How Much Premium is enough for Life Insurance?
The amount of premiums to be paid for a life insurance cover depends on how much life cover an individual requires for them and their family. The cover that an individual settles on will determine the amount of premiums that they have to pay in order to get that particular cover when it is claimed. A premium calculator helps in figuring out if the premiums that are paid by a policy holder are enough for the life insurance that they have. Using a premium calculator will help a plan holder to choose an appropriate plan.
Steps to be taken to figure out how much premium will be enough for your life insurance:
- Research about the life aspects of you and your family.
- Figure out how much these life aspects would cost.
- Add the rate of inflation of each of the aspects according to the number of years you are planning to buy the life insurance policy for.
- Now, this amount will be the amount of life cover you want that is the sum assured you want to get when you claim your life insurance policy after its maturity or when your family members or nominees claim it in case of your unfortunate demise.
- According to the sum assured, the insurance company will set a premium amount according to the premium payment frequency that the plan holder chooses to pay the amounts.
How much premium would be enough?
Now, the premium amount chosen will be enough for the life insurance. If a plan holder doesn’t do proper research and planning before taking up a life insurance policy and choosing the sum assured amount, the premiums that they pay will not be enough for their life insurance plan as the amount that they get might not be enough. Or, the premiums might be too high for the life insurance policy if unnecessary riders are taken up without the need for them. So, the best way to figure out your premiums is to plan well and ahead.
How to choose the cover for the life insurance?
The cover for the life insurance will determine how much premiums a policy bearer will pay for the life insurance policy. So, to make the premiums enough for the plan, the sum assured should be enough to cover the aspects of your life as well as your family’s.
- Assets and liabilities
While taking up a life insurance policy, a plan holder should consider any liabilities that they need to pay off in a period of time. If they have loans to pay off, they should consider them as well. A plan bearer should take up a life insurance cover that would help them to pay off their loans or debts so that their family is not bothered with it in case of the unfortunate demise before they could pay off the money. Suppose, a plan holder had taken up a loan and re – paid 70 % of it including the interest, they should calculate the amount for the rest of the 30 % and include it into the life insurance cover while planning for it. Life insurance plans are supposed to cover all aspects of your life, so paying an extra amount of premium to be able to pay off your debts could be the right thing to do.
In case the policy bearer has children, they should opt for a life insurance policy with a higher cover. If the policy holder unfortunately dies, their child is left helpless in this money – thirsty world. So, you need to have a higher life insurance cover to protect your child financially. Also, a higher life insurance cover will help you provide for your child so that they can have a better life and future by investing the money into their education and higher education so that they can get into a good career path. Your children need your support in every way, especially in terms of finance so that your child is secured.
The age of a plan holder plays an important role in the life insurance cover that has to be chosen. If the age of the plan holder is nearing the typical age where many individuals might become the sole bread earners of the family, then the life insurance cover they are planning to choose should be higher as they have dependents to look after and protect in terms of finance in case of the unfortunate death of the plan holder. The life insurance cover should be chosen according to the kind of dependents you have such as your parents, your spouse, your children or any other relatives. Also, if a plan holder is in their 30s, they would have a lot of liabilities that would cost money. So, a cover should be chosen that will help pay off those. Choose your life cover when you are just starting out in your life as it would prove beneficial in the long run because you would be able to accrue a larger maturity benefits for more number of years and starting your life insurance policy early will also help you to start it at a lower premium as it would be with a lower age.
A plan holder is offered a lot of rider to choose from in a life insurance plan. These riders are an add – on to the basic and the original insurance plan and they cost an extra amount of premium that the policy bearer has to pay. These riders are taken over the insurance policy and they provide the insured with extra benefits. Accidental death benefit rider is one of the most important riders that pays an extra amount of death benefit to the family members or the nominees of the policy holder in case of their death that occurred due to an accident. Now, the plan holders have to pay an extra amount to avail these riders. But, any rider should only be taken up if the plan holder actually needs it. They should not take up a rider just to increase the worth of the plan. Suppose, a plan holder takes up a critical illness rider on their life insurance policy and they already have a health insurance that would cover of a critical illness, then that rider would not be needed and the premiums paid for it would be a just an extra amount that would be unnecessary. Do not waste your money on extra riders just because they are offered; take up riders only if they would benefit you and you already do not have any other insurance plans or riders that cover the exact same aspect.
A life insurance cover will determine the premiums that a plan holder would have to pay. Now, a higher life insurance cover will set a higher premium to pay. Sure, a high cover will be beneficial but if it is not necessary, it would only be a burden as you would have to pay a high amount of premiums to get that cover. So, take up a life insurance plan with a life insurance cover that will be apt for your requirements and is in accordance with how much premium you can afford to pay. If you aren’t able to pay the high premiums for the high cover, then it would be a waste as well as a hassle. The premiums would be unnecessary.
A premium calculator is a device that helps a plan holder in the process of the calculation of the amount of the premium that they have to pay for the life insurance policy. A premium calculator should be used before purchasing a life insurance plan to have a clear idea of how much payments you will be paying through the tenure of your policy for you to be able to accrue the life cover that you want to settle on. A premiums calculator also helps a policy holder to compare different life insurance policies to choose the best policy that would help them get good benefits.
Different plans can be compared on the premium calculator by inputting your details of the kind of plan that you want so that the premium calculator shows results of how much premium amount would various life insurance policies cost (approximately) for the same of cover. This is done so that the plan bearer can choose the best premium they can get their hands on for the cover amount they want to accumulate.
There are two kinds of premium rates, they are as follows:
- Premium Quote
- Premium Charge
The premium quote is the amount of premium that the insurance company has quoted. It is the amount of premium that is available by the insurance company.
The premium charge is the amount of premium that the plan holder has to pay for the life insurance policy according to the customization of the plan and the riders that they have taken up. Now, this is where the premium calculator comes in. the premium calculator will help determine the amount of premium charge over the premium quote.
So, there is no particular answer to how much premiums would be enough for a life insurance. It depends on the cover that the plan holder wants to accumulate. The premiums will be enough when the insured gets a cover that fulfils their requirements that they had planned for. Use a premium calculator to help settle on a plan.