If you want to buy any life insurance policy for yourself or your loved ones, you must have heard of insurance calculators. These are indispensable online tools, enabling you to make the correct decisions in choosing your plan, knowing the premium you have to pay, and taking care of many other aspects, like giving you estimates on the returns you may expect from your investments or letting you know how much money you will need to accumulate for your retirement. While getting an insurance policy, especially one that secures your family’s financial future, is a must, you should always check out online calculators that you have at hand and know how to use them. Here’s a brief guide to some of them.
Types of Life Insurance Calculators
You will find several kinds of life insurance calculators online. A life insurance calculator is a free online tool that aids the user in assessing the policy’s premium rate. There are many different types of life insurance plans on the market. An individual must pay the premium when purchasing a life insurance plan in exchange for the life coverage provided by the policy. The insurance policy’s premium rate is based on several variables. Thus, a person can estimate the policy’s premium rate with the aid of a life insurance premium calculator and compare different plans. Here’s looking at some of the options that most people commonly use.
- ULIP Calculator-
This calculator requires you to input the following things-
- What is the amount required to achieve your life’s goals?
- How long can you invest in fulfilling the same (in years)?
- What is the ideal division of your investments?
- What is your anticipated return rate?
You should do your homework before deploying investments in ULIPs. This calculator will help you calculate the maturity amount you can expect in the future, although please note that it is an estimate. The returns are market-linked hence there is no definite way of predicting the same. Once you choose the premium payment frequency, amount of the premium, return rate, investment type, and fund type, it will give you the expected amount. Some calculators for ULIPs also come with options for subdividing the amount into market-tied and risk-free options.
- Pension Plan or Retirement Calculator-
When you are looking to create a retirement portfolio, you can use an online retirement planning calculator. It requires you to input your monthly expenses, the years left for your service, the number of years after retirement for which you will need funds, and the expected inflation rate. It also takes into account the expected annual rate of return.
You can use this calculator in the following ways-
- Input the monthly costs, which are a crucial factor
- Input the number of working years, which directly influence the corpus amount
- The number of years you’d need funds to cover your monthly expenses after retiring
- Provide an anticipated rate of inflation only after doing your homework
- Provide an expected rate of returns
- See the amount you can get as your retirement corpus after staying invested for a certain number of years
The resulting amount can help you make a sound retirement plan and invest in various financial products to accumulate the desired corpus.
- Term Insurance Calculator
This is another vital calculator you can use online, as Term insurance is one of the most popular life insurance policies. To use it, you have to enter the following details:
- Annual Income
- Working Tenure
- Expected income increase (in percentage) over the years
- Percentage of income spent on your needs
You can use a term insurance calculator to determine the premium you will have to pay for your desired coverage amount. However, the coverage amount should be evident in your mind. For this purpose, you can use the above calculator inputs. This will give you an estimated coverage amount, and you can then enter the same to know more about the premium amount payable at your end.
Benefits of Life Insurance Calculators
The use of a life insurance premium calculator provides many advantages. Let’s examine a few of these advantages:
Saves Time
In addition to being simple to use, a life insurance calculator also saves a lot of time and work. There are no actual documents that you need to submit to receive the premium quotes. One can obtain the premium amounts of several plans in a few minutes by providing a few simple facts, such as annual income, name, and date of birth. An individual can buy the policy online without the assistance of the agents by making an informed choice.
Comparison of Different Plans
An individual can compare a wide range of policies provided by the insurer with the help of a life insurance calculator. They can also change the input variables to compare different premiums for the same plan to see which one fits in their budget. Additionally, they can compare the advantages of multiple plans and select the best life insurance policy as per their requirements.
Simplifies Budgeting
An individual can obtain a good sense of how much premium they will have to spend to get the desired coverage by using a life insurance premium calculator. As a result, it aids in developing a sound financial budget.
Cost-Effective
The life insurance premium calculator is available online for free. It is an important part of the process of buying a policy online. Additionally, many insurance providers give customers who purchase insurance online enticing discounts.
Gives A More Accurate Idea Of Coverage
An individual can estimate how much life insurance they can receive for the provided budget with the help of the life insurance calculator. The person can assess whether the life insurance policy they have chosen will be sufficient to safeguard their family financially in the event of anything.
Conclusion
There are many kinds of calculators that you can use online. These are only three indicative options that you can use to get a better idea. Online calculators are always helpful since they enable better decision-making at multiple levels. You can invest only after having worked out everything from a logical and financial standpoint. Although many of them vary across insurers, the basic principles and calculation formulas remain the same.
