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Life Insurance Calculator

“No one lives forever” is not just the name of a 1960 spy thriller, but in fact, it is a truth of life. All of us, no matter who we are and what we do for a living and how much money we make, have to be dead someday, and this is precisely why life insurance is so important. But life insurance is more than just the sum of money that is promised on death to the person who has been nominated by the policy holder, it is much more than that. The owner of the policy also often starts a life insurance scheme not in expectation of death, but simply as an investment to earn a premium when the policy matures and the policy holder is still alive. So we can say that life insurance policies are of two kinds…
  • All those policies wherein the holder insures the future of the nominee and expects a good return upon death.
  • All those policies wherein the holder expects a good return on maturity of the policy and the policy holder himself or herself benefits financially from the returns.

What is a life insurance calculator?

The life insurance calculator allows you to calculate the amount of insurance you need to protect the financial interests of your family. And in this, there are many factors that need to be considered such as your age, the total number of years for which you need the insurance policy, your income, monthly expenses and the number of dependents you have. Just put in all these inputs into the life insurance calculator, and it will tell you the total amount you need at the time of maturity of the policy and the amount of premium you need to pay regularly.

The calculator also often considers your other financial plans such as Retirement Savings, College Savings and Emergency Funds. And there are a few life insurance calculators that also consider your life goals such as buying a home or going on a vacation.

But there is another way the life insurance calculator works, and this works in just the opposite way. Here, you just put in the amount of premium you are comfortable with, and the calculator will do the computation in the background and tell you the money you or the nominee will get on death or maturity. And if this amount seems a bit too less to you, all you will need to do is just increase the premium a bit in the calculator to reach a balance between the total premium to be paid and the total returns to be received that makes you happy and comfortable.

Factors considered by the life insurance calculator:

  • Your age: Age is always an important factor in life insurance, because the more aged you are, the higher will be the premium. And there are certain companies that do not open policies for seniors. So it is best to start a policy at a young age – perhaps when you are in your late 20’s or 30’s.
  • Number of years of the policy: It is always better to have a policy for more number of years rather than for just a few. Experts say that your policy should be for at least 12 to 15 years if you are young. You can expect to pay less as premium if you have a policy for a longer time – the returns are also better.
  • Your income: Your income is of course important because you after all need to be able to pay the premium and be comfortable with the amount. But your income is also important for another reason and this is that it should be able to at least maintain your lifestyle, if not improve it. There are some life insurance calculators that make the calculations not just on your present income, but also take into account your historical income to consider your future income increases as well.
  • Your expenses: It is important for the life insurance calculator to consider your expenses because the return you get has to meet these needs of course. There are some calculators that consider the place of your residence too because the expenses can be widely different based on where you are living.
  • Number of dependents: If your policy is not an investment, but to insure the financial future of the nominee and his/her immediate close family or dependents then this is very important. If you just have a wife/husband or living partner, and want the person to gain from the money due, then your premium will be calculated in a certain way. But if you have kids whose future depends on you including their future education, then you can expect your premium to be that much higher.
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