Everybody requires term insurance for the financial well-being of your loved ones. Term insurance is a pure protection plan, which covers your family in your absence. As a buyer, you consider various factors like its features, benefits, and premium while purchasing a term policy. But what is the prime factor of your buying decision? Whether it is a traditional life insurance product or a term policy, you should always look forward to receiving an adequate coverage for the financial protection of your family.
Previously, determining the coverage was quite difficult based on the current financial status. However, the process of calculating the coverage amount has become easier due to the availability of term insurance calculators. Therefore, let’s begin by understanding what a term insurance calculator is:
A term insurance calculator is an online tool that allows you to calculate your required life cover to receive your desired sum assured amount. You can use a term insurance calculator on your insurer’s website. All you have to do is enter all the relevant personal and policy details and calculate the determined value.
When you are calculating your term life insurance, you should pay the premiums on time for a long period. In addition to this, you should select a premium payment term, which is flexible for you to afford the premiums for that whole period. Consider the following five factors mentioned below to calculate the insurance cost as well as the premium rate:
- Your and your spouse’s age
- Monthly household expenses
- Educational expenses of your children
- Outstanding loan debt or uncleared debts
- The current valuation of your assets
Many people follow specific thumb rules when it comes to calculating the required term insurance coverage. Typically, you should consider elements like your age, annual income, outstanding loans, etc. Let’s take a look below to know these thumb rules:
- If you’re between 25-35 years, you should calculate your cover by adding your outstanding loans to at least 15-18 times of your annual income.
- If you fall between the age brackets of 35-45 years, you should calculate your coverage by adding your outstanding loans to at least 10-15 times of your annual income.
A term insurance calculator is used for several reasons. Apart from the accurate calculation, a term insurance calculator offers many other benefits. Given below are the top three benefits of term insurance calculator:
A term insurance calculator allows you to save a maximum time in your hand. While we do understand that you might not have an entire day, all you have to do is spare two minutes of your time. All you have to do is fill in the accurate information to get your coverage amount within minutes.
- Accurate comparison
A term insurance calculator can also be used for proper comparison. Once you enter the relevant details in the calculator, it will automatically suggest multiple plans based on your financial needs.
As a policyholder, you can not only compare policies but also buy them online. After you have successfully compared several term plan options on the calculator, you can purchase the final term policy online at a relatively cheaper rate.
To sum up, a term insurance calculator determines not only your coverage amount but also your premium value. However, many people depend on their insurance agent for providing them with an accurate premium and coverage amount. With a term insurance calculator, you no longer have to depend on anyone as you can easily get the exact figures by yourself.