Term insurance is an essential part of any financial plan. No matter how much or little you have, term insurance will protect your dependents in the event of your death. Getting term insurance is not difficult (though getting the right coverage can be).
If you are buying online, it is important to understand what differentiates premiums and why one term insurance policy costs more than another. The easiest way to calculate term insurance premiums is by using a simplified premium calculator.
Premiums can be calculated manually too, but that requires a lot of calculations and it may take a long time. The calculation of premium on Term Insurance depends on various factors including the sum assured, duration, loan value on your existing insurance policy, etc.
Here we’ll show you how to calculate term insurance premium yourself and help you buy the online term insurance policy at the best price.
What is a Term Insurance Premium Calculator?
Term insurance is a kind of insurance that covers the policyholder against the risk of death for a specified period, called the term. The rate of premiums will depend on your age, health, and several other parameters.
To make this information available to you at any time, insurance providers have created a term insurance premium calculator that provides instant access to the costs of your policy. The term premium calculator is a useful tool that helps you budget for term plan payments.
To calculate the amount of term life insurance you need, you can fill out an online form with your insurance preferences and you’ll know about the required premiums instantly. The insurance calculator enables you to look at different plans that are available and make an informed decision.
How To Use a Term Insurance Premium Calculator?
The calculation of your term plan premium is an easy three-step process as given below:
1. Enter Your Details
Using the term plan premium calculator, you’ll need to enter various personal information such as your birth date, marital status, income, smoking habits, number of financial dependents, and how much coverage you’d like. It is essential to be truthful to have a smooth claim settlement process. If you provide false information in your application, your claim may even get rejected.
2. Choose a Required Sum Assured
When we say “the desired sum assured,” we mean how much of a death benefit you want. It should be at least 10 to 15 times your annual income. Then, you will need to decide on the policy tenure. This is the total duration of your policy up to which it will last. You also need to decide how you want to receive your death benefit – as a lump sum or as monthly income.
3۔ Check and Compare Plans
Once you’ve added the information needed, including your age, smoking status, and so on, click the “View Plans” option. The page will then tell you about the different life insurance plans that are available. You can feel free to compare the various plans available as per your financial requirements.
Why Should You Use a Term Insurance Premium Calculator?
If you’re buying a product, the price is usually the first thing you look at. Similarly, if you’re buying term insurance, it’s important to get a cost-benefit analysis of your purchase. A term insurance calculator lets you do that. Here’s why you should use a term insurance premium calculator before purchasing a policy:
1. Helps Saving Time
Online premium calculators give instant term plan quotes. If you’re at the office, you can get it all done in one sitting. There’s no need to collect all your financial records and submit them either. The process of getting term plan quotes is a lot easier online.
You can get a general idea of how much your cover will cost by entering your age and the amount of cover you want. This will give you an estimate for your monthly premium. However, keep in mind that the actual premium may vary based on other factors and the figure gained is just an estimate.
2. Provides Comparison of Different Policies
Aside from giving term plan quotes quickly, calculating term insurance online enables the comparison of different policies, which helps you find the best term insurance policy that will suit your financial requirements.
3. Saves You Money
Online term insurance purchase enables customers to directly communicate with the insurer and eliminates the middleman. With the purchase of term insurance online, you have lower distribution costs and get to save a lot on your premium amount.
The discounts you can get for buying insurance online are not available when you buy it in person. Facilitating quick comparisons means you can buy the most cost-efficient term plan to secure your financial future.
Factors to Consider Before Calculating Premium Amount for Term Insurance
The purchase of insurance is an important investment, so you should make sure it covers all the essential bases that include:
- Requirements – When considering your insurance needs, think about what expenses you might incur if you get into an accident or suffer from a serious illness. Also, think about how much coverage you’ll need shortly.
- Age – Term insurance prices depend on the age of the person who buys it. If you buy it earlier, you’ll pay less for the same plan.
- Tenure – The longer your policy’s tenure is, the cheaper your monthly insurance payment is.
Therefore, make sure you keep the aforementioned factors in mind while choosing a term insurance plan.
It is important to understand the fundamental terms of your term insurance policy, including how your premiums are calculated. However, you can easily calculate term insurance premiums on your own using an online calculator by following the steps shared in this article. We hope you find the shared information helpful.