How does a term insurance plan calculator work?

It is a known fact that term insurance spans a long period of time. And, you have to pay premiums for quite some time to keep your policy in force. So, it is important to be mindful of your budget when selecting a term insurance policy, so you can maintain your commitment over the long term without financial strain.

A term insurance policy’s premium is a crucial factor to consider before buying the policy. And, various factors affect the premium rate. Knowing the premium upfront will help you decide if you can afford the policy and what payment schedule works best for you. It is common for people to talk with their insurance agent to get information about premiums. This is similar to shopping for a car, where prospective customers often rely on dealerships to provide information about pricing and availability.

However, with today’s technology, you no longer need to rely on agents or advisors to find out about premiums because you can find all the information online, with the help of a term insurance premium calculator. It is a handy online tool that can help you calculate the premium yourself. With it, you won’t need to spend time or energy on tedious manual calculations.

So, what is a term insurance premium calculator? How does it work? Let’s see!

What Is A Term Insurance Premium Calculator?

Term Insurance Plan

When you buy term insurance policy, you must pay premiums regularly for the insurer to provide financial coverage. Depending on your convenience, these premiums can be paid monthly, yearly, quarterly, or half-yearly. If you want to select the right policy for your needs, you should check if the premiums payable are within your budget.

A term insurance premium calculator is a tool that helps you determine the premium amount you will have to pay for the chosen coverage and plan benefits. Term insurance premiums are based on various factors including age, gender, income, health status, etc. This tool allows you to compare term plans at no cost and choose the one that best suits your needs.

How Does A Term Insurance Plan’s Premium Calculator Work?

A term insurance premium calculator will calculate the premiums based on the information you enter, such as your age, income, gender, policy tenure, coverage amount, etc.

By using this tool, you can get accurate estimates of the premiums payable for different term insurance policies. Moreover, you can add or remove riders, change the tenure, increase or decrease the sum assured, or choose features/benefits – and see how these changes affect premiums.

Factors Considered For Term Insurance Premium Calculations

There are several factors that influence the calculation of a term insurance premium, including:

1️⃣Sum Assured

You pay premiums based on the amount of financial coverage you choose. A higher sum assured means a higher premium. The best way to secure your family’s financial future is to choose adequate coverage.

2️⃣Policy Duration

This is the period of time during which your policy is active. A policy’s tenure influences your premiums as well.


Age plays a critical role in premium calculations since rates vary according to how old you are. Investing in term insurance at a young age is a wise decision – particularly if you have financial dependents or unsettled loans/liabilities. As you age, your premium increases. The reason for this is that when you get older, you become more vulnerable to illnesses – so the insurer views you as a high-risk individual and charges a higher premium.


Gender specifications are considered when calculating premiums online. Well, it is a long-known fact that women tend to live longer than men. According to the U.S. Census Bureau, women’s life expectancy is projected to reach 87.3 years by 2060, compared with 83.9 years for men1. Since women are more likely to survive higher policy tenures than men, insurers charge them lesser premiums compared to men.


Your occupation plays an important role in determining the sum assured and premiums. In general, premiums are higher if you work in a riskier occupation. A bus driver, for example, may have to pay higher premiums than an MNC employee.

6️⃣Medical History

Insurance companies also consider your and your family’s medical history when calculating your term insurance premiums. Genetic, pre-existing and other medical conditions can result in higher premiums or even rejection of your term insurance application – if the insurance company considers you risky to cover.

7️⃣Lifestyle Choices

Lifestyle choices are important factors that insurers use to evaluate your risk profile. If you have the habit of smoking or drinking or using drugs, then you are more likely to contract medical conditions and have a shorter lifespan. Consequently, you have to pay higher premiums – due to the risk involved.

8️⃣Benefits And Features

If you opt for more features or benefits, your premiums will increase. For instance, you can upgrade your sum assured to keep up with growing responsibilities or rising inflation – by using the increasing cover option. Under this option, your plan’s cover amount increases by a specified percentage until a predefined limit is reached. Such features will result in higher premiums.


You can add riders to your policy to enhance coverage by paying an extra premium. They get triggered in the event of specific circumstances. If you choose to add riders to your term insurance policy, your premiums will increase.

Wrapping up!

It is not so difficult to select a term insurance policy that fits your budget, thanks to the term insurance premium calculator. It assists you in comparing the premiums of term insurance plans. It is a time-saving tool that is absolutely free to use. So, use this tool to find the right term insurance that will provide the right level of protection for your loved ones – at an affordable cost.