We have enough evidence that financial planning and its importance are going to remain constant, even in the future. Insurance plays a crucial role in your overall financial plan. Term insurance policies act as a financial protective shield for your family (or nominees) in case of your untimely and unfortunate demise.
Since buying a term life insurance plan is such a vital part of your life, you must be careful before you settle on one. There are numerous insurance companies offering several term insurance policies, and choosing one can be very difficult. But modern tools like term insurance premium calculators can help you compare the policies, premiums, benefits, and add-ons all in one place. For that, you will have to learn how a term life insurance calculator works!
How to use a Term Insurance Premium Calculator?
- Personal Information
A term insurance policy calculator asks you for information, including birthdate, gender, marital status, income, number of kids, life insurance cover expected, do you have smoking habits, do you have any relevant medical history, does your family medical history, etc. Later on, the same data is used for calculating your policy premium.
- Assured Amount
When you enter all this information, you will be asked about the expected sum assured at the end of the policy. Along with the sum assured, you will have to mention the tenure of the policy, preference of payment of the sum assured, flexibility in premium payments, whether you wish to add any add-ons, etc.
- Policy Comparisons
After you submit this information, you will have to click on the compare option. You will see all the possible options for term policies according to the information you have entered before. These options will state the premiums of each of the policies. You can then decide which plan suits your requirements and budget.
Factors Determining Your Term Insurance Premium Amount
- Age and Gender
Your age and gender are the two most important determinants of your premium. Age and health risks are directly proportional in most cases. This makes it easier for the policy-providing company to trust you. If you are young, your premium will be in the lower range. If you are older, your premium will be on the higher side. Female subscribers have a lower premium as compared to their male counterparts. Females have higher life expectancy than men, and in many cases, they also have a lower risk of certain health conditions.
- Policy Term
The term of the policy, the time period for which the policy covers your life, is also an important factor that influences the policy premium. If the policy term is long, the premium will be low, and if the term is short, the premium will be high!
- Medical History
If you have any medical conditions or pre-existing diseases, genetically passed disorders, or any other illness, you have to inform the policy providers. The reason is that these conditions are the determining factors of your policy premium. Typically, having an existing medical condition leads to higher premiums.
- Lifestyle
Your lifestyle choices, like smoking or alcohol, affect your policy premium. Since these choices are unhealthy and risky for your life, your premium will be high. If you have a healthy and balanced lifestyle, your policy premium will be lower.
Summary
Comparing your policies before buying one is essential. Term premium calculator gives you an all-inclusive view point of looking at premiums and policies. With this calculation tool, you can select the plan that strikes the right balance between cost and benefit. Before choosing a plan, always check the expected premium using the term insurance premium calculator.
