How Does the Term Insurance Premium Calculator Work?

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The term insurance premium calculator is specifically designed to allow the consumers to evaluate the probable cost of insuring their live. There can be different types of term insurance premium calculators. We may encounter the following two simple online premium calculators majorly:

  • Calculators with sum assured as basic input
  • Calculators with income as basic input

The first category of calculators allows the users to decide the sum assured.These term insurance premium calculators generate premium estimates based on the age and sum assured chosen.

Term Insurance

The second category of premium calculators ask for the income range (usually annual) of the proposer and generate a sum assured for the user before arriving at a premium. Annual income of the proposer is one of the criteria limiting the maximum cover anyone can opt for. Thus, these calculators will offer a far better estimate of the possible cost and cover available to you.

What Affects Your Premium Estimates?

Apart from the chosen or arrived sum assured, term insurance premiums are affected by the following factors:

  • Mode of payment (monthly, annually, single premium, etc.)
  • Tobacco consumption or smoking habit
  • Medical history
  • Physical health or disability
  • Hobbies and occupation
  • Additional covers selected

Is Term Insurance Premium Calculator Important?

Calculator not only provides an estimate for premium but also helps in comparing different policies for their cost and benefits.Also, this sum-assured and premium estimate will continue as your basic premium and insurance covers for the underwriting process.

Unless there are exceptions to consider, the insurer will offer the same cover and premium to you. Thus, this calculator is not just an estimator but an important part of your whole life insurance proposal in the online buying process.

Steps to use the Premium Calculator?

The whole process to calculate the premium on insurance can be calculated in three steps that are as follows:

  1. Enter personal information such as date of birth, name, gender, marital status, annual income and number of children. In addition, people may also have to answer whether they are smokers.
  2. Specify the amount of insurance or your annual income.
  3. Select the additional benefits like accidental and disability cover or critical illness cover.
  4. The calculator will offer multiple premium estimates based on:
  • Mode of premium payment
  • Mode of claim settlement; i.e. lump-sum or regular or both

The calculator plays an important role in eliminating the ambiguities while comparing the policies.

Advantages of Online Life Insurance Premium Calculator

The calculator is instrumental in comparing the plan of different insurance policies to zero in on the best possible choice. Some of the prominent benefits are as follows:

Save Time

It goes a long way in saving precious time as the calculation had to be performed manually. In order to get premium quotes, people do not have to submit hard copies of thee documents. Instead, the information is filled in virtually to get the best possible estimation available in the market. People can use the calculator to determine the plan and purchase the insurance without the help of agents.


Best place for using the calculator is while comparing the shortlisted term insurance plans in the final stage of buying. It’ll give you a clear cost-benefit picture, and help you arrive at a decision faster.

Low Cost

Majority of companies offer huge discounts to the customers if they are buying the policy in the online mode. Therefore, you can use the virtual calculator to find the suitable insurance package for the family members. In short, people can save a lot of money due to low cost alternatives.

How Reliable are Online Calculator Premium Estimates?

Online term insurance premium calculators, available at the insurer’s website are accurate and updated with latest quotes. However, third party aggregators and websites may have some lags. Thus, you should always rely only on insurer’s estimates for your life insurance quotes.

Even though the calculator estimates are accurate, it is possible that final premium cost is different after the proposal. This happens since premium calculator only considers a limited standard information, while more detailed information goes in the proposal form.

Thus, however reliable calculator’s initial estimates are your final premium may vary after processing of the proposal.

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