.
All in all, the calculator helps you to find out the awaited premiums of your policy so that you can determine the affordability of the coverage that you choose.
What is a term insurance plan?
A term insurance plan is a life insurance plan which promises to pay a financial benefit in case of death of the insured during the term of the policy. When you buy a term insurance plan, you can choose the coverage level and tenure over which you want to be covered. If over the chosen tenure, the insured dies, the death benefit is paid. The death benefit is the sum assured that you had chosen when buying the policy.
How is Life Insurance Premium Calculated?
Insurance companies provide different life insurance premium calculators. These Calculators are used to analyze the premium payable for the selected insurance coverage.
The method of using a life insurance premium calculator is generally easy. All that individuals need to do is provide details like their annual income, gender, birth date, lifestyle habits, occupation, monthly expenses, policy tenure, liabilities, mobile number, email ID, etc. Next, you need to make a smart choice by selecting a life insurance plan variant, the amount of coverage, duration of coverage, and the premium payment frequency.
Next, select your preferred rider add-ons like the accidental cover, accelerated critical illness (ACI), etc. Upon entering these details, the calculator analyses and displays the total amount of premium that you need to pay for the preferred insurance cover. Alongside, they even display a summary of the selected life insurance coverage.
Tip: Try choosing a life cover of a minimum of 10-20 times your annual income.
When should you buy term insurance?
A term insurance policy should be bought in the early ages so that you can enjoy coverage at the earliest. Moreover, if you buy the plan young, your premiums would also be low because premiums increase with increasing age. So, it is recommended that you should buy a term insurance plan as early as possible.
Features of term insurance plans
Term insurance plans are characterized with some salient features which are as follows –
- There is, usually, only a death benefit which is payable under term insurance plans. If the plan matures, no maturity benefit is payable
- These plans allow very high coverage levels so that you can cover yourself optimally
- The coverage tenure goes up to 30 to 35 years, ensuring that you stay covered longer
- Bonuses do not accrue under term insurance plans
- You can choose optional coverage features called riders for increasing the scope of coverage offered by the plan
- Many term plans, nowadays, also offer inbuilt rider benefits for enhanced protection
- The death benefit can be paid in a lump sum, in monthly instalments or in a combination of both
What is a term insurance calculator?
A term insurance calculator is an online calculator which calculates the amount of premium which is payable under the policy. The calculator considers all coverage factors and then arrives at the premium.
How does a term insurance calculator work?
Premiums of a term insurance plan depend on a lot of factors which include the following –
- Age
- Sum assured
- Term
- Premium payment term and frequency
- Occupation
- Medical history
- Physical build
- Smoking habits, etc.
When you use the term insurance calculator, you need to provide these details to arrive at the premium rate. You would have to mention your age, the coverage that you need, the term of the plan, for how long you want to pay the premium, the frequency in which the premiums would be paid, your occupation, medical history, smoking preference, etc.
These details then affect the premium calculation and give you the final premium payable. Here’s how the factors affect the premium calculation –
| Factors | Effect on premium |
| Age | The higher the age, the higher would be the premium payable |
| Sum assured | If you opt for a higher coverage level, the premium would increase |
| Term | The longer the coverage tenure, the lower would be the premium |
| Premium payment term | If you pay premiums throughout the policy tenure, the premium would be low. Limited premiums and single premiums, however, are higher |
| Premium payment frequency | Premiums paid annually or half-yearly are lower compared to premiums paid quarterly or monthly |
| Occupation | If you are engaged in risky occupations, the premium would be high |
| Medical history | If you suffer from any medical complications or have a history of family illness, the premiums would be high |
| Smoking habits | Premiums are higher for smokers than non-smokers |
| Physical build | If you are overweight or underweight, the premium would be high |
Tips to Reduce Life Insurance Premium
Given below are a few tips to reduce your life insurance premium. Let’s look into it.
- Invest In Insurance At A Young Age
As soon as you start earning, make sure you invest in insurance. This is because, lower the age, lower the premium. Hence, purchasing insurance at a young age will help you avoid endowing higher premiums. - Select The Ideal Policy Term
The duration of your policy holds a vital role in calculating the amount of premium. Hence, individuals must keep the policy term in mind while purchasing a life insurance policy. Note that the longer your term policy is, the lower your premium will be. For example, if you get wages, it is recommended to take coverage till the age of 50-60 years. This is to ensure you move through all the liabilities comfortably. - Maintain A Healthy Lifestyle
Ideally, a healthier person needs to pay a lesser premium. This is because insurance companies are paying more attention to the medical history of individuals. If policyholders suffer from BP, heart disease, hypertension, etc, their premium amount increases. Similarly, if you have a habit of smoking/drinking, ensure getting rid of it to avoid paying higher premiums. Simply put, health issues = higher premiums. - Timely Premium Payment
When policyholders fail to pay their premium timely, a late premium fee is charged. This eventually increases the overall amount of premium. Hence, make sure you pay your premiums on time. - Refrain From Including Add-ons That You Don’t Require
Several insurance companies provide extra cover at extra charges. However, bear in mind that extra protection calls for an extra cost. Hence, determine your requirements and choose riders that you actually need. This will help you to lower your premiums. - Buy Your Policy Online
Compared to the policies available offline, online plans charge a considerably less premium. The reason behind this is simple. No additional costs exist because you are purchasing plans directly from the company and not from agents/intermediaries. Offline plans cost more due to the intermediaries expenses included.
Types of term insurance calculators
There are different types of term insurance plans. Since the plans are different, their premiums are different too. That is why there are different term insurance calculators for different types of term plans. Here are the different types of term insurance plans available and their respective calculators –
- Level term plans
Level term plans are those under which the sum assured does not change over the coverage duration. These are the simplest term plans which require a basic term insurance calculator for calculating the premium. - Increasing term plans
If the sum assured increases every year by a fixed percentage, it is called an increasing term plan. Though the coverage increases, the premium remains fixed. However, the premium is calculated in such a manner that it would cover the cost of increasing coverage. For these plans, therefore, separate term insurance calculators are used which calculate the premiums considering an increasing coverage level. - Decreasing term plans
Completely opposite to increasing term plans are decreasing term plans. Under these plans, the sum assured reduces every year. These plans are usually offered with loans to cover the reducing liability. These plans also need a separate term insurance calculator for calculating the fixed premium which is payable every year even with a reducing coverage. - Return of premium plans
Under these plans, the premiums paid are refunded when the plan matures. These plans, therefore, have a maturity benefit. A return of premium term insurance calculator is used to calculate the premiums of these plans as the premiums are higher than normal term insurance plans.
Using a term insurance calculator
A term insurance calculator can be easily found online. Every insurance company offers a calculator with its term insurance plans. You can use the calculators offered by specific insurance companies and you would get the premiums of the term plans that they offer. What if you want to compare?
Turtlemint also offers you a term insurance calculator using which you can calculate the premiums of different term insurance plans at one go. Turtlemint is tied up with leading life insurance companies and offers their term insurance plans for easy comparison. You would, therefore, have to enter in your coverage details once and you would be able to check the different term insurance plans available in the market and their premium rates. Here are some simple steps through which you can use Turtlemint’s term insurance calculator –
- Visit https://www.turtlemint.com/life-insurance and choose ‘Term Life Plans’
- Enter in the coverage details which include the following –
- Gender
- Marital status
- Date of birth
- Annual income
- Smoking preference
- Sum assured level
- Your name, mobile number and email (these are optional)
- You would then be able to see some of the best term insurance plans which are available in the market
- Compare these plans on the basis of their coverage and premiums
- Choose optional riders if you want and the premium would be updated accordingly
- Once you finalise the plan and the coverage, you can pay the premium online and buy the policy directly
Turtlemint’s term insurance calculator also suggests the optimal coverage level based on your annual income. So, the calculator not only calculates the premiums and allows you to compare, it also recommends the ideal coverage amount for you. Moreover, if you provide your contact details, Turtlemint’s executives also call you to assist you with any queries that you might have.
Can you Depend on Life Insurance Premium Calculators?
Yes. Life Insurance Premium Calculators help individuals to simplify the process of buying plans online. Alongside, it helps you to manage your finances effectively by notifying you of a tentative premium amount. Moreover, these Calculators help you to compare distinct life insurance policies effortlessly besides letting you know the variations in premium by listing different factors. They calculate the total premium of the desired life insurance coverage. All these reasons clearly state why one can depend on Life Insurance Premium Calculators restlessly.
Benefits of term insurance calculators
A term insurance calculator is a must before you buy a term insurance plan because of the following reasons –
- The calculator gives you the correct estimate of the premium payable. You can, therefore, judge the affordability of the term insurance plan before you buy it
- You can compare the premium rates of different plans by using the term insurance calculator
- The calculator is pretty straightforward and can be easily used for finding the premium
- The term insurance calculator is completely free of cost
- The calculator is dynamic in nature where the calculated premium changes when the coverage details are changed. You can, therefore, arrive at the most suitable premium by changing the coverage amount and/or the term of the policy
A term insurance plan is an important requirement if you want to leave your family financially secured in case of your premature death. So, buy a term plan at the earliest. However, before buying the plan, use a term insurance calculator to find out the expected premiums of the policy so that you can judge the affordability of the coverage that you are selecting.
FAQ’s
Yes, the calculator is completely safe to use. If you are using the calculator of a trusted and reputed website, your data is protected from online frauds and you can calculate the premiums on a secured gateway.
The coverage of the term plan should be sufficient enough to cover your family’s financial needs in your absence. One way to find the ideal coverage level is the income rule. As per the rule, your term insurance coverage level should be at least 10 to 12 times your annual income.
If you choose to add riders to your term insurance coverage, the premium calculated would increase. This is because each rider comes with an additional cost for the additional coverage benefit that it provides. Thus, by adding each rider, the premium goes up.
