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How to Calculate Life Insurance Premium?

Calculate Life Insurance Premiums

An online insurance premium calculator is a tool that estimates the amount of insurance premium you will pay based on the policy you choose and other factors such as your age, policy term, premium frequency, and sum assured, and so on. The majority of these tools and online insurance premium calculators are also available on the insurance companies' official websites. In most cases, you'll need to fill out the following information in the online insurance premium calculator : policy name, policy holder's age, sum assured, premium frequency, tenure, and riders.

What is Life Insurance Premium?

A life insurance premium is a single or multiple periodic payments made by a policyholder towards his or her insurance policy. A life insurance policy is effective if the policyholder pays premium in the manner as specified in the policy document. The majority of policyholders choose to pay premiums annually, half-yearly, quarterly, or monthly and get returns/cover as per the policy chosen.

The premium for insurance varies, which is determined by the plan chosen and the individual's age, health condition, etc. Most of the time, a young and healthy person will pay a low premium for the same term plan as someone older. Besides these, numerous other factors play a role in determining the premium for a life insurance plan, which is why one should know how to calculate insurance premium.

Benefits of Life Insurance Term Plan Calculator

An online calculator benefits in many ways that can solve most of your queries like how to calculate insurance premium, how to calculate premium without tax, how to calculate sum assured and so on. So, let’s take a look at the benefits of an online insurance premium calculator.

  • Error Free Calculations : There are extremely few errors in the premium calculation procedure because it is automated.

  • The Easiest Method of Calculating Premiums : It estimates the amount of premium that needs to be paid without the need for human calculations.

  • To Determine the Actual Cost : It determines the precise amount that needs to be paid to cover one's life. This provides a precise sense of how much he or she wishes to spend on life insurance, allowing cautious financial preparation.

  • A Tool for Comparing & Choosing the Most Appropriate Insurance Policy : This is one of the most straightforward methods for comparing different term insurance policies. The comparison provides a clear picture of what to choose and what to avoid. This provides a clear idea of the policies that should be pursued.

How to Use an Online Insurance Premium Calculator?

To calculate the premium of an insurance plan, most online insurance premium calculators follow the steps below (Steps may depend upon the insurer):

1st Step : The buyer needs to enter details like Applicant's age, gender, number of children, annual income & marital status.

2nd Step : Enter your expectations from the policy-

  • Policy's type or name
  • Premium payment term
  • Sum assured
  • Additional riders that a person might like to include in his or her base plan.

3rd Step : Filling out the form takes only a few minutes, and after you've entered all of your information, the projected premium figure will appear.

4th Step : Compare the plans and go ahead with the best option.

Factors Influencing the Life Insurance Rate

The amount paid to obtain a life insurance policy is referred to as the insurance premium. There are several factors that determine life insurance premiums.

  • Sum Assured : The bigger the sum assured, the higher the premium that must be paid.

  • Age of Applicant : The policyholder's age determines the mortality rate for that age group. This is one of the most important criteria in determining the policy's premium. The younger the policyholder, the more likely it is that the insurance company will provide a reduced rate. The key reason for this is the reduced likelihood of claims.

  • Habits and Health Records : Unhealthy lifestyles, such as drunkenness and smoking, result in a higher insurance premium. In other words, people who engage in bad habits like smoking and drinking must pay a higher premium than those who maintain a healthy lifestyle.

The Way Forward

It never hurts to research the plans you are thinking to buy. However, whether you are looking to calculate the sum assured or finding out how to calculate insurance premium, it would be great to use an online insurance premium calculator as it is error-free and gives you an accurate calculation as per your requirements.


*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.