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How Are Term Life Insurance Premiums Calculated?

Published On Sep 23, 2021

Term insurance policies provide financial assistance to the policyholder's dependents in the event of their untimely death in return for regular premium payments. A term insurance policy's premium is determined by a number of criteria, including your age, total coverage (amount assured), medical history, gender, lifestyle, and job. However, the rate for the same amount of term insurance coverage will differ from one insurer to the next.

What is Term Insurance Premium?

The regular or one-time payment you make toward your life insurance coverage is referred to as a premium. A life insurance policy is only valid if the premiums are paid on time and in accordance with the insurer's policies. In general, you have the choice of paying your premiums monthly, quarterly, half-yearly, annually, or as a single payment. When the policy's benefits are activated, a portion of the premium is paid out as a sum assured.

The cost of life insurance policies varies depending on the plans chosen and the applicant's qualifications. A younger, healthier person will usually be quoted at a lesser rate than someone in his or her 50s. A non-smoker will also receive advantageous premium rates, but a smoker would most likely be offered a greater cost. There are numerous factors that go into deciding your premium amount, and doing your own math can only get you so far. Here's where premium calculators for life insurance prove helpful.

How Are Term Life Insurance Premiums Calculated?

A term insurance premium calculator is a tool that estimates the amount of premium you'll pay based on the policy you've chosen and factors like tenure, age, sum assured, premium frequency, and so on. For their exclusive selection of products, these calculators are accessible from the official insurance providers.

A term insurance premium calculator often has the following fields where you must enter information.

  • Applicant's Age
  • Policy Name
  • Policy Term
  • Sum Assured
  • Premium Payment Mode
  • Rider Benefits
  • Lifestyle Choices (whether the applicant smokes and drinks or not)
  • Any Pre-existing Illness
  • Family History of any Diseases etc.

The entire form takes less than a minute to complete, and once you've entered all of the essential information and options, a premium estimate will be provided as a consequence. The result is only an estimate, as the insurer may request further information about your background, which could impact premium calculations.


A premium calculator is a tool that can be used to estimate the cost of your insurance. As your life progresses and you reach various personal and financial milestones, you can use the premium calculator to get a quotation for the additional life insurance coverage you'll need to protect your lifestyle and assets. These data, however, are merely illustrative. The actual premium amount is determined by the underwriter after a thorough examination of your profile.

Also read: 

Should You Buy Add-Ons With a Term Insurance Plan?

Important Benefits Of Life Insurance Renewal Process

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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