6 Factors That Can Affect Your Term Insurance Premium – Credihealth Blog


The financial protection of loved ones apart from oneself is a recurrent concern across all families and people. Insurance plans have slowly grown into favour as essentials for people because of changing lifestyles and better financial literacy amongst people. To make small payments in order to prepare for the future is a simple activity, but it can greatly influence the lives of those dependent on it when the time arrives. 

Since the insurance market is replete with several plans to choose from, with additional features one can add the process of choosing one plan can become tedious. Therefore, tools like term insurance calculator can streamline the decision-making process by calculating some expected premium expenses and projected coverage amounts. 

Term Life Insurance Calculator

A term insurance calculator is an online tool that helps a person to get an approximate quote as to the premium investment they would have to make for towards their term insurance on the basis of their income, age group, monetary liabilities. A term insurance calculator can also calculate the required amount of coverage under the ideal plan a potential policyholder ought to avail according to the aforementioned metrics as well. These tools can be found on the websites of insurance providers to be used for free with the options and fields already loaded with plan options. 

Different factors such as lifestyle, health conditions, age, and income determine the choice of a term insurance plan. A term life insurance calculator also uses these fields to calculate projected premiums for a plan. 

Let us look at the things that influence your term insurance premium under a term life insurance plan:

  1. Age: It is a misconception that one only requires term insurance when they are well past their younger years and only once they have dependents such as a spouse or children. A detriment of buying term plan insurance at an older age is the high cost of premiums, as a person is most likely to have illnesses or ailments at this age rather than at a young age. A term life insurance calculator also asks for the policyholder’s age while calculating the approximate premium, as it is an important factor for insurance providers. 

Buying a prolonged term insurance plan in one’s mid-twenties is the ideal decision, as the cost of premiums is significantly less and one can alter their terms of coverage once they have major life developments such as a marriage or a child. 

  1. Lifestyle Habits: The first step that a term life insurance calculator requires the potential policyholder to enter in order to calculate premiums is their apart from their Age, Gender, Annual Income is if they have tobacco dependency. 

These factors are essential in determining one’s approximate premium costs, if person hopes to have significantly affordable premiums they must choose to live their life in the healthiest way possible. Being a non-smoker, in their mid-twenties, or a relatively balanced lifestyle with little stress. 

  1. Family Size: One of the first things a prospective policyholder should do, is determine their net expenses as an individual along with that of their family before choosing a coverage under any term insurance plan. A policyholder should opt for a term plan insurance that goes at least 8 times beyond their foreseeable family expenses, especially if they are the sole income earner. If a policyholder has a larger family which requires more coverage, their premium costs will also be higher. 
  2. Chances of Hereditary Illnesses or Previous Illnesses: One of the factors insurance providers gauge is if the policyholder has any existing medical conditions, or if their family has a history of illness. Since illnesses require additional coverage, the premium costs for such policyholders will be higher. 
  3. Gender: Insurance providers check the life-expectancy of the respective gender of the policyholder while choosing a plan. A term life insurance calculator also calculates the projected premiums on the basis of gender being one of the fields. Since women have a higher life-expectancy, they may have lower premium costs. 
  4. Policy Tenure: The choice of tenure that one makes also influences the premium costs paid over the years.  A term insurance calculator also asks for this field as a calculating metric. It may be cost-effective to buy a shorter term plan with premiums, but once they complete their tenure, the age of the insured person increases which will increase the cost of premiums at the time of the renewal of the policy. 

The benefits of term insurance enables the coverage of the needs of the insured and their dependents through an assured benefit sum in the event of the policyholder’s demise. However, purchasing a term insurance plan can be a daunting process, but with the correct tools and resources at hand, a person can avail the best of term plans and be secure about their future. 

Disclaimer: The statements, opinions, and data contained in these publications are solely those of the individual authors and contributors and not of Credihealth and the editor(s). 

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