Are you looking for a life insurance policy? Here is how an insurance premium calculator can help you
Now is the right time to think about creating proper financial security for your family members after your demise. The COVID-19 pandemic has taught very important lessons on safe health practices and managing finances during emergencies. With uncertainty all around, it is necessary to buy an insurance policy like a term plan that addresses your concerns and protects your family at an affordable cost. To help you achieve it, a term insurance calculator can help you deduce the coverage amount enabling you to reach your financial goals.
Shagun Sharma is a 26-year-old interior decorator working with a furniture company in Bangalore. Though she has started her career recently, she plans to start a boutique firm of her own in the next two years and is also looking to pursue a design course in France. Shagun is also looking for an apartment so that she could bring her parents to the city. While discussing these plans with her close friend, she was told to first invest in an insurance policy to cover her against any unannounced risks in her journey towards success. So, she decided to buy a term insurance policy considering the benefits and cost but did not know the coverage value for which the policy has to be taken. Her friend then introduced her to the term plan calculator, using which she input her expenses and cost of future goals. The tool immediately gave her the best cover amount along with a list of insurance policies that match her budget along with their premiums.
4 Advantages of using a term insurance calculator
While looking at life insurance price comparison, it is necessary to have an approximate budget that you are comfortable paying every month/ year. While some choose to go for a rough estimate, others prefer expert help, which these calculators provide. Some of their other benefits are:
1. Get Adequate Life Cover
If you choose to buy a term plan, a term life insurance calculator is necessary to calculate the sum assured or coverage value. It helps you take adequate insurance without the risk of being under-insured. In addition, the death benefit paid to the family in case of an unfortunate event like death, disability, or illness of the policyholder, should be helpful for them to manage their expenses even in the absence of the insured.
If you have outstanding loans or other liabilities, accounting for them is also necessary to calculate your life cover. By leaving them out, you are putting your family members at risk because the benefit amount might not be sufficient to clear the loans and take care of their daily expenses. This will put them into a more significant burden in addition to losing you. On the other hand, by opting for insurance with a very high sum assured, there is a risk of paying high premiums, which you might not be able to afford in the long run. Hence, an insurance calculator will significantly help in fixing the right coverage amount.
2. Premium Calculation
Knowing how much you need to pay as a premium for term insurance is vital to see if it is within your budget. The insured’s age is an essential parameter in calculating the premium of a term policy, and it is one of the fields that have to be filled in the term plan premium calculator. The age of a person directly impacts the premium amount since the coverage value of the term plan will increase or decrease according to the risk factors associated with a person’s age.
If a person is young, they are considered less risky since they won’t suffer from any health complications, which automatically reduced the policy premium. On the other hand, as the age of a person increases, the policy premium also increases because of the probability of health complications. Also, the insurer might ask you to undergo medical tests to confirm your medical condition. Apart from it, users of tobacco, smokers, etc., can also find an increase in their premium amount compared to those who don’t indulge in them. Thus, the insurance calculator gives a clear understanding of the premium that you need to pay either monthly or yearly, allowing you to arrange funds in advance.
3. Policy Comparison
With numerous insurance companies in the market offering insurance policies, it is undoubtedly an overwhelming task for individuals to choose the policy they need. Though all insurers have official websites, visiting each site and jotting down each plan’s details requires more time and effort. Nowadays, some websites are equipped with an insurance calculator that provides premium calculations and helps you make term life insurance comparisons. Thus, one can get a side-by-side comparison of insurance policies with their features, premium, eligibility, benefit payouts, etc., from which you may shortlist the one that fits your budget.
4. Excellent Budgeting Tool
Gone are the days when every family used to function based on a monthly budget prepared by elders in the household. With nuclear families on the rise, the concept of budgeting is forgotten, paving the way for financial mismanagement. While using a term insurance premium calculator, you can get an overall picture of your daily expenses, investments, and savings. If these are aligned with your future goals, it is a confirmation that you are on the right path, but if they match up with your future requirements, it is a wake-up call for you to make suitable adjustments.
A term insurance calculator may look like a simple calculator aimed to calculate the premium of your desired insurance policy. But practically speaking, it is a reality check, allowing you to look at your past spending habits, investment decisions you have made in the present, and the saving avenues that exist for you to explore in the future.