You already know that term insurance is a life insurance plan designed to offer you financial protection and safeguard the financial future of your dependents. These plans offer a promised sum of money in the event of the insured`s sudden death during the policy term due to a situation covered under it. Term plans are considered to be the most cost-effective life insurance plans which enable you to take care of your family`s financial stability even when you are not around.
Typically, you will note that a higher sum assured proves more effective in building a safety net against financial obligations. It allows the dependents of the insured to meet their needs and expenses and settle future obligations without dipping into emergency funds. This is why most people would advise you to opt for a higher sum assured. However, you should note that such a policy plan would be effective only if you are comfortable with its tenure and premium amount. This is because the two variables tend to impact the sum assured and your paying capacity.
To understand their relation and impact better, many use an online term insurance premium calculator. This tool not only helps estimate the sum assured but also suggests the likely premium. You are also allowed to adjust the variables to compare which combination of tenure and premium would suit your needs. This is why it is encouraged that you know more about the features and benefits of term insurance calculators to make the most of their benefits.
What is a Term Insurance Premium Calculator?
Typically, a term insurance premium calculator is an insurance tool, designed to help you find suitable coverage for your family`s financial needs. The online tool is available for free and can be accessed easily. It can also help you determine how much money premium you would be required to pay for a given period to achieve the desired sum assured. Based on the outcome, you can decide whether the premium is within your payment capacity.
How Can You Access a Term Insurance Premium Calculator?
Term insurance premium calculators are readily available online. You can use them for free and without much effort. However, you must have a basic idea about the premium you can afford to pay, the desired sum assured, and the number of years for which you would need coverage.
You can begin your hunt for a term insurance calculator, with a quick Google search. However, pick a reliable website for safety reasons.
Next, navigate to the term insurance premium calculator page and fill up the required details. For instance, you would need to enter these details –
- Age: Enter your age as per your verified age documents such as Aadhaar, voter card, and PAN. Notably, age influences the premium amount. Typically, older adults who are closer to retirement age pay higher premiums because they are deemed risk-prone than those in their early 30s or 40s. To offset this risk, insurance companies charge higher premiums.
- Desired age of retirement:Next enter the age you would like to retire. Typically, individuals consider 60 as the retirement age. However, if you have accumulated enough corpus or have secured a stream of income for retired life you may consider retiring early.
- Existing life cover:If you have an active life or term insurance, you would be required to know their details. This will help you understand the additional coverage you would need to protect your financial future.
- Annual income:A term insurance premium calculator will also ask for your annual income to understand how much coverage would be enough to supplement it.
- Savings: You would also be required to share your savings details to understand if they would be enough to safeguard your dependents’ financial future. Additionally, it will help determine the additional support that could strengthen their financial future.
- Obligations: Entering your existing obligations such as loans, EMIs, and bills would help determine your total liabilities. You may also be required to confirm your CIBIL score details, in rare cases. This will help understand your payment capacity and then help you find out your suitable premium and coverage combination.
Based on these inputs, the tool will offer you an estimate of coverage and premiums. Typically, it is suggested to avail of a cover that is at least 10-15 times one`s annual salary. In case you are not satisfied with the combination, you can readjust the variables multiple times until you find the best-suited outcome.
What Will a Term Insurance Premium Calculator Do for You?
A term insurance premium calculator will help you determine the ideal coverage for you that will enable you to safeguard the future of your loved ones. This will ensure that the backup you create is adequate to help your dependents cope with the financial burden created in your absence. However, when you avail the outcome, make sure to factor in the inflationary pressure to understand whether the same would be sufficient to keep up with the rising cost of living.
This insight will help you to plan your finances accordingly and will allow you to take additional steps if required. You should note that the final amount will also factor in details such as the user`s age, lifestyle habits, health conditions, and income. In addition, these factors will also influence your outcome. For instance,
If you opt for a high cover amount, it will likely follow a high premium amount. The cover amount is the amount the insurance provider will pay your dependents in case of your sudden death or clause covered under the policy. Similarly, a longer duration would attract a higher premium. You can ascertain its impact by adjusting the tenure of the tool for more clarity.
Besides this, riders, which are add-on coverage are also an influential factor. While they increase your coverage and help customize a base plan, they also increase your premium amount. Though you can add multiple riders, it is advised you pick only the ones you need so that you do not overburden yourself.
This way a term insurance premium plan calculator can be used for proper financial planning. Based on this you can proceed to purchase a particular insurance plan. However, make sure to check the features and terms and conditions of the policy to ensure it suits your needs and offers you the best support at the time of need.
