Term Insurance Calculator: 7 Factors Affecting The Term Insurance Premium

Term Insurance Calculator: 7 Factors Affecting The Term Insurance Premium

A great way to financially protect your family from the uncertainty of life is to invest in insurance. It can give them a cushion to fall back on under challenging times when they recover from the financial impact of a sudden setback. Keeping that in mind, the stakes can be very high when buying a product such as a term insurance. 

It can be a daunting task to find the right plan, which works best for your family. Therefore, using tools such as a term insurance calculator is an ideal way to go about it. You can opt for the appropriate coverage for the desired duration and estimate the price for the policy with a term insurance calculator. 

But, before we go forward, let’s have a brief look at how term insurance can be valuable for you and your family:

Insurance is quickly taking its place among the many necessities in life. You can ensure that your loved ones remain financially independent even when you are not around with a suitable plan. Term insurance is an affordable and straightforward way to achieve it. The earlier you invest in term insurance, the cheaper it can be for you since the cost of covering a younger and healthier individual is lesser. 

Now you know what is term plan and with all these benefits, the primary concern of a policy buyer is the price of the policy, i.e. the premium rates at which they buy the term insurance. When you use a term insurance calculator, you can see how the premium rates fluctuate with different variations of key factors like:

  • Age

Among the most critical factors that affect the premium rate for your term insurance is your date of birth. When you use the term plan calculator, it is a part of the basic personal information that you provide. There are several reasons why a term insurance calculator considers your age. A prominent one is that your life stage at the time of buying life insurance significantly affects your insurance. 

For instance, if you are in your late twenties, you may be planning to start a family, impacting your future financial requirements differently from someone in their late fifties, buying insurance to remain protected post-retirement. Besides, a younger individual may be able to get their hands on lower premium rates since their risk-profile is comparatively lower. 

  • Gender

Your gender is another crucial personal information that you provide when using the term insurance calculator. You may find that the premium rates for women are lower than those of men. This can be because studies have suggested that women live longer than men. The gender disparity for life expectancy means lower insurance rates for women. 

  • Lifestyle

When you use the term insurance calculator, it may ask you to check a box for a smoker or a non-smoker. This is because the health risks associated with a frequent smoker are more significant than a non-smoker. In order to cover the medical risks adequately, the premium rates may be higher. 

  • Medical History

Insurance providers may need to do a medical assessment of the insured individual when you buy term insurance. You may also need to give them access to relevant health records of yourself and your family. This is because if there is a history of critical illnesses, it increases the premiums for the policy. 

Make sure to reveal any existing severe illnesses at the time of buying insurance. You may not be appropriately covered if you fail to do so and face financial pressure due to medical expenses. Insurance companies may even view the discrepancy as an attempt at fraud. You could lose the coverage entirely in such a case. So, make sure you provide all the relevant information to the insurer on time. 

  • Policy Tenure

The duration of the policy determines the premium payment as well. Your premium liabilities can be spread over a more extended period if you buy insurance early in life. Otherwise, you may need to pay larger amounts as a premium later in life to get financial security. You can change the policy tenure on the term insurance calculator to check how it impacts the premium rates.

  • Premium Payment Option

You will find different premium payment options on the term insurance calculator, such as regular pay, limited pay or pay till a certain age. The availability of these options may depend on the type of policy and the insurer. You can select an option that aligns well with your financial profile and check the premium rates. 

Moreover, you can also change the premium payment frequency with a term insurance calculator to see the price variations. Usually, you can pay the premiums on a monthly, quarterly, half-yearly or yearly basis. 

  • Income Range

You have to choose the income range and nature of occupation such as salaried, non-salaried, self-employed, etc., when using the term insurance calculator to calculate the term plan coverage and, consequently, the premium rates for the policy. 

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