Term insurance plans are a financial tool that can help you protect your family’s financial future even if you can’t be there. It’s a contract between a person and an insurance company. The insurance company agrees to pay a certain amount of money, called the sum assured, to the person named as their beneficiary when the person passes away.
In exchange, the person has to pay the insurance company regular amounts of money, called ‘premiums.’ And the sum assured benefit amount is one of the most important things determining how much the person has to pay in premiums. Now that you truly understand term insurance, how do you figure out how much sum assured your family needs? Are there any term insurance tax benefits you can use to your advantage? Since the lives of your family are at stake, you can’t just make a decision based on guesses or assumptions, can you? That could cause a lot of problems in the future.
A term insurance calculator can help with this. It lets you figure out how much life insurance you need based on what you put in. Doesn’t that sound interesting? Let’s look at this unique tool in more detail.
What is a calculator for term insurance?
As you’ve seen above, a term insurance premium calculator is a financial tool that lets you figure out the total amount of life insurance coverage you need with a term policy. The tool helps you make smart decisions by providing you with a rough estimate of how much sum assured you would need to choose.
As soon as you put in your information, the calculator gives you a real-time estimate of the premiums. And finally, you can find term insurance calculators online, which are also free to use.
How to use a calculator to buy term insurance?
You can find a term insurance calculator online that you can use to figure out how much life insurance your family will need to be financially safe. Here’s how a calculator for term insurance works:
- First, go to your insurance provider’s website and find the page for the term insurance calculator. You can find it in the special ‘tools’ section.
- In the text box, type in your annual income. You can also use the slider if you want.
- Then, type in the years you want to work in the future.
- Enter the expected percentage increase in your income.
- And finally, enter the percentage of your income spent on yourself and not on your family.
- As soon as you provide information for all of the above fields, the calculator should give you an estimate of how much life insurance coverage you should get with a term policy.
Perks of using a term insurance premium calculator before getting a term policy
Now that you know how to use it take a look at the various benefits that a term insurance calculator provides:
- It saves a great deal of your time, and saves you a lot of work: Trying to figure out how much life insurance you need by hand takes a lot of time and effort, and you could always make a mistake. Using a term insurance calculator saves you a lot of time and work, which is one of the best things about it. You must type in the numbers, and the calculator will give you the answer.
- It gives you an estimate: A term insurance calculator is usually made to give you a conservative estimate and err on the side of caution. As long as the values you put in are correct, the answer is likely to be correct as well.
- It allows you to make informed decisions: Getting a term insurance plan without knowing how much coverage your family needs could hurt them more than help them. It can even leave your family without enough money to live on.
On the other hand, a term insurance calculator can help you decide what to do by giving you a better idea of how much life insurance you will need under your policy.
- It allows you to plan better: Term insurance calculators help clear up a lot of the confusion. Once you know just how much life cover your family would need, you’re instantly put in a position where you can better plan your budget and finances. With the life cover set, it’s easy to figure out how much you’ll have to pay for the plan’s premium and plan for it in your budget. It also helps you find term insurance tax benefits and plan accordingly.
As you can see, term insurance calculators are extremely useful tools. So, if you want to buy a term insurance plan soon, you should use a term plan calculator first. It can make your work a lot simpler.