Building a secure future for your family is one of the biggest responsibilities you will ever take on. Family comes first in an Indian household, and so we work, save, and plan for our parents, spouse, and children so that they may live a life of comfort with no worries. However, life throws curveballs at us unexpectedly, and we are never able to prepare for such situations beforehand. To ensure your loved ones live safe lives regardless of what happens, you must have a financial backup plan.
By buying term life insurance, you build a financial cushion to protect your family from financial misfortunes. Term life insurance is one of the most practical and affordable ways to secure the financial independence of your family. But what stops you from making this important move? The jargon of the insurance world can overwhelm anyone, making it hard to answer questions like what sum assured do I need to choose or what premium do I need to pay. With the help of modern-day technology, you can now easily calculate what your needs are with a term insurance calculator. It takes just a few minutes to calculate your needs and leave behind all confusion.
What Is Term Life Insurance And Why Does Every Indian Household Need It?
Term life insurance is the purest form of life insurance. You pay a fixed amount of money (premium) to an insurance company for a fixed period of time and in return, the company undertakes to pay a sum of money guaranteed (sum assured) to your nominated family member in case of your demise during the policy period. It offers pure risk coverage, unlike endowment plans or ULIPs, which have a savings component built in along with life coverage. Thus, keeping the premium rates low.
In an Indian context, where traditional family values advocate for large families, term life insurance is a must. If the breadwinner of the family dies unexpectedly, the family faces not just the pain of losing a loved one but also financial strain since they have to face mounting monthly kitchen expenses, children’s school/college fees, rent, and other obligations. With an adequate term insurance cover, the family is able to receive a lump sum or monthly payouts to keep their lifestyle intact.
What Is A Term Insurance Calculator and Why Should You Use It?
A term insurance calculator is a free online tool that helps you calculate your sum assured and premium easily. You avoid the hassle of speaking to agents or relying on your own assumptions, which could be way off. Simply plug in your details and let the tool do the magic.
Getting your calculations done online ensures complete transparency, helping you avoid the mistakes of choosing a cover less than what is required or more than required, thereby choosing unmanageable premium rates. Moreover, getting the calculations done online itself saves you time, as well as the paperwork during the decision-making process. You can play around with the tool to find the best cover for you.
Important Inputs To Use The Online Tool To Calculate Your Insurance Needs
To calculate your insurance needs accurately using an online tool, you need to provide several personal details. These inputs are important as they define your current and future financial needs. Let’s understand the important inputs needed to calculate your insurance needs.
Your Current Age and Income
Your age plays a big role in deciding what premium you must pay. Since the risk of mortality is least when you are young and healthy, the premium rates are quite affordable. Your income decides how much cover your family may need based on their future financial needs.
Total Outstanding Liabilities and Debts
Do you have a home loan, personal loan, car loan or education loan in India? All these loans have to be cleared by your family in your absence and the tool helps you include them while calculating your sum assured.
Future Goals and Inflation
Your family has its own dreams, which can be realized only by having enough money to fund them. With rising inflation in India, the amount that you will need in the future will be way more than what you save today. The tool helps you include the amount of inflation and future goals to calculate your needs.
How To Buy Your Policy Using The Tool As A Step-By-Step Guide
Buying your policy is a simple process that you can complete from the comfort of your home. Simply follow these steps and complete your purchase.
Step 1: Input Your Financial Profile
Go to the calculation tool on a trusted insurance aggregator or company’s website. Fill in your basic details like age, occupation, city, income, and whether you are a smoker or not. Fill in the information accurately, as it may impact your eligibility for the policy.
Step 2: Set Your Required Sum Assured
As a rule of thumb, you need a sum assured of 10 to 15 times your income. However, this varies from person to person based on their financial needs. Simply move the slider to calculate the premium you need to pay based on your income.
Step 3: Choose The Right Policy Duration
Choose the right policy duration based on your needs. Ideally, you must choose a term that covers your working life until retirement (age 60 or 65) with no financial liabilities.
Step 4: Pick Your Preferred Payout Option
Insurance companies in India offer a range of payout options. You can choose the payout option you prefer based on your financial needs. For example, a lump-sum payout helps clear debts, while monthly payouts help meet monthly expenses like rent/mortgage and other daily needs.
Step 5: Compare Plans And Apply
Compare the best 3 plans available online for top Indian insurance companies. While comparing your options, remember to look at the Claim Settlement Ratio of the companies before filling out your application form and uploading the required KYC documents like your Aadhaar card and PAN card. You must also get a medical checkup done if required by the company.
Essential Tips for Indian Buyers Before Finalizing A Policy
Keep these tips in mind before you finalize your policy. Always disclose your complete medical history and ailments so that the insurance company doesn’t reject your claim later on. You may add additional riders like a Critical Illness Cover or Accidental Disability Cover for an additional premium, which could help your family pay for treatment in case you fall seriously ill or get into an accident.
When you make the right move to buy term life insurance after analyzing your needs using a term insurance calculator, you are investing in the financial independence, pride, and security of your family.
