Term Insurance Calculator: Do the math before you buy a term plan

Deciding to buy a term plan is easy – doing the calculations for the right plan is even easier! We explain why using a term plan calculator is a wise option.

It is basic human nature to worry about the future. You must have experienced it yourself: even during the times that you are happy and content with life, you may feel a twinge of worry about your loved ones. No, you won’t constantly worry about what happens to your loved ones unless you are a paranoid person. But it is fairly normal to wonder what your family members would do if you were suddenly absent from their lives.

A fair number of people are affected by a person’s passing. Naturally, the blow is the hardest on the immediate family, who have to grapple with both the financial and emotional aspects of the matter. As grim as it sounds, the financial repercussions of the demise of the earning member of the family tends to hit the hardest. Out of the blue, the family now has to contend with expenses that it is not in a position to meet.

And expenses never stop, whatever else may happen in life. Our children grow up and want to get a higher education. Our spouse needs monthly support. The household groceries and bills must be paid. There must be money set aside for emergency expenses. All of these are big monies, and they must be arranged in the present moment. The best way to do this is to take term insurance.[1]

Why buy a term insurance plan?

Term insurance policies provide a high sum assured for an extremely affordable premium payment. It is especially useful for those who do not wish to invest in expensive life insurance policies, but who would still like to have sufficient life coverage. Thus, it is suitable for every person, whatever their income levels or size of the family.

The sum assured of the term insurance policy is high enough to meet your family’s future needs in your absence. So even if you are not there in the future, your thoughtfulness in taking term insurance will make it seem like you are![2]

And yet, many people balk at buying term policies…

Term insurance helps to protect the future of your loved ones. The traditional term plan is one that has a high sum assured, low premium payments and no maturity benefit. This last factor means that the policy simply ceases if the policy holder outlives the plan tenure. Meanwhile, if the policy holder survives the plan tenure, no amount of the paid premiums is returned to them. Only on the unexpected demise of the policy holder does the family receive the death benefit of the plan.[3]

This factor makes several people shy away from buying a term plan. However, the point to remember is that insurance is not a typical investment option, and hence, it should not be viewed through the prism of profit and loss of money. The most important benefit of the term insurance is its high sum assured, which can care for your loved ones in your absence. In the face of such a major benefit, that the policy holder does not get back the premiums paid is hardly a matter of consequence!

How to buy the right term plans[4]

The insurance landscape has really matured in India, with a multitude of reputed insurance companies offering a variety of excellent term plans for customers. Earlier iterations of term plans were traditional, non-participating policies that had only a death benefit. In recent years, however, insurance companies have offered some degree of customisation in term policies, where the pay-out options and frequency can be chosen by the policy holder, or there may be special riders included in the policy, among other features.

One of the most notable features, however, is the option of buying term insurance plans online. This is easily done, since most term plans are comparable with one another, so it is easy to research them online.[5] Besides this, reputed insurance providers also allow customers to use an online term insurance calculator to find out the different monies involved in the term plan.

Using the term insurance calculator is quite simple[6]: you simply enter the figures for the desired sum assured, term (10 years, 15 years, 20 years, and so on) and the premium payable therein. Most online term insurance calculators are sliders, that help you manipulate the sum assured and tenure figures to arrive at your desired number for premium payable. Though it is not an exact figure, the number is the closest approximation to the actual premium payable.

Also, the term insurance calculator computes the numbers in real time, which helps you decide whether you wish to buy that particular term plan or not.

Since the premiums payable on the term plan are quite low, and since the policy is deemed ‘ceased’ if the policy holder does not pay further premiums, many insurance providers today do not insist on medical exams to complete the term insurance purchase process. Thus, it is possible to initiate the term plan purchase online, and also complete buying it.

The insurance provider also sends reminders about premium payment date via SMS and email, so that policy holders never miss a payment. All in all, the digital medium has made it very easy for people to buy term life insurance.

Are you convinced about buying term plans?

A term plan is thus the answer to your prayers about your family’s future wealth and well-being in your absence. It helps your loved ones maintain the standard of living that they are used to, and there is no need to compromise on any front. While the term plan corpus can certainly account for all major expense heads (children’s education, wedding, spousal support, etc.) it also offers a large amount of support when it comes to repaying unpaid debts and closing property loans.

 

Keyword: term insurance calculator

[1]https://www.cooperators.ca/en/Answer-Centre/how-does-insurance-work/why-do-we-need-insurance.aspx

[2]https://www.policybazaar.com/life-insurance/term-insurance/articles/top-10-reasons-to-buy-term-life-insurance/

[3]https://www.personalfn.com/knowledge-center/insurance/tutorials/12-01-19/the_term_plan_-_features_and_riders.aspx

[4]http://economictimes.indiatimes.com/wealth/insure/step-by-step-guide-to-choosing-the-perfect-term-plan/articleshow/51209860.cms

[5]https://www.policybazaar.com/life-insurance/term-insurance/

[6]https://www.policybazaar.com/life-insurance/term-insurance-calculator/

Author: Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles by others on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to editor.webposts@gmail.com