Life insurance premium calculator at InsuranceDekho is an easy to use tool which helps a potential life insurance policy buyer make an informed decision for his/her life insurance. Below mentioned are some of the benefits of using InsuranceDekho Life Insurance Premium Calculator: Show
How is Life Insurance Premium Calculated?You can easily calculate premiums for a life insurance plan with the help of the InsuranceDekho Life Insurance Premium Calculator. The premium of the life insurance plan depends on the sum assured and other factors such as age, gender, cover-up, riders, and personal habits like consumption of tobacco/alcohol. The premiums are determined by the insurance providers and differ from policyholder to policyholder. The calculation of premium can vary depending on the change in the variables and premium payment frequency. How to Use a Life Insurance Premium Calculator?There are many insurance companies competing with each other and each one of them has a different procedure of calculating the life insurance premium. At InsuranceDekho, you need to provide the following information in order to calculate the premium for your life insurance plan:
Factors Affecting Life Insurance PremiumThe premium of life insurance is calculated after considering the following factors: 1. Age: Age is an important element considered to calculate the premium for a life insurance plan. The reason behind age being an important variable in the premium calculation of a life insurance plan is that younger people are less likely to catch diseases and are considered in a low-risk category. Usually, premiums for life insurance are lower when you purchase it at a young age rather than at an age where high risk is involved and premiums are also higher. 2. Gender: Some insurance providers offer less amount of premiums for women. There is scientific and statistical evidence that reveals that women are likely to live more than the average age of a man. This allows women to take advantage of life insurance plans for a longer policy tenure which calls for lower premiums. 3. Medical Records: When you are purchasing a life insurance plan it is necessary to go through medical examinations. These medical examinations help in determining your current health status and help in determining any potential diseases that might occur in the future. Obtaining the results from the medical examination helps in calculating premiums for life insurance plans. 4. Personal Habits: Personal habits like the consumption of tobacco/alcohol can affect the calculation of premiums for a life insurance policy. Consumption of tobacco and alcohol is considered harmful to an individual's health. People who consume tobacco/alcohol are more likely to catch different diseases and are considered in a high-risk category. Therefore, the premium rates for non-tobacco/alcohol consumers are low and rather high for people who consume tobacco/alcohol. 5. Medical History: In case, the medical history of a policyholder showcases serious illnesses like heart disease, cancer, or any other, then the insurance companies consider the policyholder to be on the higher side of risk. In a case like such, the premium of a life insurance policy can increase with a significant margin, thereby affecting the ultimate premium amount. 6. Profession: The occupation or profession of a policyholder plays a vital role in deciding the premium they will have to pay for a life insurance policy. For instance, if a life insurance policy buyer belongs to dangerous professional backgrounds such as mining industry, fisheries, oil and gas, or any other, they will have to pay a significantly higher premium amount for the policy they want to purchase. 7. Policy Term: The policy term or policy duration is also one of the crucial aspects that affects the life insurance policy premium. Note that the longer the tenure of the policy will be, the larger will be the amount of the benefit at the time of the policyholder’s death. Why? It is because the policyholder would be paying the premium for that time period. If we talk about short term policies, they are more expensive as compared to those that have a long term. 8. Lifestyle Choices: Your lifestyle choices can also end up in having you pay a lot more than you expected. Take note that many insurers keep a higher premium for people who love to get involved in adventurous activities for the purpose of thrill. If you, as an individual, are of the adventurous kind and get involved in activities concerning speeding cars, climbing mountains or other high risk activities, you may have to pay a much more premium amount than you expect due to the nature of high risk involved. 9. Obesity: Obesity is also one of the key aspects that can affect the life insurance policy premium you wish to buy. As a policyholder, if you are obese, you would be considered at a high risk for a series of health problems such as Osteoarthritis, Cancer, Stroke, High Blood Pressure, Coronary Heart Disease and more that can result in severe health problems in the future. Resultantly, you will have to pay higher premium as compared to non-obese individuals. Tips to Reduce Life Insurance PremiumHere are some tips which can help you reduce the life insurance premium: 1. Buy Policy Online: Premiums for life insurance plans purchased online are comparatively less than purchasing them offline as it requires no additional cost of purchasing them directly from the insurance company or any agents. 2. Avoid Consumption of Tobacco/Alcohol: Consumption of tobacco/alcohol are harmful to a human being’s body. Health is considered the most important factor while calculating the premium for a life insurance plan. The premium rates for non-tobacco/alcohol consumers are low and rather high for people who consume tobacco/alcohol. 3. Choose the Best Possible Policy Term: The time period of the whole policy tenure also plays an important role in the calculation of policy premiums. If you purchase a policy for a longer term then the premium for the life insurance will be low as compared to premiums for a short policy tenure. 4. Add Riders Only If Required: When you purchase life insurance you get an option to purchase additional coverage with a life insurance plan. Choose the riders wisely and opt for them only if you genuinely require them because riders increase the number of premiums. Can You Depend on Life Insurance Premium Calculators?Life insurance premium calculators are backed by a thorough process of calculating the policy premium rates. This online tool considers a vast array of elements like age, gender, sum assured, and more into account for calculating the insurance premium. As compared to manual calculation of premium, an online tool can be highly relied upon as there are no chances of error. Human errors can be expected while doing manual life insurance premium calculation, but a calculator can be depended upon for giving the most accurate results. Additionally, life insurance premium calculations also provide results within a few seconds, thereby saving the effort as well as time of the policy buyer. The entire process is smooth and seamless as compared to the manual process, therefore the online life insurance premium calculators are highly recommended.
When you are purchasing a life insurance policy, it will be useful to calculate insurance premiums and lay out a financial plan for the years to come. It is also essential to regularly review your life insurance needs to ensure that the policy aligns with your life changes. For example, events in life such as marriage, the birth of a child, income fluctuations, child’s education, and investment in properties can impact the insurance premium calculation. It is best to have an early start to avoid any regrets in the future to ensure that you and your loved ones are financially secure.
Some personal and policy-related factors determine insurance charges. Let’s have a look at some of them. 1. AgeIt makes sense to invest in a life insurance plan at an early age, preferably when you start earning, and some people depend on you financially. Age affects the insurance premium calculation since younger people are more likely to be healthier and opt for a more extended period of cover, thereby enjoying lower insurance premiums. 2. GenderIt might seem surprising, but the gender of the insured also impacts the insurance premium calculation. On average, men also tend to be involved in riskier work or lifestyle environments. It may result in women paying lower insurance charges than men. 3. Medical HistoryYour medical history plays a massive role in the insurance premium calculation. Insurance providers examine the condition of your health to understand future financial needs better. However, the premium calculation impact also depends on the severity of any illnesses you may have. In the case of a life-threatening disease, the premium costs are likely to be higher. Also Read: Why Medical Test is Important in Term Insurance? 4. Financial DependentsThe insurance premium calculation also takes into account the number of financial dependants on the insured. If you are the family's sole breadwinner, you might require higher coverage for your family members. It will translate to a higher premium cost consequently. 5. OccupationPeople exposed to high-risk environments in their jobs, for example, pilots, soldiers, mining, or oil and gas workers, may expect a higher insurance premium for their policy. 6. LiabilitiesIt is essential to consider any financial liabilities that might demand a huge portion of your income, such as property loans. Insurance premium calculation must be in alignment with any such liability to ensure your ability to pay them.
There is no prescribed right or wrong time to invest in an insurance policy. However, purchasing a plan at a younger age might benefit you since the insurance providers do a thorough risk assessment. A more youthful individual will likely present lower risks and favour the insurance premium calculation. For example, a person in his late twenties is much less likely to suffer from a severe illness than someone in their late fifties. It will reduce the coverage amount required by them. Additionally, an insurance plan at a younger age will allow you to spread the duration and decrease the premium costs. 2. What kind of coverage do you require?In general, there are various types of life insurance policies catering to different financial needs. It will help assess your and requirements from a plan and investing abilities to calculate insurance premium effectively. Furthermore, there are various combinations of riders you can opt for to strengthen your coverage further. For example, Max Life offers a critical illness insurance to your term insurance policy to equip your plan to provide healthcare assistance. 3. How much coverage do you require?The amount of coverage that an individual requires depends on their current and probable financial condition in the future. Charting major expenses while taking into account any unfortunate circumstances will significantly help in insurance premium calculation. In general, the lesser coverage, the cheaper the premium costs. The number of dependents and lifestyle of the insured also impact the insurance premium calculation. Insurance providers will also look at your personal information, such as medical and driving records, credit history, lifestyle, occupation, and smoking or drinking habits. It is to accurately assess the risk profile of the insured and apply it in insurance premium calculation.
However, there are a few things to be kept in mind during insurance premium calculation to lower the stress on your budget.
It is essential to choose a suitable policy term for your financial condition, considering the liabilities. Insurance premium calculation assumes the insured individual’s ability to pay premium costs for the tenure as well. For example, if you are a salaried individual, it makes sense to opt for a longer-term that will allow a steady premium rate. It may seem appealing to reduce the tenure of the plan and increase premium costs, but insurance policies serve the purpose of providing a financial cushion. Therefore, remember to carefully assess your long-term needs at the time of insurance premium calculation. 2. LifestyleSince medical history has a significant impact on the insurance premium calculation, it will work in your favour in more than one way to maintain a healthy lifestyle. Insurers consider smoking or drinking habits as health risks and might, therefore, charge a higher premium due to it. Be sure to take care of your health and avail of optimum benefits from your insurance policy. 3. Tax BenefitsWhile you may not directly affect the insurance premium calculation much, certain tax benefits may relieve some of the pressure. The Income Tax Department of India allows tax deductions and exemptions under Section 80C when it comes to life insurance expenditures. It serves as an incentive to buy life insurance without worrying about premium costs.
 Q. Why is Life Insurance Important?A. Life insurance is essential to take care of your family’s needs in times of need. It will serve as a financial cushion and safeguard their interests. It will help them maintain the standard of living even during a time of crisis. Q. What Should I Look for in a Life Insurance Policy?A. You must check if there is the availability of guarantee of return and understand the terms and conditions such as the lock-in period, details of insurance premium calculation, terms for the revival of the policy, and more. Q. Should you opt for a life insurance policy based on a lower premium?A. While lower premium rates are attractive, remember that the coverage will be following that as well. Since higher premium calculation means higher coverage, it works the same for lower rates as well. In cases where the coverage seems to be adequate, check the policy's terms to be favourable. Q. Are There Different Options to Pay the Premium?A. Yes, most insurers offer a monthly, half-yearly, or yearly payment option depending on the types of insurance. It is best to consider this at the time of insurance premium calculation. Q. What Will Happen If I Do Not Pay the Premium On Time?A. Most insurers provide a grace period of 15-30 days on the payment of premiums. Failure to pay the premium after that may result in the lapseof the policy. You might want to discuss the terms regarding payment with your insurance provider. Arn:- Jan21/Bg/13E |
What are the various factors affecting the calculation of premium of an insurance policy explain the procedure for calculation of premium for life insurance policies 15?
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