May 20, 2024
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Life Insurance Calculator: Steps to Use and Benefits to Know

Life insurance calculators can be described as online tools that help find the best term policy that suits one’s financial needs. The tool works by using personal and financial data to estimate life insurance policy premiums and recommend suitable plans.

However, to use a life insurance calculator, it is essential to understand how the tool works and which factors impact the final results. This awareness will help users understand more about life insurance premiums and choose a policy whose coverage suits their requirements.

How Does A Life Insurance Calculator Operate?

Online life insurance calculators help estimate life insurance policy premiums within a couple of seconds and understand how several factors affect coverage. Typically, one needs to enter details like age, gender, income, marital status, and desired cover to determine a suitable plan. After one enters these details, the online tool assesses the user’s

financial standing to suggest a suitable plan, adequate cover, and premium payment frequency. Understanding the features of the tools and how to use them for one’s benefit helps users make the best of the calculator.

Factors That Impact Insurance Premium

Note that age, gender, current health status, income, and even lifestyle choices can impact the premium cost and coverage of one’s preferred insurance policy. That said, let’s check how different factors can impact one’s insurance policy and their cover.

    • Age: On average, insurance providers tend to offer higher coverage with lower premiums to young applicants than to those in their late 40s and above. This is because insurers view young applicants as someone, who is less likely to file a claim in the initial year, making them less risky to insure. To prove their age and process the application, applicants are often asked to submit documents such as government IDs, Aadhaar, or PANs.
  • Desired retirement age: Individuals typically retire at the age of 60, but some professionals may choose to retire before or later than the standard age for personal or financial reasons. However, to use the tool, it is suggested to identify one’s retirement age to plan their insurance financial coverage. Knowing this will help individuals plan their insurance plan accordingly and ensure a comfortable retirement for themselves.
  • Annual income: A life insurance calculator uses the shared information to determine the financial resources individuals need the user and their loved ones to maintain their living standard if the insured faces an untimely death or accident that leaves them disabled.
  • Insurance cover: The need for life insurance coverage varies among applicants and the same depends on their age, income, current debt, and retirement plans. A higher cover amount can offer greater financial security and empower their dependents to take charge of their finances and support their liabilities without straining their budget.
  • Existing life cover: An online insurance calculator helps users figure out the approximate coverage they could need to financially secure their independents and beneficiaries long after they die.
  • Loan obligations: Insurance providers need to applicant’s financial obligations, such as their loans, EMIs, and other living expenses, to provide them with accurate quotes so that they can plan their finances better.

Individuals’ personal habits, such as smoking and drinking can influence the cost of premium, same as their age, gender, and record of health. Insurers usually view the applicants’ unhealthy lifestyle as potentially riskier, as they believe those who indulge in such activities are likely to raise claims quickly. So, to cover for the risk, they charge those individuals with higher premiums.

Steps to Use Online Life  Insurance Calculator

Here’s how one can use an online term insurance calculator in a few steps – 

Step 1: Visit the official website of a trusted insurance company.

Step 2: Go to the online insurance calculator page.

Step 3: Enter crucial details such as name, age, gender, contact, medical record, and lifestyle habits, in the designated fields

Step 4: Enter the expected sum assured 

Step 5: Enter the desired policy term for which you need the insurance coverage

Step 6: Click the ‘Calculate’ option to avail premium quotes

Online calculators help users find the best policy for the user’s needs. The best thing about the tool is that users can adjust their desired inputs until they avail an ideal combination of premium and sum assured that fits their preferences and needs. These online insurance calculators are free to access and can be used unlimited times as needed, making them a useful financial planning tool.

When Should You Buy An Online Life Insurance Policy?

It is usually recommended to get a term plan at a young age, as policy premiums are typically lower than what is asked from older applicants. This is because insurers consider younger people healthier and less prone to develop lifestyle or chronic illnesses, making them relatively less risky to insure. Typically, it is believed that the longer one delays purchasing a life insurance policy, the higher the premium one pay for the coverage.

The top benefits of using an online life insurance calculator for those planning to get an insurance plan include –

  • It helps users to accurately determine how much coverage they would need and how much they will pay as premiums.
  • It saves the user’s time and effort by making the task of comparing different insurance policies and their features quick and easier.
  • Shows how major personal and financial factors influence one’s policy premiums.
  • It helps the user choose the best insurance cover for their niche needs.

When choosing a life insurance policy, it is essential to consider one’s insurance coverage needs, current financial capacity, and the insurance company’s track record of claim settlement and promptness of customer service. Finding these in advance will help ensure one receives timely assistance and that their loved ones can quickly settle claims and access required financial aid. 

All these features and uses make a life insurance tool a must for those looking to get a policy. It not only helps them understand which plan would suit their requirement but also enables them to identify their financial capacity to support the cover and plan their timely payments.

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