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Steps to Calculate Insurance Plans by Life Insurance Calculator


Every person needs have a term insurance plan to secure the future of their loved ones. However, the insurance buyer needs to pay premiums every month. An insurance premium is defined as the money that is charged by an insurance company for their coverage. Nevertheless, differences arise when the premiums actually charged is different from insurance premiums that are quoted.

This difference between the actual charge and the quote is determined by the premium calculator. Do you know how the insurance premiums that are charged by an insurance company are determined? The process is done by using a premium calculator.

A Life insurance premium calculator is used to determine the mathematical and statistics calculations that are actually carried by the underwriting department of any insurance company.

How the premium determined using the Premium Calculator?

  • The premium charged from a customer is assessed by the statistical data based upon the health, age and history of the customer.
  • A young person aged 18 years and who rides a lavish red sports car is likely to pay more premium than the person who is 50-years-old and drives a four-door sedan.
  • A person applying for insurance has to undergo underwriting process.
  • So, what is the underwriting process? It entails investigation into the various familial diseases, motor vehicle reports and analysis of different reports like the medical information bureau.
  • Once the information is analyzed and gathered, they are judged by a statistician who are called actuaries and are hired by insurance companies.
  • Once the data is analyzed, the actuary tries and determines how the insurance applicant will go about making the claim of the policy.
  • The premiums are usually high when the probability of claims is higher.
  • The actuaries use a premium calculator for studying and examining mathematical data and then compiling the same like “mortality and sickness” table. Then, using the same the actuary predicts prospective losses that are usually caused due to sickness or death.
  • Premiums are charged based on the results of analysis of information and data that are generated from sickness and mortality tables of individuals by using a premium calculator.

Every life insurance company has a premium calculator that helps them to calculate the premium for a life insurance policy with maximum ease. The best part is that you can use the calculator to assess your premium rates online without any hassle.

While using the premium calculator it is very crucial to keep in mind the various aspects that decide the premium rates

  1. The age of the applicant
  2. The present health history of the term plan insurance buyer
  3. Policy Tenure
  4. Intake habit
  5. Sum assured

In order to avail most benefits from the plan, the insurance buyer should check these important characteristics before purchasing it.

  1. The most significant step that the insurance buyers should take while buying a term plan, is to limit the amount that would be adequate to cover the needs of your family in case of the policyholder demise. Thus, the policy holder should confirm that the availed coverage is satisfactory enough to fulfill the basic liability of the dependents.
  2. According to one’s own choice he/she can choose the policy tenure from the provided option of 5, 20, 25 or 30 years. As the term of the plan plays an important role in the implementation of financial plan the buyer should wisely choose the right policy term.
  3. Once you fix the tenure of the policy, so check the wide options of term insurance policies available in the market and choose the most beneficial plan in an economical rate. By comparing different plans online and segregating the premium rates you can choose the most profitable plan for yourself.

By keeping all these aspects in mind, you can make the best use of a premium calculator and choose the most comprehensive plan for yourself.