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Life Insurance Calculator

Life insurance calculator is an advanced tool developed by insurance companies to provide an approximate premium amount that the buyer has to pay to the insurance company every year to avail of the benefits of the Insurance policy. 

The calculator asks for personal details like name of the buyer, age, policy term (the tenure of the policy during which the life of the person is insured), premium frequency (whether the premium will be paid annually, monthly, or quarterly) and the sum assured (the amount that will be paid to the beneficiary in the event of unfortunate death of the insured).

The life insurance premium calculator is a part of the artificial intelligence services by insurance companies and is useful in knowing the premium to be paid to the insurer. Most of the insurance companies have such calculators on their official websites and helps the visitors in understanding the services and benefits which the buyer can get by paying a certain amount of premium annually. It can also help in finding the best insurance policies in India.

Understanding the life insurance premium

In simple terms, it is the money that the insured pays every year to get the benefits of the Insurance policy. In case of the death of the policyholder, the insurer is bound to pay the sum assured to the beneficiary of the policy. There are some terms and conditions stated by the insurer at the time of the purchase of the policy to get the sum assured. Insurance companies provide the options to select payment frequency like monthly, quarterly, and annually.

Why should you use a Life Insurance Calculator?

The premium depends on the type of policy selected and the additional benefits selected while buying the same. While calculating the premium, the health and age of the policyholder are essential. A young and healthy individual will get the policy with a lower premium, and an older person will get the same policy in a higher amount. Similarly, a non-smoker has to pay a lower premium to buy the policy in comparison to a person who smokes. There are various other parameters that are important in calculating the insurance premium, and for this life insurance premium, a calculator is an essential tool.

Benefits of Life Insurance Calculator

Life Insurance Calculator acts as an aid to understand people who are looking to buy the policy. It is a tool with multiple benefits and is used widely nowadays for calculating the premium. 

Some of the benefits of the tool are listed below:

  • Understand the premium amount

    Life insurance is an investment mechanism to get financial security for the family. It ensures that the policyholder's family will be financially independent during times of mishappening. It is crucial that the buyer understands the premium amount he/she must pay to get certain benefits of the policy. The insurance premium calculator tool simplifies the task for people without the hassle of doing it manually.

  • Accuracy of finances

    Once the person has decided to buy a policy for the financial security of the family, it is essential that the buyer understands the exact amount that is required to purchase the policy to maintain finances. The premium calculated by the insurance calculator gives an exact amount necessary to buy the policy.

  • Error-free calculation

    Being an automated tool it gives error-free results and is reliable to calculate the premium.

  • Helps in comparing and selecting the best insurance policy

    The tool makes it easy to compare different life insurance plans and gives a clear picture of what to choose and what is the requirement of the buyer. Based on the needs, the buyer can choose the best policy among the various insurance policies in India.

Deciding factors for the life insurance premium

  • Age of the policyholder

    Age is an essential factor that decides life coverage premiums. Since the strategy will pay out upon the demise, the insurance agency needs to ensure that it won't occur too early. The organization needs an adequate number of years to gather the premiums. A person insuring life at an early age will get the policy at a lower price.

  • Gender

    Women tend to live longer than men. Based on the higher life expectancy of women, the insurance premium paid by women is less.

  • Health History

    The insurance agency will depend vigorously on the answers provided on the medical history form, so it's critical to be honest, and precise. Organizations will likewise regularly require a physical and will probably demand a report from the Medical Information Bureau or MIB. This report will give a background marked by medical procedures, emergency clinic stays, and wellbeing of the person. Based on your data provided on the medical history, the consequences of your physical and the MIB report, they'll have a genuinely exhaustive assessment of your clinical history.

  • Family health history

    Since a significant number of health conditions that influence the life span are hereditary, the insurance agency will be keen on your family's clinical history. There is probably some prescient potential in concentrating family clinical history- any disease that the individual might develop as per the family tree.

    The insurer will mostly enquire about your parents, grandparents, and siblings. Aunties, uncles, and cousins aren't considered as significant.

  • Smoker or non-smoker

    Smoking comes with a lot of predicaments, and the individual might develop some cardio-vascular disease or cancer in the latter part of life. Smoking comes down heavy on life insurance premiums. The life insurance premium can increase by 15-20% for smokers. Not just smoking, habits like chewing tobacco will also attract a higher premium.

  • Occupation of the buyer

    A few professions convey more severe hazards than others, and that will be a factor in deciding premiums. A designer may be viewed as a "more secure" occupation than a cop or fireman, where the danger of being executed at work is more significant. A career too dangerous may even result in a declined insurance application.

  • The physical condition of the buyer

    Life insurance premiums are based on weight to height proportion. There is a range that is considered as average proportion, and the degree of height-weight proportion varies from the normal range; more will be the deviation in the life insurance premiums

How to use the Life Insurance Premium Calculator?

Mostly the procedure to use the life insurance premium calculator is the same and is discussed below:

  • They are meant for buyers: There is a reason why certain tools are provided by service providers. In this case, companies want to provide the highest levels of hassle-free processes. User-friendly and easy to use, if it is provided, make use of it
  • Streamlined procedure: If you have one tool to reduce ten days' worth of manual work, it is best to check it out, if not put to good use. The majority of the term insurance calculators provided by insurance companies are straightforward and offer a streamlined, step-by-step process. No bypassing or setbacks are owing to the simplistic design of these calculators
  • Find your policy: The comparisons make all the difference in the world. Once the buyer is evident on the pros and cons of a bunch of tailor-made policies, choosing the best one is a cakewalk
  • Planning your finances: The applicant can plan his monthly finances on the spot thanks to these calculators. This also helps him/her define a structure for their budget, hence improving their money-management skills

Making prudent use of the term insurance calculator not only saves a lot of time for the buyer, but it also sets a bracket on the parameters, hence enabling the buyer to bypass the "wild guess" part of policy choices.

Using term plan insurance calculators

Using a term insurance calculator is pretty straightforward and should take about 5-7 minutes, depending on the buyer's needs. Most online calculators are based around the same base structure. Here are three easy steps of using a term plan insurance calculator based on generic processes every calculator offers.

  • Step 1. The interested person will have to fill the personal details required by the tool.
    1: Age of the applicant
    2: Gender of the person in whose name policy is required
    3: The annual income of the buyer
    4: Marital status of the buyer
    5: Number of children of the buyer
    6: Mobile number of the applicant
    7: Email Id of the applicant
    8: Some insurers ask the consumption of tobacco in the personal details itself. As it is an essential factor in deciding the premium of the policy, it is proposed in the personal information
  • Step B: The next step involves the parameters of the premium calculation
    1: Select the life cover that is required by the applicant
    2: Select the policy term which ranges from 5 years to 70 years as decided by the insurer
    3: Select the premium payment frequency (Monthly, half-yearly, yearly, Quarterly)
  • Step C: After filling the details and selecting the premium calculation parameters, you can choose the riders available with the policy. Riders are the add-ons available with the policy which provide specific benefits without having to buy a different policy altogether. Some of the riders that are available with the policies are:
    1: Accidental Death benefit rider: The rider provides a sum assured to the beneficiary in case of the unfortunate event of the death of the life insured in an accident. The sum assured of the rider is other than the amount that the nominee will get for the life cover.
    2: Critical Illness cover: There are some cases in which the insured falls critically sick and will require an additional sum for the treatment. To cover such expenses, the rider is quite useful as it provides an additional amount to the insured to cover the medical costs
  • Step 4. Once you have filled in the personal details and selected the policy premium parameters and the riders, you can submit to check the premium that will be required to pay to get the sum assured.

Companies that are providing Life Insurance Premium Calculator

There are many insurance companies that are offering premium calculators for the convenience of buyers and helping them select the right plan. Some of the companies that have an online premium calculator available on their websites are listed below:

  • SBI Life Insurance Premium Calculator

    The renowned company helps select the right policy and calculates the premium. The calculator is accurate and is easy to understand and use. The steps mentioned above will help the user to calculate the premium for the policy.

  • ICICI Prudential Life Insurance

    Being one of the most trusted companies in India, is providing services to its customers for convenience and ease of use. The calculator is available on the official website and can be used by anyone. The fields that are required to calculate the premium are easy to understand, and the premium calculation is also exact.

  • HDFC Life Insurance Online

    HDFC Life is used by millions in the country as their preferred insurance company. It is because of the innovative services that they have acquired an extensive database of customers. The life insurance premium calculator is also available on the official website of HDFC life and provides premium calculation in easy steps. The premium calculation is exact, and the policies are suggested as per the need and requirements of the applicants

  • LIC India

    Life Insurance Corporation of India is the oldest and most prominent insurance company in the country and has helped thousands in the time of emergency. It has been in operation for decades and has a vast database of buyers and assets. Being a government-owned organization, it is widely popular among people. LIC also has its insurance premium calculator available online, and the steps mentioned above can be used to calculate the premium of the policy.

  • Maxlife Insurance

    Established in 2000, Maxlife Insurance is a premium insurance provider in the country and has some great benefits available for the customers. The insurer has provided premium calculators for various products available with them, and it is highly convenient to use the calculators to understand the premium amount and the best policy for them.

Life Insurance Calculator - FAQ

  • Q: Can the exact value of the premium be known using the calculator?

    Ans: Yes, the life insurance premium calculator provides the exact value based on the inputs provided by the applicant.
  • Q: Do premium calculators provide policy suggestions as well?

    Ans: The primary function of the premium calculators is to provide the premium that has to be paid by the insured, but one can plan the finances as well.
  • Q: What are the essential factors for premium calculation?

    Ans: There are several factors that are embedded in the premium calculators. Some of the factors are age, gender, whether a smoker or not, personal health history, family health history, and nature of the occupation.
  • Q: What are the riders?

    Ans: Riders are an additional security cover provided to the policyholder at a nominal fee and ensure the additional sum provided to the beneficiary at the time of emergency. Some of the famous riders that are opted by the policyholders are:
    Accidental death benefit rider: Which provides an additional sum along with the life cover in case of accidental death of the insured. The additional amount is provided to the beneficiary of the policy. Critical Illness rider: The rider comes to aid when the insured falls critically ill and requires an additional sum for the treatment. There are certain diseases that are mentioned in the terms and conditions of the policy, and only in case of illness, the additional sum is provided to the insured. Every insurer offers a range of riders to the applicants, and the insured can select depending upon the need and requirement.
  • Q: What is a permanent disability rider, and is it a part of life insurance?

    Ans: It is a rider that provides the benefit to the insured in case of an event of the loss of limbs, legs, arms, causing permanent disability to the insured. The beneficiary will get the sum assured with this rider. Some insurance companies will make regular monthly income for 5 to 10 years as a percentage payment of the rider. In case of the death of the insured in the coming years, the insurer will provide the total sum assured to the beneficiary.
Written By: Paisawiki - Updated: 07 August 2020
Disclaimer: Paisawiki does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
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