Thinking which turn will life take next?
Are you worried about how life rolls the dice?
If you do not have sufficient financial resources, challenges can make life look elephantine.
This is why being prepared for the worst has always been important. But how can a common man do it when their monthly income is limited?
Keeping yourself financially prepared for the unexpected events in life is the best way to manage life well. Not everyone may have the capacity to save money for the odds but that does not mean that they feel debilitated when life tastes like lemons. Ofcourse!
Then what for such individuals. The most appropriate way to prepare yourself for unexpected sudden situations is by buying a term plan. Does insurance scare you but it would do only till you do not know how much is the term plan premium.
For your ease and convenience, let us explore what is term plan and how do you calculate term plan premium.
Table of Contents
- What is the term plan?
- How to calculate the term plan premium?
- Why calculate term plan premiums online?
- Factors that affect the term plan premium.
What is the term plan?
A term plan is a life insurance policy that provides protection for life till a specified time period. The policy pays the nominee a death benefit if the life insured passes away during the policy term. The term plan premium is less in comparison to other life insurance policies. This is why a term plan is called a high life cover with an affordable premium. The insurance policy does not have any investment components which makes the premium cost-effective.
For example, Rohit purchased a term plan for Rs.1 crore to support his family if anything unfortunate happens. One fine day, when Rohit passed away, the sum assured of Rs.1 core was paid to his wife (declared nominee under the policy). The amount helped the family to recover from the financial losses as well as pay the loan debts. The policy gained relevance because the premium for the term plan is very less.
Let us now see how you can calculate the term insurance premium. But before that it is important to know what are the factors that affect the term plan premium.
How to calculate the term plan premium?
A term plan premium calculator is an online digitized tool that allows you to calculate the premium available for different types of term insurance policies. Before finalizing the policy for purchase, compare the premium for the three plans.
Most insurance companies provide online premium calculators to calculate the term plan premium. You have to enter these details to calculate the premium:
- Your name
- Date of Birth
- Status of Smoker/Non-Smoker
To receive the premium information, you will have to enter your mobile number and the email address.
Let us see the term plan premium for Rahul age 21 years for Rs.1 crore sum, non-smoker will be Rs.683/ per month. The policy term will be 20 years. The premium will remain the same for the entire policy term.
A term plan does not come with a maturity benefit. But if you want to receive some at the end of the policy term, then you have to select a term plan with return of premium option. The premium is comparatively higher than the basic term life insurance policy. But at the end of the policy term if the life insured survives, all the premiums paid till date are returned.
Why calculate term plan premiums online?
These are the benefits of calculating the term plan premium online:
- Saves time: The term plan premium calculator gives you an idea of the premium you will have to pay. By using the online term plan calculator, you save a lot of time. It helps you decide early on which premium you must buy.
- Quick comparison: When you calculate the term plan premium online, you can quickly check it across different insurance players. By using the online calculators, the term plan premium can be easily established for fast comparisons.
- Accurate premium amount: With term plan premium calculator you can know the exact amount of premium payable for the cover. Manual calculations can attract errors hence using term plan premium calculators online is safe.
- Convenient Use: The term plan premium via online premium calculator is convenient to use. The calculation is easy and you get the premium amount after entering the basic details of name, age, status on consuming tobacco, and gender.
Factors that affect the term plan premium.
A term plan premium is affected by these factors:
- Age: Age of the individual is an important factor that affects the premium amount. When the age is less, the term plan premium is also less. This is why experts strongly recommend buying a term plan early in life. It is because at a young age, the individual has less risk of falling ill. On the contrary, the people of higher age are more prone to getting sick which impacts the premium directly.
- Lifestyle Habits: The insurance premium under the term plan is affected by the lifestyle habits. If you are a smoker, the insurance premium will be higher. It is simply because after smoking you are more prone to getting diseases. On the other hand, the life insured with healthy habits tend to live longer.
- Medical Condition: A term plan premium is in direct proportion to the medical condition. If an individual has a family history of illnesses and diseases, the premium is likely to be more. This is another reason to contribute to the less premium charges when you are young.
- Occupation: Another factor that affects the term plan premium is the nature of work and occupation. For example, if you work in the gas industry, it will be considered a dangerous occupation. This will lead to a higher premium amount in comparison to the premium for those who are employed in an office desk job.
A term insurance policy provides much-needed protection in the event of a disaster. As a result, it must be an important part that should be included in your financial portfolio. You can have peace of mind knowing that your family’s requirements will be met if something bad happens if you invest in such a plan. Buying a term insurance plan must be an unavoidable choice that you can make.
Term insurance is a way to secure your family’s future when you are not there to take care of them. The term plan premium is the least when compared to other life insurance policies. It is a cost-effective life insurance policy that you can buy online or offline. All the premium payable in a year is eligible for tax deduction under Section 80C of Income Tax Act, 1961. For more details on term plan, you can read here.