Future financial planning is a necessary procedure to ensure your and your family’s well-being. One of the most important steps in this procedure is buying a term insurance plan. A term insurance plan ensures your loved ones get financial security in the event of anything negative occurring to you. But getting the best term insurance plan can be overwhelming if you do not know where to begin.
This is where a term plan calculator saves the day. It’s an excellent online calculator that makes your decision so easy. You could be new to the idea of insurance or simply want some new insights to ponder; whichever it is, this article will take you through it step by step.
What Is a Term Plan Calculator?
A term plan calculator is an online software that assists you in calculating your term insurance requirement. It considers various parameters like your age, income, lifestyle, financial objectives, and liabilities to give you the highest coverage amount and premium quotation.
Using a term plan calculator can help you:
- Save time and effort as you do not need to spend time making calculations yourself.
- Compare plans easily.
- Make an educated decision based on your budget.
Let us proceed with the step-by-step process of applying this tool.
Step 1: Define Your Financial Objectives
You must have some idea about your financial objectives before applying a term plan calculator. Answer these questions for yourself:
- How much finance would your family require if you were no more?
- Do you have any loans outstanding, like a housing loan or a personal loan?
- What are your long-term objectives, i.e., education of children or retirement?
Discovering these objectives will make you aware of the amount of cover you might need.
Step 2: Select a Trustworthy Term Plan Calculator
Not all term plan calculators are made equal. Choose a solid and easy-to-use one from a well-known insurer or aggregator portal. Make sure the calculator is able to compare plans and display correct results. Include about best term insurance plan choices when comparing calculators, as some are designed to bring top-rated policies to your attention based on your information.
Step 3: Enter Your Personal Details
Once you’ve chosen a term plan calculator, you’ll be asked to enter some basic information. These are typically:
- Age: Your age will directly influence the premium. The younger you are, the cheaper the premium will be.
- Gender: Premiums could be different depending on your gender.
- Income: Your annual income is used to estimate the cover amount so that your family’s lifestyle stays as it does now.
- Occupation: Certain jobs are riskier and can affect premium rates.
Make sure to enter the correct information to get the correct suggestions.
Step 4: Estimate Your Liabilities and Expenses
The second step is adding information regarding your liabilities and monthly expenses. Add:
- Outstanding loans or mortgages.
- Monthly household spending.
- Planned finances in the future, i.e., weddings, higher studies, or medical expenses.
By keeping these points in mind, the term plan calculator will give you a clear idea of how much coverage you need.
Step 5: Modify Policy Tenure and Coverage
The term plan calculator will enable you to select policy tenure and coverage amount. Here is how to make the choice:
- Policy Tenure: Ideally, the tenure would be for the years when your family will be financially dependent on you. For example, if you are 30 years old and will retire at the age of 60, a tenure of 30 years can be ideal.
- Coverage Amount: Experts recommend at least 10-15 times your income for annual coverage. Adjust this based on your individual needs and liabilities.
Step 6: Check Riders for Increased Protection
Riders are additional features that increase the coverage of your term insurance plan. Popular riders are:
- Critical Illness Rider: Pays a lump sum when diagnosed with a critical illness.
- Accidental Death Rider: Offers additional coverage in case of death due to an accident.
- Waiver of Premium Rider: Waives future premiums if you’re unable to pay due to disability or critical illness.
When using the term plan calculator, find out the effect of adding these riders on your premium and overall protection.
Step 7: Check Premium Choices
The calculator will present premium estimates depending on your inputs. Most calculators offer alternatives for:
- Regular Premium Payment: Pay premiums monthly, quarterly, or annually.
- Single Premium Payment: Pay the entire premium at once.
- Limited Premium Payment: Pay premiums for a limited duration, but the cover will remain for the full duration.
Select a plan that suits your budget and financial planning.
Step 8: Compare Plans
- A good term plan calculator should also enable you to compare insurance plans side by side. Consider the following:
- Premium cost.
- Policy benefits.
- The company’s claim settlement ratio.
- Riders offered.
This is the most crucial step to identify the ideal term insurance policy that suits you.
Step 9: Compare Tax Benefits
Term insurance is exempted under Section 80C and Section 10(10D) of the Income Tax Act. While utilising the calculator, ensure that you contrast how the premium and coverage correspond to your objectives of tax saving. Most calculators provide an approximation of the probable tax savings so that you can make a well-informed decision.
Step 10: Buy Now
After reading through and contrasting the policies, now you should make your final choice. Most of the term plan calculators offer a direct link to buy the policy online. Don’t go for the payment without thoroughly going through the terms and conditions.
Maximising the Use of a Term Plan Calculator
- Be Honest: Always use correct data for accurate results.
- Start Early: The sooner you buy term insurance, the lower your premium will be.
- Review Regularly: Life changes occur, so stop by occasionally to review our coverage needs, using the calculator.
Conclusion:
A term plan calculator is your best buddy when you need to discover the ideal term insurance cover. It makes a convoluted process easy, and even though you’re new, you can use it with no issue. With the help of this step-by-step guide, you can easily select the most suitable term insurance plan and plan the financial security of your family. Use a term plan calculator today, and set yourself on the path to financial peace of mind.
