When you plan for your family’s financial safety, term insurance is often thought of first, being both simple and affordable, offering your loved ones just the amount of money they need in case something happens to you. But while going about finding out how much your plan will cost, you will notice that taxes are added to your premium. That’s where the term insurance premium calculator helps. It shows you the total cost, inclusive of taxes like GST.
In this blog, we will explain what a term insurance premium calculator is, how the GST on life insurance affects your premium, and what you can do to get the best value. Let’s make it super easy to understand-no confusing terms, no complex numbers, just plain and simple talk!
What is a Term Insurance Premium Calculator?
The term insurance premium calculator is a free online tool that will let you know the exact amount you need to pay to buy your term plan. You just have to enter a few details like
- Your age
- Gender
- Income
- Policy term
- Sum assured or coverage amount
Once you add these, the calculator instantly shows your estimated premium amount. It saves time and confusion while creating a better picture of what your policy will cost. The best part is that it also includes GST on life insurance, so you get to know the final price, not just the base premium.
What is GST on life insurance?
Before we go further, let’s understand what GST is.
GST means Goods and Services Tax. It is the tax levied on almost all kinds of products and services we purchase, including life insurance.
It was introduced in India in the year 2017 to replace multiple taxes with just one simple tax. The GST on life insurance is today set at 18%. Whatever your base insurance premium is, you are expected to add 18% to it as GST.
Let’s take an example:
- If your base term insurance premium is ₹10,000 per year,
- Then GST (18%) = ₹1,800.
So, your total annual premium will amount to ₹11,800. Simple, isn’t it? But this little detail creates a difference while estimating the budget.
How the Term Insurance Premium Calculator Helps
The insurance premium calculator is, therefore, your best friend while buying life insurance. It not only shows the base premium but also the final cost after adding GST.
This helps you:
- You can budget better-You’ll know exactly how much to pay.
- Avoid surprises – no shock when you see the bill!
- Compare plans easily: You can see how different insurers calculate premiums.
- Save time – You don’t need to go to offices or speak with agents to know the price.
For instance, if you are 30 years old and select a 30-year term plan of ₹1 crore, the calculator may show a base premium of ₹9,000 per year. Adding 18% GST on life insurance, your annual cost would be ₹10,620. This calculator can, therefore, be used to make better choices without necessarily doing manual math.
Why is GST important in term insurance?
You might think, it’s just 18%, why worry? But that 18% adds up when you look at the long term.
For instance, if you pay ₹10,000 per year as a base premium for 30 years, you will pay ₹300,000 in total.
But with GST on life insurance, you pay ₹354,000, an extra ₹54,000 in taxes over 30 years.
That’s why it’s vital to understand exactly how GST affects your premium. The online term insurance premium calculator shows this clearly and helps you make a smart decision.
Different Types of Life Insurance and GST Impact
Not all life insurance plans have the same GST rate on the entire amount. Let’s check how this works for different policies:
- Term Insurance Plans: GST is 18% on the full premium.
- Endowment or Savings Plans – The tax is on a part of the premium because some amount is treated as an investment.
- ULIPs: GST is applied only to the charges, not on the total amount.
Since our focus is on term insurance, the 18% GST applies fully to your premium.
This tax is already included in the “term insurance premium calculator,” so you don’t need to calculate it yourself.
How to Use a Term Insurance Premium Calculator
Using the calculator is super easy and takes less than a minute!
Here is how you can do it:
- Log in to the website of an insurance company you trust.
- Locate the term insurance premium calculator section.
- Preamble Enter your details:
- Name, age, and sex
- Smoking habit: yes/no
- Income and coverage amount
- Policy term in years
- Click on Calculate Premium.
You will get your base premium, GST amount, and total payable premium in seconds. You can also make changes like increasing the coverage or changing the policy term to see how your premium changes.
How GST Affects Monthly and Annual Payments
You can pay premiums on a monthly, quarterly, half-yearly, or yearly basis when you buy a policy.
But remember, GST on life insurance applies every time you make a payment.
For example:
- Annual premium before GST: ₹10,000
- Annual premium (after GST): ₹11,800
If you opt to pay monthly, the GST will be applied to each month’s payment.
So, your term insurance premium calculator will show you the total cost per month or year, whichever you prefer.
Can You Save on GST in Life Insurance?
You cannot escape from paying GST because it is a government rule. The good news is that you can get tax benefits under Section 80C of the Income Tax Act for your life insurance premium. That means: While GST increases your upfront cost a little, the premium you pay, which includes GST, can still help reduce your taxable income.
Therefore, even with GST in place, term insurance remains a wise and tax-friendly investment.
Why You Should Still Buy Term Insurance
Seeing that GST on life insurance increases the premium makes some people worry. But here is the thing: even with 18% GST, term insurance is still the most affordable way to protect your family.
Let’s look at an example:
A 30-year-old non-smoker purchases a ₹1 crore term plan for 30 years.
Base premium: ₹9,000 per year
GST: 1,620/- per annum
Total: ₹10,620 per year
For just ₹ 10,620 a year, which is less than ₹ 30 a day, their family gets a ₹ 1 crore cover. Is that not well worth it? The term “insurance premium calculator” makes this clear in numbers.
Things to Keep in Mind When Using the Calculator
- Use real details: Always enter correct age, income, and lifestyle details.
- Compare multiple insurers: Prices vary from company to company.
- Look for Riders – You can add riders to increase protection, such as for critical illness.
- Check the breakdown for the GST-ensure you have an idea of the total cost before purchasing.
Keep in mind that the term “insurance premium calculator” is for your clarity and confidence. Use it wisely before you make a decision.
Conclusion
One of the most important financial decisions you will ever make is buying life insurance. It gives you peace of mind and protects your family’s future. But before you buy, it’s smart to know how much it will cost and how GST on life insurance affects that cost. That’s why the term “insurance premium calculator” is helpful. It gives you a complete picture of base premium, GST, and total payable amount in just seconds. Next time you plan to buy a term plan, do not forget to use the term insurance premium calculator. It helps you make smart, clear, and confident decisions since every rupee and every choice counts when it comes to your family’s future.
