Term Plan is one of the most popular types of life insurance policies in India. It helps you secure your family’s financial future without burning a deep hole in your pocket. If something happens to you, the insurer pays the death benefit to your family, which they can use to meet their everyday expenses and be financially independent.
The key to buying the best term plan is to choose the right sum assured. The amount must be good enough to help your family take care of their needs for a few years, or at least the dependent members can stand on their feet. At the same time, the premium for the policy must be affordable and fit within your budget.
So, how do you decide how much coverage you need and how much it would cost? The best way to figure this out is to use a term plan calculator. It is an online tool that allows you to compute the exact premium payable for the sum assured and the policy tenure you choose.
Insurance experts recommend that the term insurance calculator is a reliable tool that can help you make an informed term insurance buying decision. However, you must know that the tool does not give you accurate numbers. The final premium amount you pay would depend on the insurer’s assessment of your profile and underwriting process.
Therefore, if the premium value differs from the value suggested by the premium calculator, don’t be surprised. Just like the example we mentioned above, there are various cases when the term insurance calculator may not be helpful.
If you have a pre-existing illness or have a history of diseases
Term insurance calculators compute the premium based on basic data like the sum assured and policy tenure you choose. However, it does not consider your health condition, which is a critical factor that the insurance companies consider while determining the risk coverage and the premium amount for your policy.
So, if you have any pre-existing illnesses or if your family has a history of diseases like cancer, diabetes or heart ailments, you would be a high-risk customer in the eyes of the insurer. To compensate for the risk, they take in offering your life cover at a higher premium than others who are healthy and have no medical history.
If you are in a high-risk profession
When you compute the term insurance premium using the online term plan calculator, you don’t have the option to enter details of your profession. However, insurance companies consider certain professions such as the armed forces, merchant navy, diving, and mining riskier than others.
So, if you are involved in any of these professions, you may be required to pay a higher premium than what the term plan calculator results show.
If you play certain sports
You are wondering what sports have to do with the term insurance premium, aren’t you? From the insurance company’s perspective, it is critical in determining the premium amount. The sports that you enjoy playing or consider a hobby could be a risk factor that increases the chances of you filing a death claim. Such sports include:
- Scuba diving
- Bike racing
- Climbing and trekking
How much impact these sports have on term insurance premium rates depends on the insurer’s assessment of how dangerous they are.
While a term insurance calculator is an excellent tool that you should use to get an idea of the premium payable for your term plan, it may not always serve the purpose. But the ideal purpose of using a term insurance is to give you an idea of the payable premium. You can always connect with your term insurance vendor and get the right cover by being transparent about your habits, illnesses, and other critical information.