Purchasing a term plan is one of the most important financial decisions. It helps you secure your family and accomplish their future money goals in the event of your unexpected demise. Choosing the right term plan with an affordable premium is crucial to ensure the benefits. Therefore, understanding the factors influencing calculating the term insurance premium is important.
The term insurance calculator is an effective tool online that helps you determine the premium for your term plan based on the factors.
Here is a detail about the factors that affect the term insurance premium and how the term plan calculator effectively determines their impact on the premium rate.
Factors Influencing The Term Insurance Premium
There are a few factors that help determine the term plan premium.
- Age – Age is one of the most important factors that affect the term insurance premium. As you get older, the probability of you getting affected due to various diseases will increase. Therefore, it will increase the risk of insuring you and, thereby, the premium rate. When you use the term insurance calculator, you can view the changes in the premium as you change the date of birth.
- Annual income and policy tenure – Annual income is crucial because it will determine the maximum possible life cover the term plan can provide for your family in your absence. The higher the sum assured, the higher the premium. However, if you choose to have a longer policy tenure, the cost is spread across the entire policy tenure, and therefore, the premium gets lesser and increasingly affordable. The online insurance calculator will help determine these differences in choosing the best term insurance plan.
- Gender – Men and women have different life expectancies. Also, the life expectancy of women is higher than that of men. Therefore, the term insurance premium is slightly higher for men.
- Type Of term insurance plan – There are different types of term insurance plans offered by a slew of insurance companies in India. For example, the Tata AIA life insurance term plan provides the Life Option, Life Plus Option, Life Income Option and Credit Protect Option. The premium will depend on the nature and extent of benefits provided by the specific term plan.
- Premium payment option and frequency – You can pay the premium for the term insurance plan regularly throughout the policy tenure or for a limited term. In addition, you can choose to pay the premium monthly, semi-annually, quarterly or annually. The online term insurance calculator will help you find the differences in the premium based on the choice of these options.
- Habits – Your lifestyle habits are one of the most important factors influencing the term insurance premium. Smoking is one of the most common factors. If you are a smoker, it will increase the probability of life-threatening diseases and hence the premium correspondingly. The same is the case with alcohol and other forms of tobacco consumption.
- Riders – Riders are add-on covers that enhance the benefits of your term insurance plan. For example, the health riders for critical illness provide additional financial support to pay for the medical expenses if you are affected due to a critical illness. There are different types of riders, and including each of them will add to your premium cost. You can decide on the required riders based on your family’s medical history and the cost. The term insurance calculator will help determine the impact of adding the riders to your term plan on the premium rate.
The term life insurance calculator will consider your inputs, such as age, gender, choice of life cover option, riders, etc., to determine the premium based on the sum assured and policy tenure. It is a flexible tool available online free of cost. Therefore, you can revise your decisions, change the inputs and determine the change in the premium to find if it is affordable and make well-informed decisions.
Term insurance plans help secure your family in the event of your unexpected demise. The premium for the term plan is based on several factors such as age, gender, policy tenure, sum assured, premium payment frequency, etc.
Ensuring the sum assured will suffice for the financial needs and the premium is affordable for the entire policy tenure is necessary for ascertaining the benefits timely. The term life insurance premium calculator will help determine the impact of the various features and find the most affordable premium.