Life is all about ups and downs that drive our emotions and way of living. While ups are always welcomed, it is important to be prepared for downs with smart plans. Life insurance is a wise step to safeguard your future by creating a financial safety net. Losing the primary source of income is an unfortunate event that might not be in your control. Opting for life insurance that keeps you covered in bad times is at your fingertips now.
Let’s learn about life insurance and a simple way to calculate the premiums.
Life Insurance
A life insurance plan is designed to offer coverage during the term or tenure of the insurance policy. The way most types of life insurance plans work is simple. An insurer provides life coverage to the insured, where in case of the death of the insured during the term of the policy, a lump sum amount is payable. In return, the insured person pays a premium throughout the tenure of the policy. The plan thus provides life coverage to the insured, making it a reliable plan to face an unfortunate event without worrying about finances.
The type of insurance you choose, determines the premium, the coverage duration and the benefits that you would receive. For example, different types of term insurance plans are mostly more affordable, as they offer coverage for a set term of the period, and they typically do not offer any maturity benefits if an insured outlives the policy term. Endowment plans are the ones that come with the assurance of a death benefit in case something happens to you. These plans offer payouts even if you outlive the policy period, and thus are a great addition to your financial portfolio.
How Much Life Insurance Coverage Do You Need?
Choosing the amount of life coverage is probably the most important aspect of your life insurance policy. The coverage has to be enough so that it aligns with your future goals. Also, in case something goes wrong, the coverage should be enough so that your loved ones are not in a financial crisis.
Simply put, the amount of life insurance coverage that you need depends directly on you and your financial plans. You need to chalk out your needs and obligations, and then determine what would be adequate for your loved ones. While the general thumb rule says that the life insurance should be ten times your current annual income. However, with changing lifestyles and growing inflation, you should have coverage that is at least 15 to 20 times your annual income.
Life Insurance Calculator: A Tool to Help You Determine Coverages
Now that you have an idea about life insurance, you must understand how premiums are calculated. This will help you get a fair idea of how much your coverage will be and how much will you have to pay for it. Read on to know more about how you can use the to make it simpler and easier to get things started.
A life insurance calculator is a path breaking innovation made for the insured and insurers. It is an online tool that allows you to calculate a plan’s premiums and get instant results. The calculator is designed for accuracy, and therefore, it takes factors like age, family status, salary, health conditions, etc. into consideration to calculate the premium.
Irrespective of the kind of plan you choose, the life insurance calculator is equipped to provide you with quick results. Here’s how you can use a calculator to know the premium:
- Step 1:
Please fill in the details asked on the main screen, including your age, marital status, and other relevant personal details. - Step 2:
Select the plan and coverage till the age that you want to opt for. - Step 3:
Click ‘enter’ and you will get the premium on the required plan.
Take a look at the details that you must know to get accurate results-
- Policy type or name
- Age of the policyholder
- Sum assured you are looking for
- Premium paying duration and frequency
- Tenure of the plan.
Wrapping Up
Given the uncertainties of life, owning a reliable life insurance plan is the smart way forward. Insurance policies are now designed to meet the changing needs of the people and to match the ever-increasing inflation rates. The best part is that with online options, you can compare prices, plans and coverages while using a life insurance calculator to get instant and accurate premium results.
Explore plans offered by your life insurance provider to find competitive premium rates and versatile coverage options that are tailored to your requirements.
Also Read: How does an investment calculator help in retirement planning?
