Life Insurance Premium Calculator

Updated: 12-05-2019 23:55:45 PM

A life insurance premium calculator is a tool that helps get a rough idea about the premium to be paid for various life insurance plans. The calculator helps compare the policies and then get the plan offering the best quote. This an online tool and almost all life insurance companies provide this facility on their websites.

What is Life Insurance Premium?

A premium is the amount given to the insurance company by the insured to get the coverage. The premium can be paid in the form of a single instalment or multiple instalments at specific intervals. Usually, all policies have a certain lock-in period and the policyholder needs to pay the premium for a certain number of years to keep the policy alive. However, after the lock-in period, even if the insured stops paying the premium, the policy will be alive till it the end of the term, though the extra benefits will be dissolved.

The insured needs to make the premium payment within the time frame to keep the policy alive. Usually, the companies offer a lapse period – if the insurer fails to pay the premium on time, even then he/she can revive the plan by making the payment with certain charges. But if the insured misses this lapse period, the policy will be dissolved.

Factors Determining Life Insurance Premium Calculation

A life insurance premium calculator has various fields to be filled in by the customers. By providing the details, the tool generates the approximate amount of the premium. Some of these factors that influence premium calculation are:

• Types of plan: The type of the plan that the customer chooses is a key factor in calculating the premium of the policy. For example, a basic term insurance plan will have less premium amount compared to that for the money back plan
• Age: This is another important aspect considered while calculating premiums. An 18-year-old man will have a higher life expectancy compared to a 50-year-old man. Thus, the former will have to pay a lower premium, even if they both select the same plan with the same tenure and riders
• Gender: The premium amount is higher for males and lower for females
• Occupation: The type of work a person does makes a huge difference in the premium amount. If the applicant is involved in hazardous work, his premium amount will be higher that that for a person who is involved in risk-free job
• Desired sum assured: A higher sum assured or the claim amount attracts higher premium as the claim amount is high and the company has to pay a big amount in case the claim is materialised

Advantages of Using Life Insurance Premium Calculator

Online premium calculators give an estimate of the premium to be paid for any particular product for a particular tenure. Other benefits of premium calculators are:

• Reduces the work pressure of the employees
• Customer is self equipped to know the premium amount
• Easy to compare different types of life insurance products
• Easy to compare different companies providing similar products