An insurance premium is an amount you have to pay to your insurance company over a period in exchange for life cover and other maturity benefits. One of the most confusing things about buying life insurance plan is to estimate how much premium you will have to pay for much life cover.
The best option to determine your insurance premium is to use an online premium calculator which is made available by many reputed websites. However, to calculate the premium, you will have to determine some other relevant aspects beforehand as you have to fill them while calculating your premium.
You would have to look carefully at your financial status as to determine how much you can actually save on a regular basis. This would allow to you get a general idea of the premium amount you can afford to pay regularly to your insurance company without your insurance policy lapsing on account of your inability to pay them.
In the process of determining your premium, you will have to come up with the amount of cover you will need to fulfill all of your future needs. A general rule of thumb to calculate the insurance cover you will need is a follows:
If you are of age
- 25 to 35 years: Cover amount of at least 15-18 times your current annual income + outstanding loans
- 35-45 years: Cover amount of at least 10-15 times your current annual income + outstanding loans
- 45-55 years: Cover amount of at least 5-10 times of your current annual income + outstanding loans
Number of years
To determine how much premium you will have to pay regularly, you will have to calculate the number of years you want to pay the premium before the benefits start to kick in. If you are planning to pay the premium over an extended period, you will be required to pay a little premium amount on a monthly basis. Moreover, if you want to avail the benefits only after a few years, the premium cost will be on the higher side.
Choosing payout terms
Before estimating your premium amount, you will have to decide on the payout terms of your future insurance policy. The life insurance company provides you with the option of paying your family the sum assured as a one-time lump sum amount or as monthly payments spread over some years. Both of these options come with different premium amounts as it is easier for the insurance company to pay the sum assured as a lump sum rather than giving them as monthly installments.
After you have decided on the above factors, you can calculate your premium and choose an insurance policy which best suits your lifestyle and can provide you with a financially secure future for your loved ones.
Edelweiss Tokio Life‘s insurance policies can provide with cost-effective premium payments that you can afford without having to worry about low savings. We provide you with the option of adding cost-efficient riders like the waiver of the premium rider so that you can customize your policy according to your lifestyle with the added benefit of tax saving under section 80C and 10(10D).