As we know term insurance is essentially a life insurance plan that has been designed to offer financial protection to the insured's dependents. Typically, term plans offer a certain amount of money to the policy nominee in the event of the sudden death of the insured due to situations covered under the insurance.
Notably, term insurance plans are cost-effective and an effective means to ensure the family of the insurer is well taken care of even in their absence. In this regard, the higher the sum assured the more effectively the dependents can account for their needs and cater to their obligations. However, it should be noted that the effectiveness of such an insurance depends entirely on the plan one picks and the combination of tenure and premium they opt for to plan their coverage. Though the process sounds complex, today individuals can easily compare policies and combinations of variables within a couple of seconds thanks to the term insurance calculator.
Such a tool is designed to simplify the entire process and help figure out the best combination of premium and tenure to build financial coverage. However, to make the most of the tool individuals must know about its features and use.
A term insurance calculator is an online insurance tool that is designed to help users compute suitable coverage for their needs. It also helps understand how much premium the users would be required the pay over a term to be able to access the desired sum assured. The online is easy to access and use, adding to its appeal. The user-friendly interface of the tool allows individuals with limited tech savviness to use it with ease.
Since the tool helps determine coverage and accompanying premiums, it helps those seeking to purchase a term insurance plan. Typically, users need to enter a few basic inputs to use the tool and provide a clear picture regarding their desired insurance plan. This way it helps understand how much coverage they would need to safeguard the future of their loved ones and how different variables tend to impact the amount. Notably, term insurance calculators can be used for free, making it a convenient tool.
Individuals can easily access an online term insurance calculator with a quick search on the internet. However, it is suggested to opt for calculators from reliable financial institutions or insurance companies for accurate results.
Once individuals visit the provider's official website and navigate to the calculator page they can proceed to use it by filling out the basic information.
To offer insight into the user's coverage and premium amount for a plan, the tool needs this information -
Age: The user's current age as per verified proof of age documents like Voter ID, Aadhaar, and PAN.
Intended Retirement Age: Ideally, 60 is considered to be the retirement age for salaried individuals. However, individuals with robust financial standing or retirement corpus may plan to retire early. On the other hand, self-employed individuals may choose to retire early or later than 60 at their convenience.
Existing Life Cover: Individuals with active term insurance plans or life insurance policies must divulge the details to estimate more accurately the additional coverage they would need to safeguard their financial future.
Annual Income: With this information, the tool estimates the amount of money that would help meet the expenses of the dependents, even their upcoming obligations.
Savings: The tool also factors users' savings to understand their ability to safeguard the financial future of their family members even in their absence. Sharing these details is crucial to estimate the coverage they would need to meet the requirements.
Existing Loan: In order to understand the user's overall financial liabilities, the tool requires details of ongoing loans and other large ticket EMIs that they pay every month. This allows the tool to understand the user's payment capacity and their actual obligations to help determine a suitable combination of coverage and premium amount.
After weighing the information shared by the user the term plan calculator offers an insight into the insurance cover. Notably, this cover is an estimated total or additional coverage that the user would need to build robust financial protection for their family based on their current income, age, financial liabilities, and more. The tool will also display the estimated premium that the user will have to pay to avail of the protection. Based on this information, individuals may decide whether the same suits their budget or not. They may also plan to opt for a one-time premium amount or opt for regular premiums based on their payment capacity.
Users have the option to readjust the variable information to determine which cover would work best for them. It is suggested that the insurance cover should be 10 to 15 times one's annual salary.
A term plan calculator helps the user find out how much insurance coverage they would need to protect their loved ones from the financial repercussions of their sudden death. However, before judging the outcome, individuals must note that the coverage amount should be enough to support their dependents and meet their financial needs. Additionally, they must factor in the inflation impact to understand whether the coverage would be adequate to meet the rising cost of living. The tool also helps determine the premium amount accompanying the coverage, enabling users to understand whether they would be able to afford the amount and plan their payment schedule accordingly.
Notably, the tool provides a suitable premium after weighing key factors such as the user's age, lifestyle habits, income, and health condition. In addition, the tool factors the following to estimate a suitable premium -
This is the sum disbursed by the insurance company following a claim settlement. The company processes the cover amount to the nominees in the event of the sudden death of the insured. A high cover amount accompanies a high premium.
It is the duration for which an individual seeks insurance protection. Notably, longer policy term attracts higher premiums.
Individuals can add riders or additional cover features to their base plan for personalized coverage. Some of the popular riders include critical illness cover, premium waiver rider, and accidental death benefit. While adding riders increases a plan's coverage, it also inflates the premium amount.
Since choosing the right term insurance plan and coverage is important for securing the financial future of one's family, individuals must be careful in their judgment. To ensure one makes an informed decision, they can use a term plan calculator and proceed with their purchase.
