Here’s How a Term Insurance Premium Calculator Can Help You Plan Your Investments Better

It’s a fact well known that buying term insurance is a financial decision that you can never regret. After all, a term insurance plan ensures that your family is looked after financially in your absence. 

However, buying a term insurance premium comes with a lot of questions. Some of those revolve around term insurance premiums. Precisely, how much would the premium cost? Would it be affordable? Is there any way to know your term insurance premium other than contacting the insurance companies? 

All of these questions can be answered with the help of a term insurance premium calculator.

That said, you can calculate your term insurance premium using a term insurance premium calculator. One of the many benefits of using a term plan calculator is that it doesn’t only offer you clarity, but also helps you invest better. 

Wondering how? This article is here to enlighten you.  But before getting to it, let’s brush up on the basics of a term plan calculator. 

What is a Term Insurance Premium Calculator? 

We all know what is term insurance for, but do we know what a term insurance premium calculator is? It’s simple. A term insurance premium calculator is an online tool that determines the premium payable for a term insurance plan. A term insurance premium can be calculated on the basis of policy duration and premium payment mode (monthly, semi-annually, or annually). Being an online tool, it is simple to use and only requires an input of basic information such as name, profession, and age. Apart from that, term plan-related information such as policy tenure is also entered to determine the premium to be paid. 

How Can It Help You Plan Your Investments Better? 

A term insurance premium calculator comes with a lot of benefits. But the most significant of them all is that it helps you plan your investments better. Here’s how. 

i) Eases Financial Limitedness

Creating and maintaining a strong investment portfolio is highly recommended to multiply your wealth and generate a corpus – whether it is to increase your financial standing or support your family in times of need. Ergo, keeping a free hand at investment is always recommended. Unfortunately, most potential investors underestimate their financial capabilities. In other words, as savings can come in handy to protect a family against the financial catastrophes of the untimely death of the policyholder, most individuals limit their investment to preserve savings.

Term insurance can help ease financial limitedness by being an alternate form of financial security for your family. To put it plainly, being aware of the fact that your family is promised an amount in case something happens to you offers you the financial liberty to invest a portion of your life savings. 

That said, a term plan calculator can help you find the best most suitable term insurance plan to meet your family’s requirements. 

ii) Helps you Plan Out Your Budget

When it comes to investing, knowing how much to invest is a puzzling question for most investors. The amount that can be invested depends on your financial goals and financial capabilities. As a term insurance premium calculator offers you clarity by calculating the premium for you, you can plan out how much you can spare every month to pay for your term insurance premium. The remaining amount can be used to make investments. 

Explaining it through an example: For instance, your term insurance premium comes out to be INR 4000. And your monthly earning is INR 50,000. Out of which, 25,000 are spent on your basic and necessary expenses. Now after paying the term insurance premium of INR 4,000, you would have 21,000 left.  You can either keep it liquid or use some of it to invest in an investment instrument, say SIP. Let’s say you decide to invest Rs, 7000 monthly in SIP, and the remaining INR 14,000 liquid.

Nevertheless, the point is, having clarity about the exact amount you would be left with every month, can help you decide the ratio between saving and investing. 

iii) Helps Know How Much Money You Would be Saving on Taxes 

Additionally, as the premium paid towards insurance instruments is subject to tax benefits, you can save significantly on tax (up to INR 1,50,000). In other words, if your annual premium is less than INR 1,50,000, you don’t have to pay tax on it as insurance premiums are tax-deductible. This implies that you will be saving money. You can use this sum to invest in various investment or savings schemes that can help you build your ideal corpus at a much faster rate. 

Parting Thoughts 

Term insurance can never be a step in the wrong direction, especially when it comes to investments. It assures you, eases your financial limitedness, offers you clarity, and helps you save money on taxes. It’s an insurance instrument that you need to purchase if you haven’t already. So, if you are planning to buy one, you know a term plan calculator can make it easy.