Purchasing term insurance is an important part of financial planning, as it helps secure the family’s future in case of unexpected death. When choosing the best term insurance plans and sum assured to protect your loved ones financially, selecting the right premiums that fit your budget is a critical factor to keep in mind.
This is where online premium calculators come in handy. But how accurate are these tools in giving premium estimates for such high amount policies? Read on to further understand what factors impact actual premiums, why final rates may vary from online calculator estimates and tips you can follow to get more precise indicative rates.
Understanding Term Plan Premiums
The premium of a term insurance plan depends on several factors, such as:
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Tuesday 28 Jan. 2025
- Age: As you get older, the risk of death increases, so insurance companies charge higher premiums for older applicants to account for this added risk.
- Gender: Compared to men, women pay lower premiums
- Smoker/Nonsmoker: Smokers have increased health risks, so insurers charge them higher premiums due to the greater chance of needing a payout.
- Health: Insurers consider people with medical conditions to be at higher risk, so they charge higher premiums to account for the increased likelihood of a claim being filed.
- Amount guaranteed: More coverage means the insurer must pay more if you pass away. Thus, higher premiums are charged for policies with higher death benefits, such as a ₹1 crore sum assured.
So, premiums can vary from person to person, even for the same level of coverage.
Accuracy of Online Term Plan Calculators
Online term insurance premium calculators are more accurate in providing estimates if you enter the correct information. Reputable insurance companies make these calculators based on actual pricing and detailed information. However, the final premium may differ somewhat from the estimate as the calculators do not take some factors into account.
For example, the final settlement also depends on how the insurer will evaluate your health and family medical history. The insurance company may increase premiums if you have pre-existing health issues or a family history of serious illnesses. So, while term plan calculators for ₹1 crore policies are largely accurate, the final premium maybe 5-10% higher or lower than the estimate.
Tips to Get Accurate Premium Estimates
Here are some tips to ensure that the estimate from the online premium calculator is as close to the actual premium as possible:
- Be honest about your tobacco use when asked if you are a smoker/non-smoker. An incorrect declaration can result in your claim being rejected later.
- If you have existing health conditions, talk about them thoroughly, as clinical trials will reveal them later anyway.
- If you have a family history of serious illness, disclose this early, as it affects the bill.
- Compare quotes from 3 to 4 insurance companies before making a decision. This will give you a fair idea of the market price.
- While the best term insurance plan doesn’t have to be the cheapest, consider premiums before choosing.
- Opt for a higher sum assured only if you need that level of coverage. Higher coverage costs more in premiums. A ₹crore term plan also has higher premiums than a 50 lakh or lower coverage plan.
Online vs Offline Term Plan Buying
While online term plan calculators are pretty accurate, some prefer to buy the policy offline. The table given below will guide you through the significant differences:
| Parameter | Online Term Plan Buying | Offline Term Plan Buying |
| Premium Quotes | Can easily compare premium rates from multiple insurers using online calculators | An agent can guide on reasonable premiums as per income and ability to pay |
| Policy Features | Self-service model, so there is less guidance on add-ons and riders | Agent explains different features and riders to customise as needed |
| Query Resolution
|
Limited options for clarifying doubts
|
One-on-one interaction with the agent helps resolve queries |
| Buying Process
|
Faster purchase journey by eliminating agent middleman
|
Agent provides assistance through the purchase process |
| Price Discovery
|
Online quotes are helpful to benchmark whether the offline premium is competitive. | May get special discounts from agents unavailable on the online platform |
Conclusion
Remember, online term plan premium calculators are accurate if you enter the correct personal information. However, final premiums from insurers may vary by 5-10% based on specific evaluations. It is wise to be transparent regarding your health history and compare quotes across companies to your insurer. Buying plans online offers excellent comparison convenience; the offline option allows for one-on-one instructions from an agent. Look at both options for the best ₹1 crore plan per your budget.
