1. What is a Life Insurance Premium Calculator?

Definition: This calculator estimates the premium amount for life insurance based on the sum insured and the premium rate.

Purpose: It helps individuals and financial planners determine the cost of life insurance coverage.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( P \) — Insurance premium (USD)
• \( S \) — Sum insured (USD)
• \( r \) — Premium rate (decimal)

Explanation: The sum insured is multiplied by the premium rate to calculate the annual premium amount.

3. Importance of Premium Calculation

Details: Accurate premium calculation helps in financial planning and ensures adequate life insurance coverage at an affordable cost.

4. Using the Calculator

Tips: Enter the sum insured in USD and the premium rate as a decimal (e.g., 0.0015 for 0.15%). The premium rate must be between 0 and 1.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical premium rate?
A: Rates vary by age, health, and policy type but often range from 0.1% to 1% of the sum insured annually.

Q2: Is this for term or whole life insurance?
A: This basic calculation applies to term life. Whole life premiums include additional savings components.

Q3: How often is the premium paid?
A: This calculates the annual premium. Monthly payments would divide this by 12.

Q4: Does this include taxes or fees?
A: No, this is the base premium. Additional charges may apply.

Q5: Where do I get the premium rate?
A: Insurance providers determine rates based on underwriting factors like age and health.