In a nutshell, life insurance policies offer monetary
benefits to the policyholders’ dependents in case of their untimely demise.
This is however only a facet of life insurance policies, as these policies also
double as endowment funds, investment and savings instruments, pension funds
etc. And to top it all off, you also receive tax benefits on premiums paid
toward a life insurance policy. Life insurance policies are designed to
effectively provide financial protection for your and your dependents’ futures.
Calculate Life Insurance Premium
Life Insurance
Premium
Life insurance premium is the recurring or one-time payment
you make towards your life insurance policy. A life insurance policy is valid
only if your pay the premiums on time and according to the insurer’s
guidelines. In general, you have the option to choose the frequency of premium
payments such as monthly, quarterly, half-yearly, yearly, or single premium. A
factor of this premium is paid out as sum assured when the benefits of the
policy get activated.
The premium for life insurance policies varies according to
chosen plans as well as the credentials of the applicant. Usually, a younger,
healthier individual will likely be quoted lower premium than a person touching
his/her 50s. Similarly, a non-smoker will get preferential premium rates
whereas a smoker is likely to be quoted a higher amount. There are various
variables that play a part in determining your premium amount, and making your
own calculations can only take you so far. This is where life insurance premium
calculators come into play.
Life Insurance
Premium Calculator
A life insurance premium calculator is a tool that gives you
an estimated amount of premium according to your chosen policy and
technicalities such as tenure, age, sum assured, premium frequency etc. These
calculators are available from the official insurance providers for their
exclusive list of products. For instance, the Life Insurance Corporation of
India (LIC) has its own premium calculator for life insurance policies.
Typically, a life insurance premium calculator
includes the following fields where information has to be provided by you:
·
Plan name
·
Age of applicant
·
Sum assured
·
Premium frequency
·
Tenure
·
Riders, if any
The whole form takes less than a minute to fill up, and once
you have input all the required data and preferences, an estimated figure of
premium will be displayed as result. The result is an estimate as the insurer
may go for further details about your background that can affect the premium
calculations.
Sample Life Insurance
Premium Calculation
Life insurance premium calculations are complicated and
can’t be done by prospective customers on their own due to the numerous
underlying variables. A premium calculator is your best bet in this scenario.
Let’s take the example of LIC premium calculator to illustrate premium
calculations.
The calculator has 4-5 fields depending on the selected
plan. For this illustration, we will select the New Endowment Plan that has the
highest number of fields including:
·
Plan type: New Endowment Plan
·
Age: 38 years
·
Term: 20 years
·
Sum assured: Rs.10 lacs
Accident Benefit (Rider): Yes/selected*
*The Accident Benefit rider provides additional cover for
accidental death on top of the base insurance plan, by adding a small amount of
premium on the base premium. Other insurers may or may not provide the option
for adding riders.
The results of this calculation are as follows:
·
Yearly premium: Rs.49,940
·
Half yearly premium: Rs.25,235
·
Quarterly premium: Rs.12,750
·
Monthly premium: Rs.4,250
The premium figures are shown in four different varieties.
Typically, yearly premiums will cost you less in the long run than opting for
the more frequent half-yearly, quarterly, and monthly options.
Source: https://www.bankbazaar.com/insurance/life-insurance-premium-calculator.html
No comments:
Post a Comment