Calculator Inputs
Plotly Graph
Example Data Table
| Entry Age | Term | Sum Assured | Interest Rate | Mortality Rate | Bonus Rate | Expense Loading | Premium Frequency |
|---|---|---|---|---|---|---|---|
| 35 | 20 years | 1,000,000 | 6.50% | 0.60% | 2.50% | 12.00% | Monthly |
| 42 | 15 years | 750,000 | 5.75% | 0.90% | 2.00% | 10.00% | Quarterly |
| 28 | 25 years | 1,500,000 | 7.00% | 0.35% | 3.00% | 11.50% | Annual |
Formula Used
The calculator estimates an endowment premium using discounted expected values. It combines death benefits, maturity benefits, bonuses, and claim expenses, then spreads them across expected premium-paying periods.
Survival probability at time t is approximated by:
S(t) = (1 - q)t
The present value of expected death benefits is:
PV Death = Σ [S(t) × q × DeathBenefit(t) × vt+1]
The present value of the maturity benefit is:
PV Maturity = S(n) × MaturityBenefit × vn
The premium annuity factor is estimated over the selected payment frequency:
Premium Factor = Σ [S(k/m) × Discount(k/m)]
Net premium per installment is:
Net Premium = Total PV Benefits ÷ Premium Factor
Gross premium adjusts for expense loading:
Gross Premium = Net Premium ÷ (1 - Expense Loading)
How to Use This Calculator
- Enter the insured person’s starting age.
- Choose the policy term in years.
- Provide the sum assured for the policy.
- Enter the annual interest rate used for discounting.
- Enter the annual mortality rate assumption.
- Provide the expected bonus rate on the sum assured.
- Add expense loading, claim expense, and first year expense.
- Select annual, semi-annual, quarterly, or monthly premiums.
- Click Calculate Premium to show results above the form.
- Review the graph, summary metrics, and yearly projection table.
Frequently Asked Questions
1. What does this calculator estimate?
It estimates an endowment policy premium using statistical assumptions for mortality, discounting, bonuses, and expenses. It helps compare scenarios quickly before requesting insurer-specific quotes.
2. Is this an exact insurance company premium?
No. Actual insurers may use age-based mortality tables, underwriting classes, taxes, commissions, and proprietary pricing assumptions. This page offers an analytical estimate for planning and comparison.
3. Why does mortality rate affect premium size?
A higher mortality rate increases the expected cost of death benefits before maturity. That raises the present value of benefits and usually increases the premium needed.
4. How does the interest rate change results?
A higher discount rate lowers the present value of future payouts, which can reduce the estimated premium. Lower discounting does the opposite and usually increases premium cost.
5. What is the bonus rate in this model?
The bonus rate is a simple reversionary-style growth assumption applied to the sum assured each year. It increases projected death and maturity benefits in this calculator.
6. Why do payment frequencies matter?
Frequency changes the timing of premiums. Monthly or quarterly payments spread cost over more installments, while annual payments collect larger amounts less often.
7. What is expense loading?
Expense loading reflects administrative and operational costs added above the net benefit cost. Higher loadings increase gross premium requirements and expected total policy outflow.
8. Can I use this for policy comparison?
Yes. Keep benefit assumptions consistent, then adjust mortality, interest, bonuses, and expenses across scenarios. That helps you compare relative premium sensitivity and policy affordability.