Insurance Insurance Calculator - Your First Step Towards Term Life Insurance

We all want our loved ones to always be happy and lead a successful and fulfilling life. There is no denying the fact that financial stability is the number one prerequisite for a comfortable and worry-free life. Parents work hard to earn an income and they use this income to provide for their children, their parents and their grandparents.There is a reason that they are called dependents. They depend on the breadwinners of the family for their needs, whether it is to bring food on the table, their education, their medical costs, or simply their day to day expenses.So what if, due to an unfortunate and unforeseen circumstance, the sole breadwinner of the family passes away? The family can fall into immediate financial turmoil if a contingency plan is not set. And the best plan that can save a family in such a circumstance is a life insurance policy . You, as a policyholder, have to pay premiums to the insurer for an assured sum of money called as a life cover.In case you pass away within the policy term, then your family will be paid the assured sum as a one-time lump sum payment. This ensures that your family can continue their life and pay their bills even in your absence. Thus, a term life insurance can literally be a godsend in the event of a tragedy.Let us now understand term life insurance in detail

1) Premium

The premium is nothing but the regular amount you pay towards your life insurance policy. Your policy remains active as long you keep paying your premiums before the specified due date. Your premium is dependent majorly on your life cover, that is the premium is higher if your life cover is higher and vice-versa.

2) Life cover

The life cover of your policy is the amount that your nominee will get if your policy is claimed after you pass away. This is an important factor that decides how useful your life policy is. Your life cover must be sufficient to keep your family financially afloat in your absence.

3) Term

The term of an insurance is the amount of time that a term life insurance remains in effect. It can be anything between 5 to 30 years. As opposed to whole life insurance, which lasts for the entire life of the insured, term life insurance only lasts until the specified tenure of the policy. Also Read: How Does A Term Life Insurance Work?

Coming to the crux of our topic, let us now understand what an insurance premium calculator does. Like we saw above, a term life insurance has three main variables, and they are dependent on each other. When deciding on a life insurance policy, buyers can choose the life cover they want and the term for which they want it. Insurers then take this into account, along with other factors like age and medical history and calculate the premium that you will have to pay.The above can all be done with the help of online insurance premium calculators that are available on all insurance provider’s websites. All you have to do is enter the life cover you require, your term length, input further details like Aadhaar and PAN, and the calculator will tell you the premium that you’re liable to pay. You can immediately go ahead and buy the policy too.

Life cover

As discussed earlier, the life cover is perhaps the most important number that you will have to decide when choosing a policy. You will need to calculate your family’s expenses and figure out an amount that will be sufficient for them. The amount must also be realistic because your premium will be decided by this amount too. If you want to purchase a policy with an unnaturally high life cover that your family may not require, your premium will also proportionally increase and may become a burden on your finances.

Your age

Your age when you buy your policy plays a huge role in deciding your premium. The younger you are, the lower will be your premium for a term life insurance. For example, a term life cover of Rs. 1 crore for a tenure of 20 years for a male non-smoker will attract a premium of approximately Rs. 7500 at age 30 years, Rs. 14000 at age 40 years, and Rs. 40000 at age 50 years. It is evident how much the premium increases as you grow older. So, get your life insurance, as early as possible.

Smoking habit

The next important factor that directly affects your premium is whether you’re a smoker or not. Since smoking causes cancer, the life expectancy of a smoker is lesser than that of a smoker. Therefore, insurance companies charge a higher premium for life insurance if you happen to be a smoker.It must be remembered that two people with exactly the same policy may pay different premiums, if both of their lifestyles are different. The term plan calculator is just a tool to give you an idea of the premium that you might have to pay for term life insurance. While it does take into account other factors while calculating, the actual premium is decided by the underwriter after carefully studying your profile.

Thus, a term insurance calculator can be an excellent tool to instantly find out what premium you might have to pay for your term life insurance. With a few clicks, you can compare different policies, modify the assured sum and tenure, and tweak your entities to get the desired premium. Always remember to try and get the lowest possible premium for the highest possible assured sum. Because in the end, the well being of your family must be your first priority.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.