All You Need To Know About Endowment Policy Premium Calculator

Updated On May 18, 2021

Endowment plan is a life insurance plan which provides you with a combination of both i.e. an insurance cover, as well as savings plan. It helps you in saving regularly over a specific period of time, so that you can get a lump sum amount on policy maturity, if the policyholder survives the policy term. It's also useful for securing yourself and your family post-retirement or to meet various financial needs such as funding for children's education or marriage or buying a house

What are the Types of Endowment Plans?

There are 4 types of Endowment plans, which are mentioned-below-

Unit Linked Endowment Plan

Under Unit Linked plan, the insurance premiums are into multiple units allocated under a specific investment fund which can be chosen by the policyholders.

Full/With Profit Endowment

Under this plan, the basic amount which is the sum assured will be provided to the policy holder. This amount is guaranteed right from the start of the plan. However, the final payout provided is comparatively higher depending upon the bonuses announced from time to time by the company. The bonuses that are once declared become a part of the policy are payable in the event of death of the policyholder or maturity of the policy.

Low-Cost Endowment

This type of endowment plan was designed with an intention of allowing the policyholder to accumulate the funds which need to be paid after a specified time period, usually mortgage.

Non-profit Endowment

These types of endowment plans generally do not participate in the profits yielded by the company (bonuses). But, in order to make them competitive against other available products, companies offer guaranteed additions in such plans which help in generating returns for the policy holder.

Factors Affecting Endowment Premium Value

There are various factors that play an important role in evaluating the premium amount of an endowment policy. Below-mentioned are some crucial factors that endowment service providers usually consider while determining the premium amount of endowment policies:

Sum Assured
Sum Assured is the coverage amount the nominee or beneficiary receives on the unfortunate demise of the policyholder during the policy term. Higher sum assured usually means higher premium amount for the policy.
Age
Age is another critical factor in estimating the premium amount. Higher the entry age of the policyholder, higher the premium amount. The main reason behind this scenario is several health-related risks are associated with older age. Since the premium rates are most likely to increase with age, purchasing an insurance plan at a younger age is cost effective.
Gender
Gender is also a necessary factor for estimating the premium amount. Many insurers use the statistical model to calculate the longevity of the insured. As per various studies, an average woman lives around 5 years longer than an average man. Thus, the premium amount for women is lower as compared to men.
Tobacco or Smoking Habits
It is a common fact that people who do not have the habit of smoking or consuming tobacco products usually live healthier and longer than those who do. Smokers and tobacco users are more prone to several critical and life-threatening diseases like throat cancer, lung cancer. Hence, they pay a higher premium than the individuals who do not consume these products. People who have consumed any kind of tobacco product in the last 12 months are considered as tobacco users and have to pay more premium than non-smokers.
Medical History
The past medical history of an individual is also considered because it affects the premium amount. If in the past, any applicant has suffered from any serious or critical illness or is suffering from one at present, the premium amount will most likely go up. Life-threatening diseases or critical illnesses like cancer, heart problems, type-1 diabetes, liver problems etc. are tend to raise the premium amount.