What Is A Term Insurance Calculator?


A term life insurance calculator is a tool that is designed to help users determine which life insurance coverage will be most suitable for them. The online tool uses users’ personal and financial information to help pick the best term insurance plans. However, to make the most of the features of the tool it is important to know how the same works and what tends to affect the results. This way you can use the online calculator in your favor and plan your insurance policies accordingly.

Let’s now take a look at a term life insurance calculator in detail to understand it better.

Do You Know How A Term Life Insurance Calculator Works?

A term insurance calculator is designed to help users determine the premiums and helps under how several factors tend to affect the coverage amount. Typically, the users need to fill in a few key information into the tool to determine the insurance premium.

For instance, users need to enter details such as

  • Date of birth
  • Annual income
  • Gender
  • Marital status
  • Insurance cover

Once the complete details are entered into the term life insurance calculator, the online tool will weigh into your financial capability and requirement and offer you a suitable plan. Besides these, it is crucial to identify and specify the sum assured you deem adequate to cover the financial future of your family, the insurance tenure, and the frequency of insurance premiums. Having a clear understanding of these will help you to compare different plans and make better decisions.

Factors Affecting The Insurance Premium

These key details of an individual tend to influence the insurance premium and coverage amount significantly. Let’s discuss to find out their impact in brief –

  • Applicant’s age: Typically, younger applicants are more likely to secure a relatively cheaper insurance premium compared to senior citizens or those nearing the age of retirement. This is because insurance companies associated older individuals with being more risk-prone than younger applicants. Insurance companies generally accept documents such as Aadhaar, PAN, and government IDs, as proof of age.
  • Applicant’s desired age of retirement: While 60 years is considered the standard age to retire, some individuals may decide to retire later or earlier based on their financial or other goals. Mentioning this detail helps to determine the ideal financial coverage that could help policy buyers’ families sail through their retirement life.
  • Annual income: This particular information will enable the term insurance calculator to estimate the amount of money the policyholders and their dependants would find adequate to ensure their financial security in the event of the sudden death of the insured.
  • Insurance cover: This denotes the estimated insurance cover one would need depending on their current age, income, financial liability, and intended age of retirement. Usually opting for an extensive cover ensures greater financial security for the family.
  • Existing life cover: An online term insurance calculator helps to find how much additional cover they could need to ensure the overall financial security of the dependents of the policyholder.
  • Loan obligations: The insurance companies need to understand the applicants’ total financial obligations to provide them with a better insurance quote. Typically, applicants are required to share details of their outstanding loans and EMIs they pay out towards them.
  • Savings: The dependents of policyholders who have substantial savings are more likely to be financially secure and can manage their financial obligation better in case of the sudden death of the insured.

Besides these, personal habits such as smoking and drinking affect the cost of the premium too.

How To Use Term Insurance Calculator?

The first thing to do before using a term insurance calculator is to analyze the future financial requirements of one’s family and their required provision for emergencies.

Having an estimate beforehand allows individuals to use the online financial tool to adjust the policy’s sum assured according to the premium they intend to pay.

Subsequently, they can follow these simple steps to use a term insurance calculator  to find the policy premium –

Step 1: Visit the official website of a reliable insurance policy provider

Step 2: Navigate to the Term Insurance Calculator page

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

Step 4: Enter your desired sum assured of your chosen insurance plan

Step 5: Enter your choice of policy term for which you need the cover

Step 6: Once these details are fed into the calculator, the tool will fetch the insurance premium quotes

Based on the outcome, users can pick an insurance plan that suits their requirements the best. In case you do not find the results satisfactory, you can readjust the inputs until you get suitable combinations. Since the tool is free, term insurance calculator users can use it multiple times to plan their insurance policy purchase better.

Besides knowing what is insurance calculators are and how to use them, it is important to know how to use the same for better financial planning.
Key Benefits of Using a Term Plan Insurance Calculator

Here’s how you can benefit from using a term plan insurance calculator –

  • Helps estimate insurance coverage and premium accurately
  • Saves time in making informed comparisons
  • Offers an idea of how personal and financial factors affect premium
  • Helps to pick a suitable insurance plan

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What Is The Best Age To Get A Term Insurance Policy?

Typically, the ideal age to get a term insurance policy ranges between 18-65 years. However, buying an insurance policy at an early age can prove advantageous in several ways. To begin with, buying a term insurance policy at an early age can help insurance policy buyers to avail of high coverage at a low premium amount.

This is because younger individuals are associated with better health and are considered to be less likely to have chronic illnesses, making them low-risk candidates. So the longer you delay purchasing a term insurance policy, the more likely you are to pay a higher premium for the coverage.

Hence, before buying an insurance policy it is important to know your requirements with regard to coverage and premiums. Subsequently, to make an informed choice it is recommended to use a term insurance calculator.

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