We all have strong family bonds that make us want to care for all our loved ones and secure their financial wellbeing from life’s uncertainties. That is why you need to invest in a life insurance plan to provide this safety net to them. But what is term insurance, and how does it help? Let us discuss it below to help you understand better.
When you buy a term policy, your family members will receive the death benefit from an insurance provider if something happens to you. But do you know where to look when you want to buy a term plan? What factors affect your premium? How to use a term insurance premium calculator to choose the best policy? There are so many things you need to keep in mind before you invest your hard-earned money.
The buying process usually involves looking for plans from multiple insurance providers, assessing their benefits, comparing premiums, etc. Then, after careful assessment of all these factors, we buy the term plan.
While all these steps seem enough, one more critical step involves knowing the factors that can bump up your premium amount. This article will discuss these factors in detail to understand how to use a term plan calculator to your advantage.
Age is one of the most critical factors that increase your term insurance premium when using the term insurance premium calculator. Simply put, the term insurance premium will increase for older policyholders.
The reason insurance companies emphasise the policyholder’s age is its impact on their health. An older individual is at much higher risk for the insurer because they may fall sick due to lifestyle diseases and may pass away prematurely. However, a younger person is at a much lower risk of falling ill. Therefore, if you are young and healthy, buying your policy at the right time would be wise as the premium increases as you grow older.
2. Family medical history
When you calculate premium with the help of the term insurance premium calculator, you will have to enter details about whether you have a family medical history of serious illnesses, such as cancer and cardiovascular diseases. Your insurer will also require you to undergo a medical test to determine your overall health. These medical tests will inform the insurer of any existing illnesses. They also detect potential risks of specific conditions that you may contract later in life. These medical records determine the payable premium for a particular insurance policy.
When you use a term insurance premium calculator, you will select your gender as part of the premium calculation process. According to studies, women live longer than men. Therefore, their premium will be lower.
4. Lifestyle habits
As you check the box that indicates you are a smoker in a term insurance premium calculator, your premium will increase. According to research, smokers are more likely to develop conditions like lung cancer and cardiovascular diseases. Therefore, your term insurance premium will increase as smoking is a risk factor by insurers.
Although it does not significantly impact your premium, your occupation does play a crucial part in its estimation. The reason is that some professions are life-threatening and risky. So when these people apply for a term plan, their premiums could be higher. However, the occupation-based premium increase may vary from insurer to insurer. Therefore, remember to use a term insurance premium calculator to compare policies before investing.
6. Sum assured
Needless to say, this one aspect will have the most drastic effect on your premium. Sum assured is usually directly proportional to the premium chargeable to you. In other words, if your sum assured is high, the premium of your term plan will also be higher.
You can use a term plan calculator to see the premium applicable to your desired sum assured. Be sure to calculate the sum assured accurately based on your lifestyle needs, liabilities, income, etc.
7. Payment terms
With so many options available for a term plan, you can be flexible in choosing as per your payment preference. However, the most preferred method to pay for life insurance premiums is regular installments, in which you can choose to pay the premium throughout the policy period in equal installments.
These are just some of the many factors that can influence your premium amount. That is the reason it is necessary to use the term insurance premium calculator so that you can assess the policies objectively before making an investment decision. Take your time to carefully understand and evaluate your options before signing up for a plan.