Life Insurance Premium Calculator
What is Life Insurance?
Life Insurance is an arrangement or rather an agreement between the insurance provider and the insured person. According to this agreement, the insurance provider will pay a specific amount to the family of the insured person on his death. This sum which is paid by the insurance provider is known as the Sum Assured. The insurance company will pay the sum assured to the insured person in exchange for the payment of a specific amount which is known as life insurance premium.
With the increase in the number of lifestyle ailments, the number of accidents, environmental pollution, etc. life has become even more unpredictable. No amount of money can ever fulfil the loss of a loved one, but it can reduce the financial hardships that your family might face in your absence. So, it is always wise to secure the financial lives of your loved ones to help them in avoiding any hardships when you are not with them anymore. Life insurance will help in providing coverage against life risks and take care of the financial needs of your family in your absence.
Life Insurance Premium
Life Insurance Premium can be defined as the payments that are made to the insurance provider for paying the sum assured to you in the future. The insurance company provides the lump sum amount to your nominee on your death only if the premium paid for your life insurance policy has been done. In other words, your life insurance policy will remain active only if your life insurance premium payments are done in time.
The life insurance premium of your life insurance policy depends on several factors such as
Your age is inversely proportional to your life insurance premium. The older you are the higher your life insurance premium rate as your possibilities of being affected by diseases are more and you will make fewer payments as compared to someone younger.
Your medical history and health records
If your medical history shows up cases of critical ailments like cancer, illnesses related to heart, etc. then your life insurance premium would be higher. Similarly, if your health records are normal without any hint of ailments, your life insurance premium would also be on the lower side.
The type of life insurance policy you are selecting
Your choice of policy also determines your life insurance premium. If you are selecting a policy with longer tenure, then your premium would be lower as compared to that of a policy with shorter tenure.
The life insurance premium for women is lower as compared to that of men as the life expectancy of women is more than men.
People working in a dangerous profession like mines, fisheries, oil and gas refineries, etc. pay a higher life insurance premium.
Your lifestyle and habits
People having habits like smoking, drinking, etc. tends to pay more premiums as these habits lead to serious health ailments reducing your life expectancy.
How to use the life insurance premium calculator?
A life insurance premium calculator is a tool that can be helpful in giving you an estimation of your premium amount to be paid. This estimation depends on various factors such as the life insurance policy which you have chosen, your age, the tenure of your policy, your lifestyle, etc. Usually, the insurance providers have a life insurance premium calculator on their websites for the calculation of premiums.
Some of the mandatory fields which need to fill in the life insurance premium calculator are
- The Policy which you have chosen
- The tenure of your policy chosen
- Sum Assured
- Your age
- The frequency of your premium payments
- Riders (optional)
Let us have a look at the steps to be followed to use the life insurance premium calculator on https://www.turtlemint.com/life-insurance.
- You need to choose from the 4 options:You need to choose from the 4 options:
- Term life plans
- Investment and tax planning
- Savings for child
- In the next step, you need to enter certain personal details such as
- Your gender
- Your marital status
- Your date of birth
- Your annual income
- Whether you smoke or not
- Sum assured that you wish to opt for
- Then fill in your name and contact details then click “next” or you could “skip for now” as well
- In the next step, some details related to the policy needs to be entered such as
- The sum assured the amount
- The coverage tenure
- The tenure for premium payment
- Payment frequency
- And then click on “share quotes”
- Then you have the list of plans from which you could choose from
- After these details are filled, you will see the estimated premium displayed in front of you along with the features and benefits of each plan.
Simple Life Insurance premium calculator
Let us study an example of a simple life insurance premium calculator.
- Age – 39 years
- Type of plan – New Endowment plan
- Tenure of the plan – 20 years
- Sum insured – Rs. 10 lakhs
- Additional Riders – Yes
Now, on final calculation the results obtained on the life insurance calculators are
- Premium if paid monthly – Rs. 4, 250
- Premium when paid on a quarterly basis- Rs. 12, 750
- Half-yearly premium – Rs. 25, 235
- Premium if paid yearly – Rs. 49, 940
A Sample process for calculation of life insurance
Let us illustrate an example of the calculation of life insurance premium using a life insurance calculator.
The basic fields which need to be populated are mentioned below.
- Age – 31 years
- Term of the policy – 13 years
- The Term for premium payment- 8 years
- Sum insured – Rs. 10,00,000
- Riders – Rs. 50,000
The basic fields which need to be populated are mentioned below.
- Premium paid annually – Rs. 1,16,030
- Premium paid half-yearly- Rs. 60,335
- Quarterly premium payment – Rs. 30,747
- Monthly premium payment – Rs. 10,442
You will also have to add the premium for the rider i.e.
- Annual premium for riders – Rs. 50
- Quarterly premium payment for riders –Rs. 13
- Half-yearly premium payment for riders – Rs. 26
- The Monthly premium for riders – Rs. 4.50
Tip #4 Benefits of Life insurance calculator
Some of the major benefits of the Life Insurance Calculator can be listed below.
The calculation of life insurance premium becomes automated in nature when you are using the life insurance calculator. This automated method will be less prone to errors in comparison to that of the manual calculations.
An Easy method of premium calculation
Life Insurance Calculator is an easy and convenient method of life insurance premium calculation and helps in the accurate calculation without any hassles.
Determination of the exact amount
By a life insurance calculator, you can easily determine the exact sum insured or coverage amount which will be needed for ensuring the financial security of your loved ones.
Comparison and selection of the best policy
Life Insurance calculator will help in providing you with the scope of comparison of the premium which is being offered by various insurance providers. Then, you can select the best policy which will provide you with maximum coverage at a reasonable premium.
- I do not have any mortgages. Do I still need life insurance?You may not be having any mortgages, but if you have dependents you should have life insurance.
- Is life insurance policy necessary?Yes, in today’s world when the risk factors for life have increased tremendously it is a must to have a life insurance policy.
- How to determine what should be your coverage?To determine your coverage, you should consider the below-mentioned factors.
- Your current income
- Your financial goals
- Your liabilities
- Your dependents and expenditure related to them
- Your age
- What is the general tenure for life insurance policies?
Usually, life insurance policies are sold for 5 years, 10 years, 15 years, 20 years, 25 years, 30 years, etc.
- Is the life insurance premium calculator helpful?Yes, life insurance premium calculator is helpful for calculating the exact premium to be paid and also helps in comparing and finding out the best life insurance policy for you.