Using Online Calculators To Determine Term Insurance Premiums

Insurance companies have launched a handy digital tool called term insurance calculator to ensure making informed decisions regarding term plans. It instantly reveals plausible facts and figures regarding the future of your investment.  

What is a term insurance calculator? 

Once you have understood the utility of term insurance, the next question that you seek answers to is, “How much coverage do I need?”. An online term insurance calculator will help to determine exactly that! 

It is easily accessible over any insurance website. It considers your age, income, inflation, expenses, the total number of dependent family members, etc., to reveal the probable results.  

How do term insurance calculators determine insurance premiums? 

Usually, you need to enter your age, geographical location, annual income and other parameters that the calculator may ask for. It considers inflation, expenses, debts, and other relevant factors to reveal the probable coverage requirement.  

It also shows the tenure for your planned sum assured amount will sustain your family, revealing the break-up of the average annual expenses, the average return of your planned investment and the remaining balance.  

Example: If a 35-year-old male earns INR 2500000 annually and enters these details into the calculator, it will reveal that his ideal coverage would be INR 6.5 Cr. which will sustain his family for approximately 26 years. 

This example was just for illustrative purposes. You need to check your premium according to your choices. 

Factors affecting term insurance premiums 

When you purchase term insurance, your premium payable amount gets calculated after considering several lifestyle and demographic factors like gender, age, health status and history, hereditary records of any particular ailment, habits of drinking/smoking, etc.  

The principal factors that affect the term plan premium include: 

Age: This is a major determinant affecting term premiums. It is considered that younger individuals are less prone to health risks, which directly impacts the premium. With increasing age, the financial risks of the insurer gradually rise, eventually raising the premiums.  

Tip: Term Insurance premiums are locked for life once the policy is issued. So, the earlier you opt for the plan, the better rates you would be able to avail. 

Plan term: The plan tenure directly impacts the premium payable amount. The longer terms involving comparatively older and risk-prone years, automatically raise the premium.  

Medical history: If you have any personal or hereditary history of any ailment like diabetes, stroke, cancer, etc., it will raise the premium, and the risk involvement is higher.  

Health status: You need to undergo a specific medical checkup before purchasing a term plan. This ensures negating prospective health issues like hypertension, thyroid, diabetes, etc., which will enhance the premium. 

Occupation: The nature of the profession also impacts the premium value. If you are involved in high-risk professions like mining, defence, pilots, etc., where the risks are notches higher, your premium dues will also rise accordingly. 

BMI: Having an abnormal BMI is in itself considered to be an ailment, rest assured it raises the risks of having several other future ailments manifolds. This will also impact your premium payable amount for the term plan.  

How can a calculator effectively help to compare plans and determine premiums? 

A term insurance calculator has become an indispensable tool to determine the future of your planned investment. You need to follow these steps to understand the working strategy of this tool: 

• Enter details: As you open the calculator, you need to enter all the relevant details as required including your name, DOB, annual income, etc. 
• Coverage estimation: Depending on your risk assessment and details entered, the calculator will automatically estimate the coverage to fulfil your targets, especially during any unfortunate event. Depending on the results, you can alter the coverage amount, plan tenure, and premium to change the probable outcome.  
• Premium calculation: The calculator automatically estimates the target coverage. If applicable, you can also add befitting riders to ensure coverage expansion. 
• Comparison: Indian term plan calculators allow you to compare different quotes from different insurers so that you can purchase the most suitable one at the best rate, ideally customised for you.  
• Customisation: As these calculators offer you real-time results, you can further adjust the coverage amount, riders, plan tenure, and other applicable parameters to justify how they affect the premium amount. You can try this out for multiple insurers to know the cheapest one, without compromising on the coverage span.  
• Results: Utilizing all the details provided, this calculator will reveal the estimated premium for your chosen term plan. Such a clear picture will help you make an informed decision that will align with your budget and target.