How is Term Insurance Premium Calculated?

Age

Age is the most critical factor while determining the term insurance cost. When you are young and healthy, the insurance company puts you in a low-risk category and hence charges a lower premium. As you age, the likelihood of health issues also increases, which leads to a higher premium. Hence, it is important to buy term insurance coverage at a young age.

Lifestyle

Your lifestyle, habits such as alcohol consumption, smoking, and substance usage, put you at higher risk of critical illnesses. An insurance company reviews your lifestyle habits while calculating term insurance premiums. You may have to undergo a medical test to confirm your disclosure of crucial information. Not disclosing or hiding the facts can lead to rejection of claims in future.

Gender

Considering women’s life expectancy is generally higher than that of men, premiums for women policyholders are lower than men.

Family’s Health History

Your and your family’s medical history can have a huge influence on the term insurance premium calculation. Insurance premiums are generally higher for policyholders who have pre-existing health conditions and a family history of cancer.

Occupation

If you are in a high-risk occupation like mining, construction, aviation, etc., it increases your term insurance premium. Occupation also plays an important role in term insurance underwriting.

Coverage

Insurance cost depends on your policy coverage amount, term and other conditions. A higher amount of coverage attracts a higher premium. Similarly, the longer the term higher the premium.

Riders

When you customise your term insurance plan with additional riders to enhance the coverage, it can attract a higher premium. Some of the important riders with term insurance plans are critical illness rider, disability cover, personal accident cover and more.

Insurance premiums can vary from one insurance company to another. Buying a term insurance plan from an online aggregator can be cost-effective as there are no intermediaries or broker charges involved. At Jio Insurance Broking, you can compare term insurance policies from various insurance companies side by side. You can get the quotes for all plans in one go and compare them easily based on cost and features. You can use an online term insurance premium calculator to easily get the quote as per your specifications.

What is the Online Term Insurance Premium Calculator?

The term insurance premium calculator is a valuable online tool that helps you calculate the premium amount for the desired term insurance coverage based on various details you input. The term insurance premium calculator considers personal and policy-related details to generate the quote.

You need to input the following details in an online term insurance premium calculator:

Personal details

Here are the basic personal details to be inputted to assess your risk profile –

• Date of birth or age
• Gender
• Occupation
• Income details
• Smoking habit (yes/no)

Policy-related details

Here are the policy-related details you need to input in the calculator –

• Sum assured / coverage amount ( for example: INR 1 Cr or INR 1.5 Cr)
• Policy term ( for example: 10 years, 20 years or 30 years, or so)
• Payment mode (annual, half-yearly, quarterly or monthly)

Optional add-ons

Select the add-on you are looking for ( for example, personal accident cover, critical illness rider or disability benefit, etc)

Calculator then processes the information provided by you using actuarial logic built in at the backend to instantly give you a quote from various insurance providers. You can tweak the information as per your needs and affordability, and get a revised quote too.

The main benefits of an online term insurance premium calculator are that it makes the insurance buying process simple and easy by saving your time, offering transparency and a platform for easy comparison.

Conclusion

To sum up, it is a smart and crucial financial decision to buy term insurance coverage. Understanding how the premium is calculated and the tools available for you to calculate and compare easily helps in rational decision-making. A valuable tool like a term insurance premium calculator empowers you to make an informed financial decision after careful comparison. It brings transparency, clarity, and convenience to your insurance buying process. Remember to evaluate benefits and costs to choose the best term insurance plan that fits your needs and budget.