Term Insurance Premium: Everything You Need to Know

Term insurance is a form of life insurance that provides financial protection for a specified period, called policy term, and it typically ranges from 5 to 30 years. It is one of the most affordable life insurance policies available; it provides a death benefit to your nominees if you die unexpectedly during the policy term. 

It is a pure protection plan that works on a simple concept of income replacement. 

Term insurance premiums are the payments policyholders make to insurance companies for coverage under term insurance policies. It could be monthly, quarterly, semi-annually or annually; policyholders can choose the various options. The premium amount differs from person to person since it is solely determined by various factors related to policyholders like age, lifestyle, health, job, sum assured, and others.

Insurance providers have actuaries employed to estimate appropriate term insurance premiums for individuals. An Insurance Actuary is an expert who assesses and calculates a suitable policy premium.

Talking about term insurance premiums, ACKO Life Flexi Term Plan is a unique plan that offers flexible coverage for your changing lifestyle at an affordable premium that is easy on your wallet. This exclusive term plan provides unmatched flexibility, too! Let's look at this ACKO term insurance plan and a list of things you can customise: 

Sum Assured or Coverage amount required to provide safety to financial dependents can change over a while as the financial dependents increase (kids) or financial obligations such as loans are taken (home, personal or education loans) or lifestyle changes as income levels change (you get promoted etc.)

What's more? Extensive life coverage at an affordable premium. Flexibility to customise policy terms, payment frequency, and payment options, change nominees, add riders, and more to accommodate changes across life.

Rahul married at 30 and bought a 1 crore coverage ACKO Flexi Term Life Plan plan for his spouse. His annual income is only 10 lakh, which shows that the premiums are highly pocket-friendly.

At 35, with two kids and a 50 lakh home loan, he increased the coverage to INR 2 Crore as his responsibilities increased. By 45, after repaying the home loan and accumulating a substantial income corpus for his kids' education, he reduced coverage back to 1 crore. 

This shows how ACKO Life Flexi Term Plan adapts to individuals' changing life circumstances.

A Term Insurance Premium Calculator is a tool insurance companies offer to help you estimate the premium you need for a term insurance policy. A Term Insurance Calculator is like a virtual assistant that helps you understand the cost of financially protecting your loved ones.

These Online premium calculators require you to input information such as age, sum assured, policy term, and lifestyle habits to estimate the premium amount. Here's how it works:

Basic Information: First, you'll provide some basic information about yourself, like your age, gender, and the city you live in. It helps the calculator understand your circumstances.

Financial Details: Next, you'll need to share details about your financial situation. This includes your monthly income, expenses, and any existing debts. Don't worry; it ensures your family has enough money to cover their needs.

Coverage Period: You'll also need to decide how long the insurance lasts. This is called the "term." Depending on your needs, it could be 10 years, 20 years, or more.

Sum Assured: How much money do you want your family to receive if something happens to you? The calculator will help you determine the right amount based on your financial details and the coverage period.

Premium Calculation: The calculator will then calculate how much you must regularly pay (usually monthly or yearly) to get the coverage you want. This is called the premium. It considers factors like your age, health, and the coverage amount.

Comparison: Some calculators may even show you quotes from different insurance companies so you can compare prices and choose the one that suits you best.

Remember, it is essential to note that the premium amount provided by the calculator is only an estimate, and the actual amount may vary based on several factors.

A basic knowledge of various terms related to the payment of term insurance premiums will be helpful for better managing your policy.

Premium payment frequency refers to how often an insurance policyholder must pay the premiums on their insurance policy. The payment frequency can be monthly, quarterly, or annually. Policyholders can select the frequency that suits their financial situation and budget.

Mode of payment denotes how the policyholder pays the premium to the insurance company. It can be paid online or offline. Online modes of payment include net banking, credit/debit cards, e-wallets, and mobile wallets. Offline modes of payment include cheques and demand drafts. Insurance companies also have online payment portals.

Most insurance companies offer auto-debit options for hassle-free payments to facilitate the ease of payment and ensure regularity. The amount is automatically deducted from the policyholder's bank account at regular intervals. This option ensures the policy remains active and prevents the policyholder from missing the payment.

In case the policyholder misses a payment, the insurance company usually provides a grace period for payment. The grace period varies between 15 to 30 days, depending on the insurance company and policy terms. During the grace period, the policy remains active, and the policyholder can make the pending payment without penalty. However, the policy may lapse or become inactive if the premium is not paid within the grace period.

It is essential to ensure timely payment to keep the policy active and prevent any inconvenience to the policyholder's family in case of their untimely demise. Opting for auto-debit options or set reminders is advisable to avoid missing premium payments.

Term Insurance offers several benefits, such as high coverage at an affordable premium, tax benefits, and financial security for one's family in case of their sudden demise. It is advisable to opt for a term insurance policy with a sum assured that provides sufficient financial cover to one's family. With online premium calculators and information on the insurer's website/app, it has become easier for individuals to choose the right Term insurance policy for themselves and their loved ones

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.