In today’s reckless times, when diseases and accidents are rampant, it has become even harder to predict a long life. Even a healthy lifestyle isn’t enough to ensure that you can live to fulfil the dreams and goals of your loved ones. If you are the primary breadwinner, in particular, the thought of leaving your dependents without financial stability can be scary.
That is where life insurance plans come to the rescue. Using an efficient life insurance calculator, you can plan for the financial well-being of those you love, even in the event of your demise.
What is term insurance?
The world has evolved and so has the necessities. With that in mind, life insurance policies were subdivided into several accessible plans. Term insurance is one of the many forms of life insurance policies.
Understanding what is term insurance goes a long way toward choosing the right policy for you and your loved ones. It is the most affordable type of insurance plan that is available for 10 to 100 years based on your estimated mortality. Therefore, you can choose short-term policies or a whole-life term insurance plan at a much more affordable rate.
The thing that makes term insurance so popular is the flexibility of the policy. Not only are the premiums low and reasonable, but the sum assured guaranteed on term insurance plans is also higher. Typically, term insurance does not offer maturity benefits, much like many other forms of life insurance. But you can opt for term insurance with a return of premium.
Types of term insurance
Aside from knowing what is term insurance, you also need to know the types of plans under this subcategory of life insurance. They are as follows:
- Increasing term insurance that increments the sum assured annually.
- Decreasing term insurance decreases, the sum assured annually to repay lenders.
- Levelled term insurance that offers exactly what you paid for.
- Convertible term insurance that allows you to turn a short-term plan into a long-term policy.
It can be rather difficult to choose the right sum to secure the future of your loved ones without hampering your current financial situation. Once you know what is term insurance and how each policy affects you and your loved ones, you can use a life insurance calculator to determine the accurate coverage.
How does a life insurance calculator help you choose a term insurance plan?
A life insurance calculator is an online tool that you can find on your insurer’s website or app. The life insurance calculator takes into account your preferences to assess and estimate accurate coverage for your term insurance plan. Here is how you can use a life insurance calculator for accurate coverage planning:
- You must share personal information transparently into the life insurance calculator including the following:
- Your name.
- Your age.
- Your gender.
- Your educational background.
- Your current occupation.
- Your net annual income.
- Your pin code for the area of residence.
- Your smoking habits.
- Based on the accuracy of the details above, the life insurance calculator will offer you the most suitable term insurance plans. You can select the type of term insurance that best fits your needs and upload the necessary documents as proof.
- After choosing the plan and uploading your documents, you will be able to filter the results of the life insurance calculator using the following parameters:
- Your desired sum is assured to cover your loved ones’ financial interest in the event of your demise.
- The total number of years for which you would like to ensure your life, i.e., the policy tenure.
- The total number of years during which you would like to make premium payments. I.e. premium duration.
- The regular intervals at which you would like to pay your premiums, i.e., premium frequency.
- The mode of death benefit payout.
Based on the specifications that you provide, the life insurance calculator will offer you an estimation of the premium that you will need to pay at the frequency you determined. Some areas are more dangerous than others, so the premiums may vary based on your PIN code. Additionally, the premiums for smokers are slightly higher than for non-smokers due to the increased risk of illnesses.
Conclusion
The results of the life insurance calculator will help you figure out the accurate coverage for your loved ones. If the premium is too high to handle in your current financial situation, you can change the parameters in the calculator such as reducing the sum assured or extending the premium paying duration. You can also increase the coverage if the estimated premium is too low.
The life insurance calculator takes into account your lifestyle habits, occupation, earning potential, age, and gender to estimate the likelihood of life insurance payouts. It then determines the total appropriate premium, which is divided into regular intervals during the specified premium paying duration.