If you’re looking to buy a life insurance policy, chances are at some point you’ve come across a life insurance calculator – but what exactly does it do? Here, we delve into everything you need to know about life insurance calculators and the types of coverage you can get.
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How do you use a life insurance calculator?
If you’ve ever filled out a life insurance quote calculator online, you’ll have seen that it asks how much coverage you need. The short answer is that a life insurance calculator provides a coverage estimate. To make it easier for you, we’ve provided a life insurance calculator that you can use for free. You wouldn’t want to pay too much or too little for your insurance. It’s crucial that you find the right coverage amount.
To use it, you simply input your details, such as what you want to be covered, the size of your mortgage, your living expenses, to get an estimated value. Note that the figure provided by our calculator is only an estimate. So, the actual level of coverage you need is up to you.
There are various types of life insurance that are better suited to different needs. We provide an overview of these later in the article.
What influences the cover amount?
The total coverage you need is influenced by what you need the life insurance for. The most common reason why life insurance is bought is to cover a mortgage, which would still need to be paid if you pass away. However, you can also get life insurance to cover other costs, such as debt, your family’s living expenses so that they can continue to have the same lifestyle if you pass away, and to cover your funeral costs.
Without life insurance, your family and loved ones wouldn’t be financially protected from these costs. So it’s always a good idea to get some protection.
How much does life insurance cost?
The cost of life insurance will vary from person to person. There’s no one size fits all approach since insurance companies take into account various variables to calculate the cost. It also depends on what type of life insurance you need, whether it’s level term, decreasing term, or whole of life.
An insurance company will take into account your age, medical history, health, occupation, lifestyle, and smoking status. To get a better premium, you should look to work on the variables you can control, such as health, lifestyle, and smoking. An excellent way to get a quick idea of how much life insurance costs is to use an online quote calculator.
How much life insurance do you need?
It all depends on what you need life insurance for and what stage of your life you’re at. Perhaps you’ve just started a family, and you’d like to have some financial protection that will ensure they can continue to live a quality life if you pass away, or maybe you’ve just got your first mortgage.
Either way, the amount you need covering will depend on various factors. That’s where our life insurance calculator comes in. It takes in all these variables and outputs an estimated figure for your coverage. If you’re only looking for a life insurance policy to cover your mortgage, it can be easy to determine how much you need. You simply get coverage for the total amount left. However, things can get more complicated when you also need to factor in living expenses, funeral costs, and other debt payments.
How long does a life insurance policy last?
The length of your life insurance coverage will depend on the type of policy you choose. Here are the most common types of life insurance policies:
- Term Life: This type of policy only offers coverage for a set period agreed on between you and the insurance provider. There’s also two types of term life insurance – level term and decreasing term. A level term policy means that your final payout total remains the same throughout the insurance period. In the decreasing term policy, your final total is reduced during the insurance period.
- Whole of Life: This type of policy isn’t offered by all insurance companies in the UK. It provides cover for the rest of your life, guaranteeing a payout regardless of when you pass away. As a result, this type of policy tends to be more expensive.
The right policy for you will depend on what you need covering. If you have an interest-only mortgage or you’d like your family’s living expenses to be covered if you pass away, a level term policy would be the best option. If you have a mortgage that will decrease over time, a decreasing term policy would be best since your premium will also lower during the insurance period.
How to get a life insurance quote?
A quick and simple way to get a quote is to use our free online quote calculator. You simply input the level of coverage you need, which you can get from our life insurance calculator, you add your details and then it will give you a series of quotes.
You can do this directly through an insurance company or via a price comparison site that will give you multiple quotes from various companies. The latter is usually the best way to get a good deal; however, if you’re looking to get one of the welcome gifts offered by insurance companies for new customers, you should know that most won’t offer it to customers that go through third party sites.
Alternatively, if you’d rather discuss your policy in detail and better understand how it all works, you can call an insurance company directly. Most firms can be flexible on prices, so talking to someone over the phone or in-person might be a good idea. Some companies don’t even have a free online quote calculator and will need you to talk to an agent.