Things You Should Know About Term Insurance Plans Premium Calculators
Plan your finances in advance using a term insurance premium calculator. Know how it works, what it takes into consideration when setting the premium rate and where you can you use the premium calculator tool.
What are Term Insurance Plans?
Term Insurance Policies are life insurance contracts that offer protection for a predetermined amount of time, or "term." A normal term insurance plan will typically provide a death benefit to the policyholder's family if the latter passes away while the policy is still in effect and the policy term.
What are Premium Calculators?
Premium calculators are practical interactive tools that assist customers in analysing, comparing, and planning their insurance coverage by identifying the plan that best suits their financial needs. Therefore, premium calculators assist users in accurately determining their insurance needs. Users have to submit specific data to make use of premium calculators. Some of the information required is listed below:
- Proposer’s Name
- Age
- Gender
- Date of Birth
- Plan Type
- Sum Assured
- Policy Term
- Premium Paying Term
- Tax
- Total premium payable
- Year of purchase of plan
- Riders
- Any other data depending upon the sub-plans
Features of Premium Calculators
The following are the salient features of premium calculators
Features | Description |
Coverage | Premium calculators will help customers determine the exact amount of coverage required to protect their families in case of the unfortunate death of the policyholder |
User-friendly | Calculators are simple, easy-to-use financial tools. Users have to fill in the required details to get the information they seek |
Analysis | By providing details such as date of birth, and other details related to a term insurance plan, customers can analysis the cost of the plan versus the benefits it offers |
Comparison | Customers can enter information pertaining to several term insurance policies and compare the premiums and levels of coverage. |
Simplifies complex data | Most consumers may find the financial data related to insurance products and tax computation baffling. A calculator provides the data in a jiffy without hassles |
Better product knowledge | Due to the aforementioned factors, customers get a better understanding of products offered by insurance providers |
Customisation | A customers entered specific details related to his plan, date of birth, premium paying term and other details related to him or her |
Quick handy tool | Customers can make use of premium calculator to make a quick assessment of the plan and how it works |
Premium Calculator - How it Works
Aditya Sharma, a 27-year-old non-smoker male working in an IT company takes a HDFC Life Click 2 Protect Plus term insurance plan on November 9th, 2015. HDFC Life Click 2 Protect Plus is a traditional non-participating term life insurance plan. Details of Aditya Sharma are as listed below:
Customer details | Description |
Name | Aditya Sharma |
Age | 27 |
Gender | Male |
Date of Birth | January 1st 1988 |
Smoker/Non-Smoker | Non-Smoker |
The aforementioned details have to be entered into a premium calculator to get the following exact values
Sum Assured | Rs.1 crore |
Policy Term | 30 years |
Premium Paying Term | 30 years |
Premium Frequency | Annual |
Plan Option | Life option (family of the life assured receives the sum assured as a lumpsum amount in the event of the demise of the policyholder) |
The aforementioned details have to be entered into a premium calculator to get the following exact values
Annual premium excluding taxes | Rs.7,981 |
Taxes | Rs.1117 |
Total premium including taxes | Rs.9,098 |
Premium due date | November 9th 2016 |
Extra Life Option
In case Sharma chooses the ‘extra life option’ available for this term insurance plan for the aforementioned sum assured, policy and premium paying term, his premium will be calculated as follows:
Annual premium excluding taxes | Rs.12,974 |
Taxes | Rs.1,816 |
Total premium including taxes | Rs.14,790 |
Premium due date | November 9th 2016 |
Note: The family of Sharma in the ‘extra life option’ will get the double of sum assured, i.e, Rs.2 crores in the event of the accidental death of Sharma.
Income Option
In case Sharma chooses the ‘Income Option’ available for this term insurance plan for the aforementioned sum assured, policy and premium paying term, his premium will be calculated as follows:
Annual premium excluding taxes | Rs.6,703 |
Taxes | Rs.938 |
Total premium including taxes | Rs.7,641 |
Premium due date | November 9th 2016 |
Note: The family of Sharma will receive Rs.10 lakhs as lumpsum and Rs.90 lakhs as monthly payout (Rs.50,000) over a period of 15 years in the event of death of Sharma.
Income Plus Option (Level)
In case Sharma chooses the ‘Income Plus Option’ available for this term insurance plan for the aforementioned sum assured, policy and premium paying term, his premium will be calculated as follows:
Annual premium excluding taxes | Rs.10,774 |
Taxes | Rs.1,508 |
Total premium including taxes | Rs.12,282 |
Premium due date | November 9th 2016 |
Note: The family of Sharma will receive Rs.1 crore as lumpsum and Rs.50,000 as a monthly payout for a period of 10 years in the event of death of Sharma.
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