One of the simplest and most budget-friendly types of life insurance is term insurance, which ensures your death results in a specific amount of money so that your family will be cared for in your absence. Of course, with so many options available, one can feel bewildered as to which one should be chosen and why. That’s what a term insurance calculator would be ideal for-that is, to calculate your premium and then compare different plans before deciding on the most suitable policy.
What is Term Insurance?
Term life insurance protects for a specific number of years. If you die within the chosen term, then your heirs will receive a single amount in cash. If you survive the term’s period, then you’ll receive no cash paid back to you, and the agreement is terminated.
he following are some of the important features of term insurance:
- Affordable premiums: Term insurance is the cheapest form of any other life insurance.
- High coverage: You get a higher cover at a lower premium.
- No savings or investment: Term insurance is purely protection and will never pay any returns as an investment.
Why Should You Use a Term Insurance Calculator?
Choosing the appropriate amount of coverage and the best policy can be difficult; however, a term insurance calculator will help you figure out how much you have to pay for the right amount of coverage. Moreover, it will also allow you to compare different plans so that you can find the one that fits your budget and goals.
It is quite quick and effortless to use a term insurance calculator. Here, you get an idea of:
- The premium you will need to pay
- The right coverage for your family
- The best policy for your situation
Steps to Use a Term Insurance Calculator
Here are simple steps to help you use a term insurance calculator:
Step 1: Visit the Term Insurance Calculator
You can find a term insurance calculator on HDFC Life Insurance sites or any other online portals. The tool is quite user friendly and requires only a few details to calculate your premium.
You will be required to enter some personal details to calculate your premium:
Step 2: Provide Your Basic Information
You will need to enter some personal details to calculate your premium:
- Age:Your age determines your premium. The more you age, the higher will be your premium.
- Gender: Insurance firms sometimes use the client’s gender to set premiums. Traditionally, generally women may pay a slightly lower premium.
- Smoker/Non-smoker: Smoking increases health risks generally, so smokers generally pay higher premiums.
- Health status: Some of the calculators ask whether you have any pre-existing conditions. This could sometimes count for the premium as well.
Step 3: Choose the Coverage Amount
It is the amount of money that will be paid to your family in case something happens to you. The higher your coverage, the more premium you will pay.
When determining how much coverage you’ll need, think about:
- Income replacement: You will need to replace your income. How much money does your family need?
- Debts: Do you have loans or debts that need to be cleared?
- Future expenses: Do you have future expenses such as children’s education or marriage?
Step 4: Choose the Policy Duration (Tenure)
The duration of policy is the number of years you require coverage. Term insurance policies are available for a range from 10 to 30 years.
When choosing the duration, consider:
- Your age: If you are young, then you will require a longer policy (20-30 years) to ensure your family is covered till retirement or till your children grow up.
- Your financial situation: You may be needing a policy for 10-20 years if you are middle-aged especially when you reach middle age.
The calculator changes the premium according to the number of periods you choose. Longer periods bear higher premiums.
Step 5: Add Extra Features (Riders)
term insurance policy lets you add additional features to them, called riders. They add extra coverage for certain situations, like:
- Critical illness rider: It keeps you covered if you are diagnosed with any serious illness, such as cancer or a heart attack.
- Accident rider: Offers supplemental coverage in case of death by accident.
- Waiver of premium rider: Waiver of premium-waives the remaining premiums if you become seriously ill and are no longer able to pay the premium.
Including these riders does add to the premium but provides extra coverage.
Step 6: Calculate and Compare Plans
Once you have all the input ready, the calculator will display an estimate of the premium for the coverage amount and period you have chosen. You can simply modify the numbers to see how altering the amounts of cover or policy duration affects the premium. Some calculators allow you to compare different insurance plans that will help you to identify the plan which best suits your needs.
Benefits of Using a Term Insurance Calculator
- Saves time: There’s no complicated paperwork nor waiting for quotes. You get an instant estimate.
- Easy to use: Most of the calculators are pretty straightforward and do not require technical knowledge to operate.
- Helps with decision-making: It helps you to make the right choice by comparing different policies, coverage, and premiums.
- Transparency: The calculator gives you a clear indication of how much you would have to pay up, hence making it easier to choose a policy according to the budget.
Tips for Choosing the Right Term Insurance Policy
- Assess your needs: Think about your family’s financial needs and how much coverage they would need in your absence.
- Don’t choose the cheapest option: While it’s tempting to go for the cheapest plan, make sure the coverage is enough to protect your family.
- Consider the insurer’s reputation: Choose a reliable insurance company with good customer service and a history of paying claims on time.
- Review your policy regularly: Your needs may change over time, so it’s important to review your policy and make adjustments if necessary.
Conclusion
A term insurance calculator is also a valuable tool to help one decide the appropriate term insurance based on needs. It can show you how to calculate premiums, coverage requirements, and comparison of one option with another in a few easy steps. This way, you can guarantee your future is covered for the family as well, regardless of what could come your way.
For an even more convenient experience, try the HDFC Life Insurance App. The app enables you to calculate premiums, check out various policies, and apply for insurance right from your phone. It is easy to use and provides access to customer support at any time. Download the HDFC Life Insurance App today and start securing a future for your family!
