Rising costs of living have made the process of living itself a rather expensive process. These daily costs interspersed with high healthcare costs aren’t necessarily surprising but are a tough pill to swallow, nonetheless. By armouring themselves with a layer of financial protection, individuals can award themselves with financial coverage should they need it. One form of financial protection that may be considered is term insurance. This form of insurance is easy to buy as it is available on the internet. There exist several tools aimed at making the selection process for the appropriate form of term insurance easier.
What is term insurance?
Term insurance is one of the affordable forms of life insurance presently available in the market. By availing of this insurance, individuals select a policy term for which they expect to be provided with coverage and pay a premium on the same as opted by them. This premium may be paid on a monthly, quarterly, semi-annual, or annual basis, and based on what it amounts to, the insurance company guarantees payment of a sum assured on death of the life Assured. In the event that the insured individual dies within the policy term, the insurance company pays a death benefit to the insured individual’s nominee. The nominee may be paid a lump sum payment and/ or receive funds of a fixed amount or increasing amount on a monthly basis for a specified period of time as per the insured individual’s instructions which were made clear at the time of purchase of the policy.
What is a term insurance premium?
Term insurance premiums refer to the regular payments made by insured individuals to the insurer for the insurance coverage under term insurance policies. The amount of premium owed may vary from one individual to another and is calculated basis certain factors. Interested individuals can make use of a term insurance calculator which provides them with an estimate of what the term insurance premium ought to be. The amount of this premium owed is determined by taking into account a number of factors pertaining to the individual. They include but aren’t limited to the age, gender, medical history, current income, annual income, anticipated year of retirement, financial goals, coverage preference, the lifestyle of the insured individual, and the likelihood of a claim being made on their account.
Actuaries are employed by insurance companies to better assess and calculate appropriate term insurance premiums for various individuals considering several factors listed above. These actuaries are tasked with analysing risks likely in case of an unlikely event occurring or a claim being made. The higher the risk, the more pronounced the insurance premium.
