Term Insurance Calculator: Things to Know

A term insurance calculator is a useful tool for financial planning that enables users to find out the most suitable coverage for them. Typically, the calculator factors in the user’s personal and financial data to determine which coverage is best for their requirement. However, to use this online tool, individuals need to identify their personal needs and requirements from a term insurance plan. They should also know how to access and use the tool to their advantage and plan the purchase of insurance plans accordingly. 

 Let’s discuss a term life insurance calculator to understand its use and features better. 

How Does An Online Term Life Insurance Calculator Work? 

An online term insurance calculator helps determine the estimated premium and helps users understand how different factors influence the coverage. 

The tool uses information fed by the users into its fields to compute the insurance premium and coverage amount. 

Typically, users have to provide the following details to determine term life insurance premiums and more –

  • Date of birth
  • Gender
  • Marital status
  • Yearly income
  • Insurance coverage

Once the user enters all the details in the calculator, the online financial tool will display a suitable plan.

Individuals who have a certain coverage and premium in their mind can easily determine whether the estimated outcome is adequate for their needs or not. In case the results do not satisfy the user they can readjust the inputs and check whether the new combination of detail offers a more suitable outcome or not.

Factors Influencing Insurance Premium

The following factors influence the premium amount significantly –

  • Age: Insurance companies consider young individuals to be less prone to suffering from old age-induced chronic diseases. This makes them less risky when compared to older individuals. As a result, young applications are more likely to avail substantial coverage at lower premiums. Applicants are required to submit proof of age and may be asked to undergo full body checkups in case of health insurance. 
  • Desired age of retirement: 60 is considered to be the standard retirement age. However, many individuals may decide to retire either earlier or later than that age, usually due to their financial standing. The anticipated retirement age is crucial in determining the coverage as it helps understand the suitable financial protection one could need to tide over liabilities, medical expenses, and cost of living post-retirement. 
  • Yearly income: This information serves as a basis to understand how much money the insured or their family would deem adequate to be financially secured in case of a mishap. 
  • Insurance policy cover: This is the amount of money individuals would receive after filing a policy claim. The amount depends on other factors like the policy buyer’s age, financial liability, income, age of retirement, and more. A substantial insurance cover ensures the financial security of the dependent of the insured for a long time. However, a high cover also attracts a higher premium amount. 
  • Existing insurance cover: Individuals who already have insurance coverage and looking to extend their financial security net should take into account the sum assured to decide how much more cover would make them more financially secure. Individuals can use a term insurance calculator to determine the additional coverage they would need to strengthen their financial standing for the future. 
  • Loan obligations: Individuals must factor in all their existing loans, pending repayments, monthly EMIs, and future obligations before getting a policy. This will help them understand which cover amount will be most suitable to account for their debt obligation and help their family settle them in their absence without being financially burdened. 

In addition to these, habits such as smoking, and drinking affect premium amounts. Individuals who do not indulge in these habits and lead a healthy lifestyle are likely to avail a high coverage at a comparatively lower premium amount. 

How To Use Term Insurance Calculator?

Follow these steps to use an online term plan calculator – 

Step 1: Go to the official website of a trusted insurance policy provider

Step 2: Open the Term Insurance Calculator page

Step 3: Enter information such as name, date of birth, gender, contact details, and smoking habits

Step 4: Feed the desired sum assured 

Step 5: Enter the preferred policy term for the cover

Once this information is entered into the calculator, the financial tool will fetch all details and then display the insurance premium quotes. On the basis of the information, individuals can pick the specific cover to readjust the inputs to check other cover combinations. The online financial tool can be used for free and hence can be readjusted multiple times to determine the desired combination that suits the budget and coverage requirement.

Top Benefits of Using an Online Term Plan Insurance Calculator

By using the online term insurance calculator, individuals can benefit in these ways –

  • Estimate the insurance cover and policy premium accurately 
  • Save time by allowing quick comparisons
  • Facilitate free comparisons 
  • Help pick the best-suited insurance plan
  • Shows how different financial and personal factors impact premium

What Is The Right Age To Avail a Term Insurance Policy?

There is no right age to avail of a term insurance policy and one can get one at any age between 18-65 years. However, it is often recommended to get a policy at a young age to save on insurance premiums. Usually, insurance companies consider younger applicants to be less risky than older individuals due to less susceptibility to chronic illness and age-related disorders. As a result, they are likely to get high coverage at a low premium cost. This is why experts recommend not to delay the process of getting a policy. 

Hence, when planning to buy a term life insurance policy it is recommended to compare different plans and their coverage to pick a suited plan. They can use an online term insurance calculator to compare covers and insurance premiums quickly and more effectively. However, to make an informed choice individuals must identify their personal cover needs and financial standing to pick a plan that suits them the best.

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