A term insurance plan is a policy used to protect your family’s financial future even if you can’t be there. It’s basically a contract between a person and an insurance company. The agreement states that the insurance company consents to pay a certain amount of money, called the sum assured, to the person named as their beneficiary when the insured person is no more.
In exchange, the person has to pay the insurance company regular amounts of money, called “premiums.” And the amount of the sum assured benefit is one of the important things determining how much the person has to pay as premiums. Since you now have a fair idea of ‘what is term insurance?’, how does one figure out how much sum assured their family needs? Since the livelihood and lifestyle of your family may depend on this, one should refrain from a decision based on guesses or assumptions.
A term insurance premium calculator can help with this. It lets you figure out how much life insurance you need based on the data you provide. Doesn’t that sound interesting? Let’s look at this unique tool in more detail.
What is a term insurance calculator?
As you’ve seen above, a term insurance premium calculator is a financial tool that lets you figure out how much life insurance coverage you would need to buy with a term policy. The tool helps you make intelligent decisions by giving you a rough idea of how much sum assured you would need to choose.
As soon as you put in your information, the calculator gives you a real-time estimate of the premiums. You can find term insurance premium calculators online, and are also free to use.
How to use a term insurance calculator?
There are various term insurance premium calculators available online. While they all intend to produce the same result, their interface may vary from company to company. Here’s how a calculator for term insurance works:
- First, go online and search for the term ‘insurance premium calculator’.
- Enter your annual income.
- Mention how many years you want to work in the future.
- Enter the expected percentage increase in your income.
- And finally, enter the percentage of your income spent on yourself and not on your family.
- Provide any other required relative details it requests you to.
As soon as you fill out all of the above fields, the calculator estimates how much life insurance coverage you should opt for with a term policy.
Benefits of using a term insurance calculator before purchasing a plan
Now that you know how to use a term insurance premium calculator, it’s time to look at the different ways it can help you.
- It saves a great deal of time and effort: Determining how much life insurance you need by hand takes a lot of time and effort, and you could even make a mistake. Using a term insurance premium calculator saves you a lot of time and work, which is one of its great things. All you have to do is type in the numbers, and the calculator gives you the answer.
- It gives you a ballpark figure: A term insurance premium calculator is usually made to provide you with a conservative estimate and err on the side of caution. As long as the values you put in are correct, the answer is likely to be valid as well.
- It allows you to make informed decisions: Getting a term insurance plan without knowing how much coverage your family needs could be undesirable to you and your family. It can even leave your family with less money to live than they may require. On the other hand, a term insurance premium calculator can help you decide what to do by giving you a better idea of how much life insurance you may need under your policy.
- It helps you make better plans: term insurance premium calculators help clear up a lot of the confusion. Once you know how much life insurance your family needs, you can immediately make better plans for your budget and finances. With the life cover set, it can be easier to figure out how much you’ll have to pay for the plan’s premium and manage it in your budget.
Conclusion:
As you can see, term insurance premium calculators are very useful tools. So, if you want to buy a term insurance plan soon, you should use a term plan calculator first. It can make your work a lot simpler.
