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TERM INSURANCE PREMIUM CALCULATOR

The premium of your term insurance is affected by various factors .Some factors on which you have control and others depend solely on the insurance company. Premiums do vary from one insurance company to another because the factors affecting it are rated by different companies in different way. When you looking at comparing term insurance policies manually, understanding each and every factor and the dynamics of how a insurance company rates it can be tedious and never ending task and you might not ever end up making the right decision.
Myinsurancebazaar.com makes the process of comparison very easy. Our premium calculator is an online policy comparison tool which based upon the details entered by you analyzes the offering from various insurance plans and gets you a list of term of insurance policies which have similar features and which are apt for your needs.

Major factors affecting the premium of term calculated by the Premium calculator:

There are various factors that affect your premium and based upon which the premium calculator indentifies for you the right policies:
1) Age of the applicant: Your age is one of the important factor. People at younger age are believed to be less susceptible to diseases and so profiled as less risky by insurance companies. A younger individual generally charged with a less premium compared to people of older age.
2) Current health history: There isn't much which you can do with the genetic pool you come from. If the applicant has health history of serious illness and critical diseases like cancer, heart diseases and other chronic diseases can affect as a factor for determining the premium charged on you.
3) Intake habits: You lifestyle habits like smoking and drinking can have effect on the premium that you pay. Your smoking and drinking frequency is considered hazardous medically and also by insurance company. While making comparison of term insurance policies , you inputs on intake habits also help the premium calculator is finding the right policy for you. Different insurance companies value these factors in different way and give different weightages so they charge different premiums.
4) Sum assured: The sum assured applied for defines the monetary value of the insurance cover. It is actually what you pay and what you get in return. While planning for term insurance, you should be very clear about your liabilities and responsibilities. The sum assured is generally the amount of money which your nominee will receive as a death benefit if you are not there to take care of your loved ones.
5) Tenure of the policy: This is another important factor based upon which the premium calculator evaluates the various insurance policies. You should be very clear about the term which means the period till which the cover under the policy would stay in effect. Generally when the term is more for the same amount of cover you end up paying less compared to a short term policy.

How can you use Term insurance premium calculator?

Using the premium calculator is very easy .You need to furnish few specific details and then you are done and the calculator does the rest. It can reduce lot of your time if you otherwise done offline. It is generally a three step process and then you are done.
Step 1: You need to enter your personal details like date of birth, gender, marital status, annual income, number of children, any existing life cover etc .In some cases you might be asked about your smoking habits also .Do always declare the right information because if done otherwise your family members may have to face problems while settling claims. Your input of false information gives a right to the insurance company to deny the death benefit to your nominee
Step 2: In the second step you need to enter the amount of sum assured you are looking for .A correct evaluation of sum assured from your side can help you select the right policy. Other than the sum assured you have to be clear in mention the term your are looking for .In some cases you can be asked to define how would you like to the money to given to your family in case of your demise also.
3)Step 3:Once all the information is inputted the term insurance premium calculator evaluates all the policies from different insurance providers based upon the details furnished by you above in step 1 and step 2 and throws before you are list of recommended polices and their respective premium amount .
Now you can just select the right policy and buy it online .

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How To Evaluate A Term Life Insurance Plan?

One of the first mantras towards having a sound personal finance balance sheet is to get yourself financially protected . Every person have their own aspirations and goals, sometimes they are for personal in nature and sometime family aspirations are involved. Plus everybody needs to be prepared for the period when one stops earning. This can be achieved by disciplined savings but then what this financial protection is all about?

All these goals and aspirations can only be meet through savings but for savings there should be a regular flow of income to support that. But the reality is life and income are both not predictable but does this mean that one’s goals are also unpredictable. That is not the case in real life, goals and aspirations have to be meet under financial or life conditions. This is where the concept financial protection emerge.

A term insurance plan is actually the type of financial product intended to offer financial protection as discussed above. In case the bread earner of the family died way before his or her normal age then how the goals and aspirations of the people depend on him or her would be handled. Now the family doesn’t have the regular flow of income to support the disciplined savings to support the goals. Term insurance here act as an instrument to provide financial backup to the family and if properly planned can take care of all the aspirations and goals.Even in case if there is a loan liability on bread earner the same also be taken care by the term insurance plan. So from the above definition we can easily evaluate how a term life insurance policy is an important component of one’s financial plan.

Like any other financial product, term plans also needs to be evaluated in detail before they are bought from an insurer. A wrong decision might actually make the financial protection wall insufficient to handle emergencies as discussed above. The below list can created by experts can actually act as a tool to evaluate the right plan from the right insurer suitable to one’s requirement.

 

  1. As term insurance is a critical component of one’s portfolio so the reliability of the insurer offering the plan should be unquestionable. But it always advised to policyholders to read the terms and conditions of the policy agreement in details before buying. one. Every insurer offer a 30 day free lop period, so even if one is not satisfied once a plan is bought can ask the insurer to refund within that period and insurer should be fast enough to respond to the query.
  2. Every term plan have an extent to which they will cover. Though there is always a sum assured amount which restricts an insurer to adhere to maximum amount of claim which they can’t reject but there can further issues like accidental disability or critical illness cases which might not be covered under a plan .Though in a case like this , the bread earner is not dead but his/her capacity to earn diminishes and so the goals also gets affects..When somebody has taken a plain vanilla term insurance plan, the same might not cover things like this. So to improve the extent of coverage the policyholder can look for additional add on cover to handle critical emergencies of this nature. The term insurance which one has opted for should have options like this.
  3. Another important parameter based upon a term insurance plan has to be evaluated is the minimum entry age and the maximum coverage age. The maximum coverage age defines the age of the policyholder until which the insurer would be responsible to pay for claims of you family when you are not there. If one is smart enough to take financial decision at an early age, can opt for a term insurance plan at that stage. Lower the age lower is the premium that you pay. On other hand higher is the maximum coverage age, the more it is suitable for policyholder to buy term insurance policy like that. Various insurers have also started offering 100 years plan in which case it become more effective as a plan at an older age, though goals have already been achieved and you are in a state when there is not flow of regular income and a simple emergency can disrupt the savings reserve meant to handle issues relating to superannuation.
  4. The fourth most important factor is the claim ratio of the insurer which defines the probability of the insurer settling your family’s claims in case of your demise. This is a critical factor to judge a term insurance plan other the whole objective of buying a term insurance plan would go in vain.

Though the parameters discussed above can give one a fair idea of how to make term insurance plan buying decision in a much better way but it is always advised to take help of online term insurance comparison websites to compare different offerings from different insurance and identify the right plan suitable one’s specific need.

 

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Term Plan Vs Whole Life Insurance: Which is best to buy for insurer?

Slowly people in India have also started understanding the value around insurance. Don’t ever get confused by treating insurance with the regular investment on the same plane of reference.  One should understand that though both are necessary component of one’s financial plan and both are important for staying financially prudent but going by the real definition, insurance is related to building financial protection and investment is meant to help you grow your money.

Now when the objective is primarily around building financial protection, a term insurance plan should always be considered as the most effective solution. A Whole life plan on the other hand is a combination of savings option and an insurance option. In a term insurance plan, your beneficiary is supposed to get all the benefits associated with the plan only when you are not there and nothing comes as a extra benefit at the end of the policy term. The premium that you pay for a term policy is actually a service charge which you pay to the insurer to give you financial protection so if one is looking for just insurance , term insurance plans should always be considered because it is not only effective but also the cheapest option.

On the other hand considering the case of Whole life insurance plan, as said earlier it is a combination of both savings and insurance so what you pay as premium consist of two thing, one is the insurer’s fee to give you financial protection and other is the extra money which the insurance company charges you as a fee or as a share of interest and which depends on the pattern of investment the investment section of the policy follows. In case the investment section follows a Unit linked pattern of investment, then the premium contains a fee relating to fund management whereas if the investment section just follows  a traditional investment strategy as offered by traditional insurance policies like endowment  , the insurer share a part of the interest earned. This brings to one clear differentiation between term and whole life plan is the difference in premium. The term plans are very cheap as compared to whole life plans.

Looking at the whole gamut of financial needs of different individuals whole life plans can be very effective if one is looking for both, building a savings corpus which is powered by financial security. Whole life plans generally offers protection for a long period of time and your beneficiary not only gets benefits of associated with sum assured if the policy holder dies but also get a return on investment associated with money that has gone to the investment section of the plan.( Things One Should Ask Before Buying A Life Insurance Plan) The other most important benefit associated with whole life plan is one can always apply for a loan from the insurer against the money that has already been deposited with them but which is not the case of term insurance plan.

 

By definition term plans are effective only in of case of death of the policy holder but in case of permanent or partial disability of the policy holder the term plan are not very effective. In most cases one needs to pay an extra premium towards different riders to take care of specific needs and upgrade the term plan but in case of whole life plans most of these features come as a part of the overall offering by the insurer.( Common Myths About Term Insurance Plans)

So to conclude one should always look at term insurance plan if financial protection is the only objective which one needs to satisfy but but if somebody is looking at holistic investment vehicle supported with financial protection then whole life insurance plans is the most effective solution to look into. People should looking at a term policy should always start at an early age so that one can take full benefits of the same but if you are at your forties and you still don’t have an insurance plan in place whole life insurance are always advised as an efficient solution.

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5 Ways To Decrease Life Insurance Premium Without Compromising On Sum Assured

Any insurer offering life insurance plans look at some vital factors to decide upon what amount of premium to charged based upon a particular amount of sum assured.Some factors like age and sex might not be under your control but there are a lot of  which you can control and which can positively effect in reducing the value of the premium that you pay towards a life insurance plan.

At times if these controllable factors are not taken care off the insurer can either refrain you taking a policy or might charge an extra load to your regular policy premium.Lets look at the few of the important factors which you can control to keep a check on the life insurance policy premium amount.

 

a)Refrain yourself from excessive drinking and smoking:  These are two habits which one should always refrain from doing.Bad habits like these can have serious long effect on your health and your insurer will always have an interest in knowing about it. During the time of applying for a life insurance policy you are always asked to declare the details of habits like smoking and drinking. A very dependence on both on of these habits would make investing on you by the insurer a risky proposition for them. A heavy indulgence can even lead to rejection of your insurance proposal or you might have to pay some heavy extra charge on a particular amount of sum assured. It is always advised that should always read the terms and conditions of the policy in    details if you carry a similar habit. Unknowing a policy this may give full authority to your insurer to reject your claim

b) Occupational hazards: Your hobbies like scuba diving, boxing or skydiving or people in certain occupations are considered by insurers as dangerous proposition to insure. Some insurers may even refrain themselves from issuing policy even and some may put an extra load on the base premium which would make your plan very costly.

c)Current health condition:  You health is a basic prerequisite based on which your insurer calculates a premium. People with pre-existing bad health conditions are more prone to health hazards. This is will always lead to higher premium being demanded by the insurer. In fact in case of certain critical illnesses your insurer may even reject your insurance application. Policies taken on a later age considers health a primary factor . So it is always advised to take a good care of your health and take possible steps well in advance so that we can keep can avoid extra premium cost.

d)Longer Sum assured: A long sum assured means that your insurer’s responsibility to protect you increases and spreads over a longer period of time. This would always lead to a higher premium of life insurance policy. Like policies with higher sum assured may lead to insurer settling a higher claims and if it is supplemented by long tenure the risk on the insurer increase which would lead to increase premium. So while planning for life insurance policy one should build a complete understanding of the amount of sum assured best suitable for oneself and evaluate the term of the policy most suitable for them.

e)Buying a policy online rather than doing it offline : Insurers considers policyholders taking insurance buying decisions online are more knowledgeable and have better understanding of things. Online insurance customers are also considered to have easier access to right health care services so they are less prone to risks for which the insurer is responsible So it is always advised to take a life insurance plan online because it will be always a cheaper one compared to it offline counterpart.

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Why Claim Settlement Ratio Of Your Insurer Is Important?

Claim settlement ratio is very important component to consider when you are selecting a particular insurer for your term policy. As we all know that Term plans are an important component of anybody’s financial plan as it acts as an insulation for the family against all financial risks that might arise  in case the main bread earner of the family dies or becomes incapable of earning any more.

Before even buying a term plan the person should make a proper calculation regarding:

a)Goals of the various family members who are dependent on the bread earner

b)Any financial liability that already exists.

Other than the above factor one should also take inflation rate into consideration because the value of the goal today would definitely rise at the point when the same has to be achieved and which is a quite common scenario in any economic condition.

Now let’s understand why the claim ratio of your insurer is very important from the perspective of which plans to select and which not to. With the coming of online term plans and website offering Compare Term Insurance Plans online people generally get over persuaded by the premium prices and miss an important component like Claim settlement ratio which is also an important parameter to judge. Say you planned well for your term plan and your insurer doesn’t settle your family’s claim then all your planning would go to waste.

Looking at the recent data published by IRDA on claim settlement ratios shows some astonishing data. You might notice that leaving LIC and most of the state run insurers have a very low claim settlement ratio.

 

Insurance Provider

Death claims received

Claim settlement ratio

Death Claims Paid

Claims Pending

LIC

7,55,901

98.33%

7,42,243

0.50%

Max Life

9,223

96.95%

8,804

0.10%

Birla Sunlife

8,436

88.45%

8,055

1.70%

Tata AIA Life

3,873

96.80%

3,659

1.00%

Star Union Daichi

1,266

80.73%

1,191

0.30%

ICICI Prulife

12,309

96.20%

11,546

0.80%

PNB MetLife

2,466

85.36%

2,290

1.50%

Bajaj Allianz

20,661

91.30%

18,978

3.00%

Kotak Mahindra Life

2,686

89.09%

2,437

3.20%

HDFC Std

12,189

95.02%

11,031

2.30%

SBI Life

14,876

93.39%

13,303

3.20%

Sahara Life

778

90.30%

700

3.60%

AegonReligare

460

95.31%

413

0.20%

Canara HSBC

576

92.99%

516

3.10%

Exide Life

3,432

89.36%

2,955

1.60%

Reliance Life

18,142

93.82%

15,211

5.80%

Future Generali

2,160

90.26%

1,808

1.80%

Aviva Life

1,690

81.97%

1,396

0.50%

Bharti AXA Life

1,112

80.02%

900

2.90%

IDBI Federal Life

1,017

84.79%

736

4.30%

India First Life

1,655

71.87%

1,195

5.00%

Shriram Life

1,960

60.24%

1,307

11.20%

DHFL Pramerica

953

83.64%

545

6.50%

Edelweiss Tokio

119

85.11%

68

5.00%

 

The policies which you might find very effective from the perspective of your needs and which are very cheaply priced might have the lowest claim settlement ratios. As this particular ratio defines the amount of claim your insurer would probably settle when a claim is raise and sometimes defies the objective why the policy is bought.

So whenever you plan your term insurance plan do considered claim settlement ratio as parameter to decide which policy to buy and which not to.

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Things One Should Ask Before Buying A Life Insurance Plan

We understand the importance of financial security and that is reason by a life insurance plan is an important component of anybody’s financial plan. Managing one’s financial balance sheet is quite similar to managing a company’s financial balance sheet. You should be technically smart enough like a CFO to manage one’s personal financial status. We have our goals and income that help us fulfill them. We have our liabilities and we have to take care of them but stability of income is not always secured, your death or inability to create enough wealth can act as backburner for financial well being. This is where your life insurance plan comes as great help. But before we plan for a life insurance plan we should first try and answer few important questions.

1)  What is the amount of life insurance cover that you require?

Going by the logic of financial math we should have a cover amounting to ten times of the income that you earn every year. Say you earn Rs.8 lac per year and the income is responsible for taking care of your family’s financial requirement. Going by the financial logic you should at least have Rs.80 lac of life insurance cover to meet this requirement so that in case of your death the money that your family gets as a claim (Rs.80 lac) can at least put in a FD or something similar which gives them 8% interest( Rs.6.4 lac per year ) so that the same can take care of their financial needs. This is in fact the most important question one should try and answer.

2) What charges that you intend to pay?

  Life insurance plans have three types of options a) Pure term plan b) Unit linked plan and c) Traditional plan. Though in all the three options the policyholder get a insurance cover but when it has investment option like in case of Unit linked and Traditional plan you have to pay an extra cost. Term plans only insure that your family gets a sum assured when you are not there so you pay less premium for them but when we consider the case of ULIP or traditional plans since they insure a return on investment on maturity other than the sum assured post your death , the plans are always costly. While buying a life insurance you have should clear objective of protection and don’t try to mix protection with investment as there are much better options.

3) What is the tax benefits associated?

 A lot people buy life insurance plans only with the objective of availing tax benefits. All types of life insurance plans comes with tax benefits, the premium that you pay is considered under Section 80C whereas if there is money received at the end of the term, the money also becomes tax free under Section 10 ( 10D). Now the question is your life insurance buying objective is only tax savings then please try to re-consider your decisions. There are much cheaper options available. Though tax benefit is something normal but you should always have a clear objective of protection before you buy a life insurance plan.

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GST Impact On Life Insurance Policy Premiums Holder

GST or goods and services tax as popularly known is one of the most important regulatory change which is happening in the indirect tax space post independence.Aimed at getting away with multilevel tax structure which has been prevalent for so many years and building a new institutional structure for indirect taxes making business easy with one nation and one tax concept .The new structure came into force after multilevel discussions among the various stakeholders by a bill passed in the Parliament on 8th Aug 2016 and with final date of implementation as 1st July 2017.So from 1st day of July things are going to change completely  from the perspective of incidence, structure and calculation of indirect taxes and which would lead to the complete refurbishment of the existing tax structure in India.

 

Understanding the incidence of GST on life insurance:

We all understand the importance of life insurance and why it is required.Going by the basic definition of life insurance it is very important for any person who is a single bread earner for his /her family. In case of his/her inability to support his/her family in future due to death or any other event , the life insurance policy can take care of the financial responsibility of his/her family.

 

Based upon the requirement life insurance plans are further divided into two major categories:

1)Term plans: It is actually a pure financial risk cover based policy . The proposer of the policy pays money for premium and in case the person dies, the sum assured is paid directly to the nominee of the policy which can cater his/her financial liability

2)Endowment plans and Ulip plans  : This are specific plans which is a combination of a term cover and investment plans. It not takes care of the financial liability of the proposer but in case the person doesn’t dies he/she can also enjoy the return on investment post completion of policy term.

 

Post GST, things are going to change for life insurance policyholders a lot . Pre-GST the service tax rate that was effective on life insurance plans was 15% but post 1st July the there would be a hike of 3% which would directly affect the overall premium cost.But don’t get confused because of the hike you should keep in mind that different type of plans attract a different type of tax structure. You should keep in mind that:

1)In some types of plan the tax incidence fall on the overall premium that you play

2)In some plans, the tax incidence don’t happen on the overall plan, you pay tax on only some of the premium.

3)Taxation also varies with the premium paying term that you have opted for. One time premium policies might attract a different taxation compared to policies in which you are paying premium in a yearly or quarterly or monthly mode throughout the term of the policy.

4)The other important thing is that taxes may also differ depending on the year of the term of the policy.

Knowing about Post GST effect:

To understand about the changes that is going to come post GST implementation see the table below :

 

TYPES OF LIFE INSURANCE PLANS

TAXATION BEFORE GST

TAXATION POST GST

APPLICABILITY

Term Insurance Premium

15

18

On the entire premium amount

ULIP

15

18

On the premium amount minus the investment amount

Health Insurance Premium

15

18

On the entire premium amount

Add-on Riders Premium

15

18

On the entire premium amount

Periodicity - Single Premium

15

18

On 10 percent of the total premium. It means that the previous 1.5 percent of the total premium would be hiked to 1.8 percent of the total premium as per the updated GST rates.

Endowment Plan Premium (First Year)

15

18

On 3.75 percent of the total premium

Endowment Plan Premium (Renewal)

15

18

On 1.875 percent of the total premium

 

 

We should remember that all these new tax rate and its applicability would be for both new policies and also old policy renewals. 

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