Things to know about term insurance premium calculator

When you buy term insurance, you are expected to pay premiums in exchange for the risk coverage it offers. The timely premium payments ensure that the policy remains active and doesn’t lapse. So, how is the premium for your policy calculated, and how much do you need to pay for the term insurance you choose? A term insurance premium calculator helps you with this. It accurately estimates the premiums you will need to pay for continued policy coverage. Also, considering the number of policies available in the insurance market today, it can be challenging to compare each of them. A term insurance premium calculator will also help compare various policies easily. In this article, let us understand all that you need to know about a term insurance premium calculator. Let us dig deeper!

What is a Term Insurance Premium Calculator?

When you buy a term insurance policy, you must pay premiums regularly for the insurer to provide financial coverage. These premiums can be paid monthly, yearly, quarterly, or half-yearly, depending on your convenience. To ensure you pick the right policy that fits your needs, you will have to check if the premiums payable suit your pocket. This is precisely what a term insurance premium calculator does for you! A term insurance premium calculator is an online tool that helps calculate the premiums payable for different term insurance policies.

How does a Term Insurance Premium Calculator Work?

You will have to enter some basic details like your age, income, gender, policy tenure, cover amount, etc., and the term insurance premium calculator will do the calculations for you. It will give accurate results of the premiums payable across different term insurance plans. You can also customise your policy by increasing/decreasing the sum assured, changing the policy tenure, adding riders, or choosing features/benefits - and check how they affect the premium. And the best part is that you do not have to wait hours talking to a call-centre agent or connect with an insurance executive to get these inputs. It is simple, easy to use, and provides accurate results.

Benefits of using a Term Insurance Premium Calculator

✅It makes comparing policies easier
Comparing various policies becomes very simple with a term insurance premium calculator. Just enter basic details like required policy tenure, cover amount, lifestyle choices, etc., and voila! The premiums payable will be displayed on your screen. You can change inputs with different tenures and cover amounts to compare premiums. This will help you make a very informed choice of buying the right term insurance policy.
✅It’s a free tool
The best feature about a term insurance premium calculator is that it’s free to use! All you must do is enter all your details and voila - you’ll get the premium rates, right on your screen.
✅It saves time
Maths is not everyone’s cup of tea, the premium calculation for different policies can be tedious. But with a term insurance premium calculator, it is done in a jiffy. It helps you save time and gets results instantly.
✅It gives you accurate results
Manual calculations might have some room for errors, but a term insurance premium calculator - being an online tool - gives you accurate and correct results each time.
✅It helps you figure out the right cover amount that is affordable for you
When you buy term insurance policy, you should ensure that the sum assured is adequate to secure your family’s future financially. This online tool can help you decide on the right cover amount to choose a policy with premiums that are affordable for you. Remember that more the coverage, the higher the premiums will be.
✅It helps your estimate future expenses and make informed decisions
Premiums payable play a crucial deciding factor in buying a term insurance policy. When you calculate premiums beforehand you will be able to budget your finances before buying a policy. So, when you are aware of how much your term insurance policy will cost you, you can make a well-informed decision that’s beneficial to both your pocket and your family.

Factors considered for Term Insurance Premium Calculations -

A term insurance premium is calculated on the basis of various factors, like -
1️. Cover Amount
The financial coverage you are looking for is directly attributed to the premiums you are going to pay. The higher the sum assured, the higher the premiums. Choosing adequate coverage is always recommended to guarantee* your family's financial security.
2️. Age
Age is one of the essential inputs to checking premium calculations because premiums vary with how old you are. It is the best choice to invest in a term insurance policy at a younger age - and if you have financial dependents or unsettled loans/liabilities. This is because as you age, you are more prone to illnesses and thus, might be required to pay higher premiums.
3️. Medical history
Your medical history also affects the premiums you will pay. The prevalence of a genetic medical condition can result in higher premiums or even rejection of your application - if it becomes riskier for the insurance company to cover you.
4️. Gender
Gender specifications are considered when calculating premiums online. Our World in Data has a detailed report that women tend to live longer than men worldwide. It implies that women will survive higher policy tenures than men, and so, insurers charge lower premiums to women compared to men of the same age.
5. Occupation
Your occupation is a deciding factor in calculating the sum assured and premiums. The riskier your occupation, the higher the premiums. For instance, a firefighter may have to pay higher premiums than a school teacher.
6. Lifestyle choices
Your lifestyle choices are important grounds for the insurer to check how risky your application is. If you smoke, consume alcohol, or have a history of drug usage - you are more prone to contract medical conditions and may have a decreased life expectancy. And thus, you are generally required to pay higher premiums. Further your indulgence in sports/hobbies which are life threatening may result in paying higher premiums
7️. Policy tenure
The policy tenure is the duration during which your policy is active. The policy tenure you choose also affects the premiums you pay.
8️. Riders
Riders are add-ons that you add to your policy for enhanced coverage on the happening of specific circumstances. The premiums payable will increase with the number of riders you choose for your term insurance policy.
9. Features and benefits
If you opt for features/benefits like the increasing cover option (your term insurance cover will keep on increasing gradually - until it reaches a maximum limit) - your premiums will increase.

To Conclude,

A term insurance premium calculator is a reliable online tool that helps you compare the premiums payable among various plans. It helps you save time and is completely free of cost. Making a well-informed decision about buying term insurance that fits your budget has now become easier because of this efficient tool.