These days, it is hard to say which day could be your last. Even healthy living no longer supports a long life. In such crises, the only ones who suffer emotionally, physically and financially are the family members you leave behind. While you may pass on to a higher realm for joy and peace, they need a safety net to protect them, especially if you are the primary wage earner. That is why life insurance is such a remarkable and needful solution.
How do life insurance policies provide a safety net for the family?
Life insurance plans are essential financial safeguards that protect your loved ones against unprecedented financial burdens after your demise. These are financial contracts that you purchase from an insurance provider for the future wellbeing of your family.
Life insurance contracts state that if you pass away during the policy tenure, the insurance provider will pay the sum assured (coverage) to your beneficiaries as the death benefit, provided you pay the premiums on time.
The life insurance policy is a safety net that assures you that in the event of your untimely demise, your loved ones won’t need to bear huge financial burdens without any help. Instead, they will receive a lump sum payout or monthly payments to handle their basic necessities as well as pursue their goals with ease. They can use the money to repay debts and liabilities, pay for a child’s higher education, marriage, etc., and achieve life goals such as home renovation, starting a business, or any other personal purpose they deem fit.
The coverage from your life insurance policy is a financial safety net to protect their future. You need to choose a sum assured that directly correlates with the income vs expense ratio and other major ambitions and liabilities. The subsequent premium for the coverage must also be affordable for you. You can determine this using a life insurance calculator.
Purpose of a life insurance calculator in financial planning
Life insurance calculators are online gadgets that you can use to determine the premium for your policy and plan your finances accordingly. It allows you to adjust your desired types of life insurance policy for maximum benefits from minimum investments.
You may have previously used fixed deposit calculator. These are gadgets on a bank’s website or an insurer’s to evaluate your returns from FDs. Fixed deposit calculators allow you to plan your savings efficiently by calculating the amount of money that you need to invest for a specified rate of return in order to earn the profits you desire.
While Fixed deposit calculators help plan your savings in your lifetime, the life insurance calculator assists in planning the financial future of those you love after your demise.
The life insurance calculator accounts for the total coverage you wish to provide for your family along with personal details about your income and occupational aspirations. It combines it with other personal information such as age, gender, smoking habits, area of residence, etc., to determine your approximate mortality. The life insurance calculator evaluates these factors and determines a suitable premium for your plan.
If it seems too expensive, the life insurance calculator facilitates changing the impacting factors to arrive at an amicable solution. The life insurance calculator provides a first glimpse into your life insurance policy investment. You can keep this figure in mind and compare plans from different vendors to make an informed decision.
How to use a life insurance calculator?
Using a life insurance calculator serves an important purpose in determining your desired rate of investment and total return. Unlike the simplicity of the fixed deposit calculator, the life insurance calculator may seem a bit complicated but it is actually very easy to use. Here are the steps that you need to follow:
- First, you will need to share personal details such as name, age, gender, area code, occupation, education, annual income, smoking habit, and contact information. The life insurance calculator will evaluate your earning vs investment potential and mortality risks, then share a customized plan on your mobile or email.
- Based on the personal details, the life insurance calculator also shortlists suitable policies. You can check the pros and cons of each and select the plan that behooves you.
- You can also submit your documents online using the term insurance calculator. The gadget can use these details to run a background check and further personalize your plans.
- Next, you can select the total coverage you want to insure for your family, the policy tenure, the premium paying frequency and duration, and the mode of payout.
These steps employed by a life insurance calculator take your preferences into account to derive an affordable premium plan for you. You can adjust the parameters to derive a suitable solution. Based on the results, you can increase or decrease the coverage for your family.
