How to Find the Right Term Life Insurance Costs

Term insurance is a type of life insurance that provides coverage for a specific period or ‘term’. Unlike permanent life insurance policies, which offer protection for the insured’s entire lifetime, term insurance policies provide coverage for a predetermined term, such as 10, 20, or 30 years. The designated beneficiary receives the death benefit if the insured passes away during the predetermined policy tenure.

Several factors impact the cost of term insurance. In this article, we clarify the key factors to consider when estimating the costs associated with term insurance coverage.

How to Determine Term Insurance Costs

If you want to calculate term insurance costs before you apply for a policy and undertake a long-term financial commitment, it is important to do the needful:

1. Assess your Financial Obligations

Begin by evaluating your current financial obligations. Consider factors such as outstanding loans, mortgages, credit card debts, and any other financial liabilities. The sum assured of your life insurance term plan should be sufficient to cover these obligations and relieve your family from any financial burden.

2. Determine your Income Replacement Needs

Another purpose of this insurance is to replace your income and maintain your family’s standard of living in your absence. Calculate your income replacement needs by determining the possible number of years your dependent family members will rely on your income. Multiply your annual income by the number of years, accounting for inflation.

3. Account for Future Expenses

While determining the insurance costs, consider any future expenses your family may encounter. These expenses may include education costs for children, possible medical care of senior citizen parents, or any other significant financial goals. Adding a buffer to your sum assured will ensure that your family’s future financial needs are adequately covered.

4. Assess your Existing Coverage

Review your existing plans, such as employer-provided life insurance or any personal life insurance plans. Subtract the coverage amount from your total insurance requirement to determine the additional sum assured provided by term insurance. If your income falls below or within the average range, avoid over-insuring yourself because it may lead to unnecessary premium payments.

5. Consider your Age and Health Condition

Your age and health condition play a crucial role in determining the cost of term insurance. Generally, the younger and healthier you are, the lower the premium. Insurers may require a medical examination, and any pre-existing health conditions may affect your premium. It is essential to disclose accurate information to the insurer for a fair assessment. Many insurers will require information about your smoking habits, so it is important you are as truthful as possible. This is the same if you are a user of cannabis, but there are Cannabis-friendly life insurance companies that will insure you if you use cannabis both recreationally and for medical use.

6. Determine the Term Length

Choose an appropriate term length for your policy. Consider factors such as the age of your dependents, outstanding financial obligations, and the time it will take to achieve financial independence. Longer terms typically have higher premiums, while shorter terms may not provide adequate coverage. Select a term that aligns with your family’s financial goals and if possible, use a term insurance calculator to accurately calculate your premium costs.

7. Compare Insurance Quotes

Obtain quotes from multiple insurance providers to compare premiums, coverage, and policy features. Online insurance aggregators can simplify the process by providing multiple quotes from various insurers. However, carefully review the terms and conditions before making a decision. It is important to thoroughly review the policy’s inclusions and inform potential beneficiaries about them. This will facilitate a smoother claims process.

8. Consider Riders and Additional Benefits

Term policies often come with options for riders and additional benefits that can enhance the coverage. Riders such as critical illness, accidental death, or disability riders can be added to your policy for an additional cost. Evaluate the necessity of these riders based on your specific needs.

9. Review the Claim Settlement Ratio

The claim settlement ratio indicates the insurer’s track record in honouring claims. Research the claim settlement ratio of different insurance companies before finalising your decision. Opting for a reputable insurer with a high claim settlement ratio ensures that your family’s claim will be processed smoothly.

10. Check the Conversion Options

Some term life insurance policies offer conversion options, allowing you to convert the policy into a permanent life insurance policy without undergoing additional medical examinations. Although this feature may increase the premium, it provides flexibility and ensures that you can maintain coverage beyond the initial term if needed. If long-term coverage is a consideration, choosing a term life insurance policy with a conversion option can be beneficial.

11. Reassess

Lastly, remember to review your term insurance coverage periodically. Life events such as marriage, childbirth, or changes in income may require adjustments to your coverage. Periodic reassessment will help you ensure that your term insurance policy continues to meet your evolving needs.


Remember that term life insurance is a personal decision, and what works for someone else may not necessarily work for you. Take the time to explore your options and consult with insurance professionals if needed. Accordingly, make an informed decision that provides the desired protection for your loved ones at a cost that aligns with your financial goals