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Term Insurance Benefits

  

What is Term Insurance Plan?

Term Insurance is a type of life insurance policy that ensures financial coverage to the family of the insured for a specific term period as promised by the insurance company. The major benefit offered by the term insurance policy is that, in case of the untimely demise of the insured, the sum assured is paid to the beneficiary of the policy. Thus, a death benefit is paid under all circumstances.

Why Should One Buy a Term Insurance?

Term insurance policy works as a financial backup for the insured and for his/her family, which can be purchased at an affordable and flexible premium rate. A  term insurance plan is both age and needs centric. For example, the premium rate of every term plan is determined based on the policyholder's age, income, and health history. These parameters are vital at both ends as, the policyholder can choose the coverage as per their requirement and suitability whereas, the insurance companies can provide more tailored term insurance plans.

The following features of the term insurance plan make it a more attractive financial instrument to potential policyholders-

There are many factors that influence the growth of an investment, such as:

The three basic types of mutual funds calculators are:

1: The total amount spent
2: The time span or the life of an investment
3: Contributions made during the lifetime of an investment
4: The rate of return that the investor desires

The tool calculates gains after considering these factors, thereby making it the most viable means for getting an idea of the best investment plans and schemes.

Some tools are also equipped to determine annualized ROI and a more complicated calculation like bottom-line ROI through an internal rate of return calculation.

These tools provide a better insight into understanding the performance of investments based on the fraction of the period (for example 6 months), on which gains have been made, the effect of compounding that has influenced the further growth of the percentage, the nature of cash flow across the lifetime of the investments and such factors.

Types of Investment Calculator

There are various types of tools available to calculate the gains earned from investments based on different conditions and aspects impacting an investment. Here you go:

  • Future Value Calculator

    This tool figures out the mature value of an investment in association with variables such as initial investment amount, rate of return, period of investment in years or months, and the value of the current investment.

    Those who invest in mutual funds can learn about the value of gains earned from mutual fund schemes upon maturity after considering variables such as SIP/lumpsum value, number of investments made, investment amount, term period, and desired rate of return.

    The three basic types of mutual funds calculators are:

    • Inflation Calculator:Helps to calculate an amount that would come in handy in coping with inflation in the future, vis-à-vis current expenses.
    • SIP Calculator:This tool finds out the maturity amount of a monthly/quarterly mutual fund investment.
    • Goal SIP Calculator:Calculates the amount that one should invest to reach a financial goal set at a future date.
  • Internal Rate of Return Calculator

    It calculates the bottom-line rate of return of an investment. In other words, this tool considers variables such as net income, earnings, profit/loss, earnings per share, gains, complex cash flow series, as well as dips in the investment amount along with varying lengths of time frame, while calculating the final return.

  • ROI Calculator

    This tool is equipped to calculate and represent the annualized yield of an investment in percentage. It informs an investor on gains/loss percentage after taking the amount invested, the amount returned, a lifetime of the investment, start date, and the end date of the investment into consideration.

Benefits of Using an Investment Calculator

One must use an investment calculator to compare investment plans and find out which is more profitable.

For example, by using a future value calculator, one can automatically find out the value of the current investment required to accumulate a desired amount of money (say the double of an ongoing investment) after a period. Similarly, one can also figure out an investment plan vis-à-vis the interest rate one is aiming for, to get a desired return after a period.

The benefit of an Inflation Calculator lies in the fact that it helps an investor to find out what is the amount he needs to invest and in what frequency to accumulate an inflation-beating value in the future.

Using an ROI calculator, one can figure out the profitability of an investment over another represented in percentage.

An IRR or Internal Rate of Return Calculator helps to determine an estimated return value involving a complicated series of cash inflows and outflows. For example, a stock investment or an investment in a business unit involves initial purchase price, commission paid in buying the asset, repaying a marginal loan in buying the asset (if any). A financial calculator will calculate the final return rate after considering these variables against the capital gains, profit, and dividends earned during the lifetime of the investment.

Investment Calculator: The Limitations

In the case of calculating annualized ROI, an incorrect return value might be produced because, during the starting of an investment, it might not be possible to consider all the expenses that will eventually go into continuing the investment through its lifetime.

In understanding the profitability of an investment in a project (in cases of a business), investors calculate the NPV or Net Present Value and make further investments only if the difference between present cash inflow and that of future cash outflows gives a positive result.

However, NPV calculation (which may form a part of the internal rate of return calculation) may prove to be a dud if the prediction regarding a business' cost of capital turns out to be incorrect. Apart from that, it is not a viable means to compare and evaluate the desirability of one project over another that is of different magnitudes.

Steps to Using Investment Calculators and Comparing Investment Schemes

To calculate the gains on an investment, an investor simply needs to fill in the necessary details on any one of the existing online fintech services, such as the original amount that he/she wants to put annually/monthly or quarterly, the rate of return he/she desires, the years through which he/she wants to stay invested and the current investment amount that one is holding.

One can compare between different investment plans online on any of the insurance aggregator sites. All the determinant factors of an investment can be calculated on aggregator websites, and investors will get personalized quotes. All one needs to do is enter his/her name, phone number, and email address. In addition to this, investment seekers can also get an insight into the performance of different funds for up to 7 years.

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