Change is the only constant in life, and while you cannot predict what may happen, you can prepare for the future. Life insurance is one of those security measures that you can take to ensure financial stability for your loved ones in the event of untimely losses.

One of the most popular forms of life insurance is term insurance. Let’s learn more about it.

What is term insurance?

A term insurance plan is a form of life insurance policy that is available at a very reasonable and low-cost premium rate. Plans come with an option to choose a tenure of 10 to 99 years. Therefore, you can avail of a term insurance policy for a very short time or your entire lifetime.

The affordability of term insurance makes it a popular choice among people of all ages. The financial contract of term insurance states that if the policyholder passes away during the policy tenure, then the beneficiaries may receive the sum assured as a death benefit. In return, the policyholder must regularly pay the premium to the insurer to keep the policy intact.

Traditional term insurance plans are usually shorter and available at very low premium rates. However, there are different forms of term insurance available in the market that offer additional benefits.

Types of term insurance

You can choose from a wide range of term insurance plans that befit your needs and that of your family. Here are the most common types of term insurance available:

1. Increasing term insurance – With this plan, the sum assured of your policy increases every year by a predefined percentage or amount.
2. Decreasing term insurance – This type of plan decreases the sum assured of your policy every year. However, the difference in the sum assured is utilised to repay outstanding loans, mortgages and other forms of debt.
3. Level-term insurance – This is a stable form of policy that does not increase or decrease the premium sum assured or policy tenure in any way. The terms of the contract hold true till the demise of the policyholder.
4. Single premium term insurance – In this form of plan, you can purchase a policy by paying the premium as a lump sum amount in a single instalment and secure your family’s future.
5. Convertible term insurance – With this type of plan, you can convert your policy into a whole life insurance.
6. Term insurance with return of premium – Contrary to traditional term insurance plans, term insurance with return of premium guarantees that if you survive the policy tenure, then the insurer will pay you the maturity benefit.

You can choose the type of term insurance plan that benefits you and your family. While increasing term insurance can help beat the rate of inflation, a decreasing term insurance plan helps negate debts that may affect your family in the future. Each type of term insurance has its benefits. Therefore, you can evaluate the advantages of each type and choose the plan that most suits your needs.

What is a term insurance calculator, and how to use it?

Choosing the right kind of term insurance plan for you and your family Requires efficient financial planning. While opting for a higher sum assured can be beneficial to your loved ones, you have to pay the subsequent premium.

A term insurance calculator helps ease the process of choosing the right sum assured for the selected policy tenure so that your premium is affordable. A term insurance calculator is essentially an online tool that helps you calculate the total premium of your term insurance policy based on the variables that you choose.

The term insurance calculator factors in the following In the first stage:

1. Your highest level of education.
2. Your occupation.
3. Your net annual income.
4. Your area of residence with the pin code.
5. Your date of birth.
6. Your gender.
7. Your habits of consuming tobacco and related products.
8. Your personal details such as name, mobile number, e-mail address, etc.

Based on these factors, the term Insurance Calculator offers viable term insurance plans that are more suited to your needs. Select the type of term insurance that benefits you and your loved ones, and upload the necessary documents. Then, you need to furnish the following details in the next stage:

1. The desired sum is assured for the term insurance.
2. The desirable policy tenure.
3. The duration for which you would like to pay the premium.
4. What is the frequency with which you would like to make premium payments?
5. The method of payout for the death benefit.

The term insurance calculator will utilise the information you furnished to evaluate the total appropriate amount of premium that you may have to pay. The total premium will then be divided into equal payable amounts distributed over the premium paying duration. You can make adjustments to the variables based on the total calculated premium to arrive at an affordable number based on your financial planning.

Richard