Term Insurance is a type of life insurance policy that provides financial coverage for a specific period. Unlike other life insurance policies, term insurance does not accumulate cash value over time. It is designed to offer pure protection and financial security to the insured's dependents in the event of their premature death.

To help individuals make informed decisions regarding their term insurance plans, insurance companies have introduced a valuable tool known as a term insurance calculator.

Once you understand the importance of insurance coverage, the next question is, how much coverage do you need?

An online Term Insurance Premium calculator helps us do just that! It helps us calculate the ideal coverage amount that we need, the amount that can help our dependents lead a normal life and take care of all liabilities and finances in case of our unfortunate death.

It considers age, inflation, and expenses to determine a suggested figure for required insurance coverage or Sum Assured.

A Term Plan Calculator requires you to input your date of birth and annual income. It factors inflation, expenses and other factors to arrive at a suggested coverage.

You also get a complete illustration of how many years your Sum Assured will support your family with year-wise figures of average expenses, average return on the amount invested and the balance left every year.

Illustration

Let's take the example of Mr. Aditya. He is a 35 year old male working at a firm in Bangalore. His annual gross income is ₹25,00,000. He wants to know how much Sum Assured he should buy.

He inputs his DOB and his Annual Income into the calculator.

The calculator suggests that his ideal cover is 6.5 Crores, which will support his family for 26 years.

A term insurance plan calculator can help you estimate the ideal coverage amount and premium for your term insurance policy. Here’s how to do it effectively:

• Step 1: Enter your Date of Birth and Annual Income.
• Step 2: Click “Calculate Ideal Cover”
• Step 3: Enter your mobile number and click “Calculate”

The calculator will display the recommended sum assured and how long it can support your dependents. You can also download a full report with details about the calculation.

Note: The premium estimated by the calculator is an approximation. The final premium may vary based on the insurance company's underwriting process.

1. Calculating Adequate Coverage

2. Comparing Premiums

3. Understanding Policy Terms

4. Financial Planning

5. Saves Time

6. Informed Decision Making

1. Determine Your Coverage Needs

• Calculate your financial liabilities, such as outstanding loans, debts, etc.
• Consider income replacement needs to support dependents.
• Factor in funeral expenses, medical bills, and other final costs.

2. Choose Your Policy Term

• Align the term with your financial goals (e.g., until children are independent or loans are repaid).
• Common policy terms are 10, 20, or 30 years.

3. Decide on the Sum Assured

• Determine the sum assured (coverage amount) based on your coverage needs.
• Ensure it's sufficient to cover your liabilities and income replacement needs.

4. Consider Your Age and Health

• Your age and health status impact premium calculations.
• Older or unhealthy individuals may pay higher premiums.

5. Select Your Premium Payment Frequency

6. Use a Term Insurance Premium Calculator

• Enter your age, gender, sum assured and policy term.
• Get an estimate of your premium amount.

7. Adjust and Refine

• Based on the calculated premium, adjust your policy term, sum assured, or premium frequency to suit your budget.

Keep in mind that these steps serve as a guide to help you make informed decisions when selecting term insurance. For personalised advice, consult a financial advisor or an insurance professional to tailor your term insurance plan to your specific needs.

1. Helps in Choosing the Right Policy and Cover

A term plan calculator's basic and most prominent advantage is that you can determine an indicative figure of your sum assured requirements and accordingly check the premium. 

For these details, you can even check and compare the premiums from different insurance providers or different plans for a specific sum assured. Finally, depending on your requirements and budget, you can select the best-suited plan.

2. Helps in Better Decision-Making

Having a term plan premium calculator at your fingertips means you can better analyse your available choices and requirements before making the final decision. You can input the various parameters like tenure, cover, multiple features, etc. and decide on an optimum policy after certain trials and analysis. 

You can even factor in the small premium of various Add-Ons and design your policy per your preferences. Check how the premium changes for small changes in the input factors and vice versa. Try different combinations and simulations before you arrive at a final decision.

3. Policy Customization

With a term insurance plan calculator, individuals can customise their policies based on their needs. You can add optical riders, adjust coverage limits, and choose the length of coverage that suits you. Some common riders include critical illness, accidental death benefit, disability cover, waiver of premium, and income benefit rider. 

This flexibility helps individuals find a policy that aligns with their financial goals and provides adequate protection for their loved ones.

4. Saves Your Time and Effort

Different policies across insurance providers come with various features, benefits, terms, and conditions. Reading through them, comparing, and getting in touch with customer service or agents to understand the premium and other things can be a highly tedious and complex task.

An online term insurance premium calculator takes responsibility for all that computing so you can sit back, relax, yet be sure of a sound financial decision. Just input the correct details needed for the computation.

As healthcare costs increase and lifestyle-related health issues change, planning for your financial future becomes crucial. One way to do this is by selecting the appropriate sum assured for a term life insurance plan because:

• Ensures your family receives sufficient funds to maintain their standard of living.
• It covers outstanding debts, such as loans, to prevent financial burdens on your family.
• It helps achieve specific goals, like children's education or marriage expenses.
• Replace your income to support your family's financial needs.
• Ensure the sum assured keeps pace with inflation to maintain its purchasing power.
• Prevent insufficient coverage, which can leave your family vulnerable.
• Prevents paying unnecessary premiums for excessive coverage.
• Knowing you have adequate coverage provides peace of mind for you and your family.

When considering this investment, consider your remaining working years. For instance, if you are 35 and plan to retire at 60, you have 25 years of income ahead. This timeframe impacts coverage and premium choices for your insurance. Existing term plan holders can explore options to increase their sum assured as they progress through different life stages, aligning their policy with changing financial responsibilities.

Impact of Smoking on Premium

• Smokers pay 30% to 80% higher premiums compared to non-smokers.
• Smokers are considered high-risk due to increased health risks, such as lung cancer, heart disease, respiratory problems and stroke.
• Smokers are statistically more likely to die prematurely, which increases the insurance company’s payout risk.
• Typically, if you have smoked or used any tobacco product within the last 12 months, you'll be considered a smoker by insurance companies.
• If you quit smoking, you might be eligible for a lower premium after a certain period, usually a year or more, depending on the insurer's policy.

Impact of Occupation on Premium

• High-risk occupations (e.g., construction workers, miners, pilots) may attract higher premiums (up to 50% more).
• Low-risk occupations (e.g., clerks, teachers, software professionals) typically attract lower premiums.
• Some occupations, like military personnel or those working in hazardous environments, may be considered high-risk or even uninsurable.

Note: If you are a smoker with a high-risk occupation, you can expect to pay significantly higher premiums. It's essential to disclose your complete smoking and occupational history accurately when applying for insurance to avoid any coverage issues or premium discrepancies.

1. Riders and Add-ons

2. Payout Options

3. Policy Exclusions

Tax Benefits

It's important to use this calculator to avoid the following potential issues:

• Overpaying: Without using the calculator, you might pay more than necessary for your insurance. Not knowing the exact amount that fits your needs and budget could lead to overpaying.
• Underinsurance: You might not buy enough coverage to protect your family properly. If something happens to you, the insurance payout might not be sufficient to support your loved ones financially.
• Financial Stress: Not having the correct premium amount could cause stress and uncertainty about your financial planning and peace of mind. This uncertainty may lead to concerns about whether you can afford the insurance.

A Term Insurance Calculator is a user-friendly tool that helps you determine the right coverage and premium amount. It considers your income, expenses, liabilities, and goals to provide personalised results and help you decide your term insurance needs. 

Try Digit’s term life insurance calculator online today to secure your family’s financial future with the correct term insurance coverage. Get instant estimates and take the first step towards a worry-free tomorrow.