Term Insurance

Term Insurance Plans

What is Term Insurance?

Term insurance plan is one of the types of low-cost plan which is provided by insurers who offer comprehensive financial coverage against premiums paid to the beneficiary of the policies if the insured passes away during the policy term. This plan is one of the safest and finest insurance policies which provides financial protection and also pays off active car loans, housing loans, etc.

 

The term insurance plan is an apt pick to keep your family financially equipped in case of sudden death or critical illness of the insured. You can also enhance your plan by adding various riders to it. This extended plan helps you to cover certain factors which won’t be covered with a plan term plan.


Let us take an example of Rajesh who is a 36-years old IT professional. He is the only breadwinner of the family with two kids, a wife (who is a homemaker) and two old parents.

If due to any unforeseen situation such as an accident, if Rajesh gets disabled or loses his life; the term insurance plan will help his family to cover the financial expenses.

 

The amount received from the term insurance plan will help Rajesh’s family to be financially equipped at such critical situation thereby not making them financially independent at such stage.

How Term Insurance Works

Firstly let us try to understand why term insurance is an ideal pick for you and your family.

The term insurance plan is a life insurance policy which comes in comparatively low premiums as compared to other plans. For example, Srinivas (who is a non-smoker) can opt for an optimum term insurance plan with a sum assured of Rs. 50 lakhs to 1 crore at the range of premium amount from Rs. 4000 to Rs. 10,000.

In addition to this, the plan offers financial coverage to the family or dependants of the insured if the insured passes away during the policy term.

 

One of the distinct features of the term insurance plan is that it is the most affordable life insurance plans to provide comprehensive financial protection to your loved ones in your absence. The plan offers a lump sum amount as a death benefit to the nominees of the policy if the insured loses his or her life during the tenure of the policy.

 

Apart from the above-mentioned benefits, the amount obtained from this plan can be used in the following ways. These include:

• Securing your child’s future by fulfilling the higher education expenses
• Monthly household expenses
• Covers the expenses involved in your child’s marriage
• Paying off your loan

 

Owing to the highest life coverage for the minimum premiums you pay, this plan is highly advised for the middle-class family. This plan is cost-effective as well as easy on the pocket with the maximum benefits it comes with. In addition to this, the plan comes with a protection time period of 10, 15, 20, 30 years or maximum renewal age. The insured is allowed to choose the tenure as per his need and convenience. If the insured dies within this tenure, the benefits associated with this plan is offered to his or her nominee.

 

There are some insurers which also cover permanent or partial disability wherein the policyholder’s regular income is disrupted.

 

However, one must note that in case of survival of the insured, the coverage at the earlier rate of premiums is not guaranteed after the expiry of the term insurance policy. Here, one can obtain extended coverage with different payment condition or forgo the coverage entirely.

Why Buy Term Insurance Plan?

There many reasons for why one must go with an optimum term insurance plan. One of the most important factors is that the plan is much easier to understand than any other insurance plans such as endowment policies which combine risk cover with savings. Moreover, the term insurance plans are also termed as cash value plans as they come with low premium rates and maximum sum assured thereby making it the best pick.

 

The plan offers the flexibility to choose the plan from a single life basis or joint life basis. Also, the eligibility criteria for this plan are quite better i.e. the minimum entry age is 18 years for this plan whereas the maximum age limit of 65 years with optional add on benefits. The younger the investor, the higher is the returns one can get from this plan. Moreover, the plan also features additional optional benefits such as critical illness and accidental disability or death or accelerated sum assured. The riders or add-on covers, when clubbed with the existing policies, can reap you the best out of your plans.

Benefits of Term Insurance Plan

​• In case of death of the insured, the designated nominee receives death benefits under the term insurance plan provided the life insured dies within the term of the policy. Here, the lump sum amount is provided to the nominees.

• The term insurance plan offers maturity benefits by returning the entire amount of the paid premiums if the policy is continued until the term’s end

• By opting for a term insurance plan, the insured is also eligible for tax benefits over the premiums paid along with maturity benefits. Under section 80C and 10(10D) of the Income Tax Act 1961, the premiums paid are exempted from income tax assessment

• Term insurance plan is one of the economical plans in spite of the high levels of sum assured it offers. There might be no other plan that would provide such high coverage at this low premium rates

• It is the simplest and easiest methods to buy a term insurance plan i.e. there are no investment components involved. One has to just pay the premiums either through online or offline mode and it covers the life risk for a fixed tenure

• You get the option of enhancing your overall plan by extending it with optional riders

• The plan offers financial security to the insured’s dependents in event of the insured’s death

• There are many insurance companies which offer the policyholder the flexibility to choose the type of insurance he or she wishes to opt for. Also, the insured can choose to extend the coverage of the plan

• The insured can go with the payment option of his or her choice based on the convenience for e.g. one can select between single or joint plans depending on one’s needs

• The rate of claim rejection is much lower as compared to other insurance plans

• By opting for a term insurance plan, you can use the amount to cover your loans and liabilities thereby ensuring financial security for the family

• In case of critical illness or disability, the term insurance plan provides supplementary income; one can also get a lump sum amount if diagnosed with critical illness and additional sum insured due to accidental death.

• Under the term insurance plans, there are many insurers who offer their customers the flexibility to choose the amount of preferred sum assured, the option of payment of premiums (one-time, limited or regular pay), and term of the policy and add-on protection.

• The plan comes with extremely affordable premiums with maximum sum assured

• Also, with the limited premium payment term insurance plan, one can pay the premiums for limited-term period. However, the coverage continues for a longer tenure. This helps the insured to end the premium payments term within a short term period. Also, one gets a longer duration of life coverage and reduces the chance of policy lapse.

• Death Benefits – Additionally, the plan comes with death benefits i.e. on the death of the life assured during the policy term; the nominee receives the total death benefit at the time of commencement. Based on the term insurance plan, the death benefit stays over the tenure, increases or decreases. This plan is specifically designed to take care of the family expenses after the death of the insured. Under this plan, a lump sum amount is provided to the beneficiary which can be used in a number of ways such as a child’s education, child’s marriage etc. An ideal pick for the breadwinners, this plan provided financial assistance to the nominees in the insured’s absence.

• The term insurance plan does not come with any kind of maturity or survival benefits. If you are looking for any such benefits, then you must with Term Return of Premium plan.

Types of Term Insurance

Plain Term Insurance Plan

Term insurance plan is a low-cost plan which is offered by insurance companies who offer comprehensive financial coverage against premiums paid to the beneficiary of the policies if the insured passes away during the policy term. One of the safest and finest insurance policies, this plan provides financial protection and also pays off active car loans, housing loans, etc. The term insurance plan is an apt pick to keep your family financially equipped in case of sudden death or critical illness of the insured. You can also enhance your plan by adding various riders to it. This extended plan helps you to cover certain factors which won’t be covered with a plan term plan.

The plan offers the flexibility to choose the plan from a single life basis or joint life basis. Also, the eligibility criteria for this plan are quite better i.e. the minimum entry age is 18 years for this plan whereas the maximum age limit of 65 years with optional add on benefits. Owing to the highest life coverage for the minimum premiums you pay, this plan is highly advised for the middle-class family. This plan is cost-effective as well as easy on the pocket with the maximum benefits it comes with. In addition to this, the plan comes with a protection time period of 10, 15, 20, 30 years or maximum renewal age. The insured is allowed to choose the tenure as per his need and convenience. If the insured dies within this tenure, the benefits associated with this plan is offered to his or her nominee.

 

Increasing Term Insurance

Under the increasing term insurance plan, the insured has the choice to increase the sum assured on an annual basis during the tenure of the policy, whereas maintaining the premium amount at the same time. Due to this, the premiums of this plan are comparatively higher to other term plans.

Moreover, under this plan, the insurer will pay the sum assured as per increasing amount if the policyholder passes away. For example, if Suraj buys a cover worth Rs. 50 lakh with a 10% increase each year, then after 5 years he would have a life cover of Rs. 75 lakh. This increasing term insurance plan takes care of the financial stability of the insured’s family in their absence.

Talking about the eligibility, the term insurance plan is usually between 18 years of age to 65 years of age.

However, while selecting this type of term insurance make sure that you have opted for the company which provides quick and easy claim settlement procedures without much delay. Few of the finest increasing Term Insurance plans in India are Max Online Term Plan Plus, HDFC Click 2 Protect Plus and SBI Smart Shield.

 

Decreasing Term insurance

The decreasing term insurance plan is opposite to that of the increasing term insurance plan. Under this plan, the sum assured keeps on decreasing annually to meet the decreasing insurance needs of the insured. This plan works for certain situations wherein the insured is under huge debts or is paying EMIs. Here, the sum assured will decrease based on the chosen frequency with the payment of EMIs and also lowers the total amount of loan.

The decreasing term plan that you opt for should be capable of offering you the money for paying off home loans, debts, other liabilities etc.

The eligibility of the term insurance plan is usually between minimum 18 years to a maximum of 65 years. It is highly recommended to invest at an early age as the premium increases with age.

One must take care to choose a plan that comes with essential riders such as accidental, critical illness coverage, waiver of premium etc. Some of the best decreasing Term Insurance plans in India are Aegon Religare Decreasing Term Plan, HDFC Click 2 Protect Plus and SBI Smart Shield.

 

Income Benefit Term Insurance

Under this plan, the insurer promises to pay the nominee a percentage of the sum assured every month for a specified number of years. If the insured passes away during the term of the policy, the nominee will receive a regular monthly cash flow due to the loss of the monthly income.

This plan is highly suggested for people who are the breadwinners of the family in order to ensure monthly cash flow to provide financial security to the dependants in their absence. The income benefit term insurance plan is also a wise pick as it makes it easier for dependants who find it difficult to handle a large amount of money at once. However, this plan is suggested to be opted by people who do not have any loans, debts under their shoulders. If you have a loan and still wish to go with this policy, you can still find a variant of the income replacement term insurance plan which is a mixture of income replacement term insurance plan and lump sum.

 

Group Term Insurance

This term insurance plan offers coverage to a group of people under which it provides financial support to the employee’s family in the event of death. This plan has become one of the fundamental constituents in benefit packages provided to the employers to the employees. This plan can also be customized to meet the niche requirements of the enrolled employees. The group term insurance plan offers the death benefits to the employees which are exempted from tax under Section 10(10D).

 

Convertible Term Insurance

The term insurance comes in different forms; one of it is the convertible term insurance plan wherein the term insurance plan can be converted into another form of life insurance plan which comes with dual benefits. This plan combines the benefits of two important life insurance plan i.e. term insurance and endowment assurance. The term benefits offer optimal life insurance coverage protection while the endowment assurance plan offers saving and maturity benefits. The premiums of such plan are comparatively low.

Let us take an example of Gokul who is 35 years old buys a convertible term insurance plan for a span of 20 years. If Gokul opts for a sum assured of Rs. 10 lakh and the plan allows conversion in the last 5 years of the term of the policy. Now on the conversion of this policy, the plan would be changed to an endowment assurance plan with the maturity benefit which is equivalent to the sum assured of the plan.

 

Joint Term Insurance

The joint term insurance plan helps to cover you and your better half under a single policy. Under this plan, it is now possible to cover your spouse under a single plan by opting for a joint term plan. The plan is designed such that it covers both the life in a single policy and comes with a combined premium. The term of this policy is fixed during the purchase is fixed and the premiums are paid throughout the period. If any of the partners dies during the policy term, the surviving partner would receive the life cover amount.

 

Let us understand this plan with an example. Suppose, that Satish and Priti brought up a joint term insurance plan for a period of 30 years with a sum assured of Rs.1 crore. Satish was 29 years at the time of the purchase whereas Priti was 27 years of age. Suppose, Satish passes away in the 5th year of the policy term, the insurance company will pay Rs. 1 crore to Priti (the surviving partner). And will continue to pay monthly payout for 5 years at a rate of 1.75% of the sum assured. Thus, here the total payout would be Rs. 2.05 crore.  After the complete payment of the monthly income benefits to Priti, the policy would terminate.

However, under the three cases mentioned below the payout processes would be quite different.

Case 1:

If the surviving partner dies during the monthly payout period, the monthly payment will continue to be paid to the legal heir as specified in the policy document.

Case 2:

If the married couple gets divorced, one can’t divide the sum assured of the policy. Here, anyone of the partner will be paying the complete premium amount if she or he wishes to keep the policy in force.

Case 3:

If both of the partners pass away together in any unforeseen situation, the death benefit will be paid to the legal heir(s) as mentioned in the policy document. In this case, there would be no monthly payout. The death benefit would not be made double in such a case.

Riders under Term Insurance Plan

What are Riders in Term Plan?

The term insurance plan offers death benefits to the insured’s family in case of sudden death. There are certain benefits or privileges that can enhance the term plan by adding just a few extra bucks. These additional benefits are termed as Term Insurance riders. These riders are like an attachment to the plan that adds up to the policy’s coverage.

 

In-built Riders

The In-built riders are those riders that come along with the term plan. These riders can be any rider; one of such riders is the Waiver of Premium. There are few plans may have the waiver of premium it in the plan as in-built, while a few insurers may keep it as an optional plan, for which you have to pay an additional premium above the base plan premium.

Most Common Riders in Term Insurance

Accidental death rider

The accidental death rider offers you with an additional sum insured in case of death of the insured due to accidents. However, even if the insured does not buy this rider, he or she will still get the basic sum assured. This rider acts as a supplementary sum assured if the insured loses his life owing to an accident.
Let us take an example to understand in detail, Suppose if Rajesh opts for a term insurance plan with a sum assured of Rs. 50,00,000 and accident rider of Rs. 15,00,000. So, if Rajesh undergoes an accident and loses his life, the total amount of Rs. 50 lakhs + Rs. 15 lakhs = Rs. 65 lakhs (i.e. Basic sum assured + Rider) would be given to the nominees. On the other hand, if Rajesh loses his life due to some other reason apart from an accident, his nominee will receive Rs. 50 lakhs which is only the basic sum assured.

 

Critical illness

Critical illnesses such as heart attack, cancer, stroke, by-pass surgery, kidney failure etc., are some of the examples of diseases covered under this cover. Once anyone this critical illness is detected, the policy might stop or continue as per the policy wordings. There are times where the policy coverage is lessened by the amount paid to you.

There are few insurance companies that pay the complete sum assured on the diagnosis of this critical illness. However, this amount is paid if the life insured survives the waiting period of 30 days after the date of diagnosis. This rider can be taken by everyone, however, it is a must-have rider for top-level executives with too much work stress, for someone who smokes frequently and for someone with an unhealthy lifestyle.

 

Income replacement rider

The income replacement rider is specifically designed to generate income after the demise of the insured person. If your plan is added with this rider, your family gets supplementary income per year for a span of 5 to 10 years along with the sum assured. Since we cannot control misfortunes to happen, we can at least prevent such incidents from happening, but a proper plan is a must.

 

Waiver of Premium

The waiver of premium rider is one of the best ways to manage to pay for the life cover and your monthly household expenses if the life insured suffers any disability owing to the not payment of the future premiums in case of a vanilla life insurance plan. Under this case, all the future premiums would be waived off and the policy would be still into existence.

Suppose, if the future premiums cannot be paid by the insurer owing to the disability or death (caused due to an accident), then the premiums of the base policy and riders will be exempted but your policy will still continue.

This rider can be taken by everyone, however, it is highly suggested for someone whose job involves physical work, someone who travels through flights on a frequent basis and for someone who commutes and travels through vehicles such as a car, public transport, train, two-wheeler, commercial vehicles, etc.

 

Partial and permanent disability

If the insured undergoes any sort of total permanent disability due to accident, this rider will be a source of cash flow under this situation. In any such unpredictable situations, the insurer gives the rider benefits to the insured person.

This rider benefit differs from one insurance company to another and also depends on the sum assured of the base plan. There are few insurance companies that pay a percentage of the rider benefit as a regular monthly income for 5 to 10 years. In case if the insured dies during the tenure while suffering from the disability then the nominee would get the outstanding sum assured as the rider condition dictates.

This rider can be brought up by anyone but it is highly recommended for someone whose job involves physical work, someone who travels through flights frequently for business-related work or trips and someone who commutes and travels through vehicles such as a car, public transport, train, two-wheeler, commercial vehicles, etc.

Term Plan Exclusions

The term insurance plan financially covers the risk of death, by paying a lump sum amount to the life assured’s nominee.

The term insurance plan comes with a wide range of features along with added benefits, riders, add-ons, etc. However, there are certain kinds of deaths are not covered by the term plan in India. In order to avoid any unpleasant surprises to your family members or dependents upon your demise during the claim process, it is essential to be aware of the terms and conditions of term insurance plans.

The below-mentioned reasons for death are some of the exclusions of the term plan in India:

• Suicide*
• Death caused due to self-inflicted injury
• Death due to pregnancy and childbirth
• Death which is caused due to the pre-existing health conditions
• Death due to sexually transmitted diseases like HIV or AIDS
• Deaths caused owing to the accidents caused due to driving under the influence of alcohol or drugs
• Death due to the participation in racing activities like bike racing or car racing
• Death caused due to the involvement in any sort of illegal activities
• Death due to the participation in adventure activities like bungee jumping, trekking, hiking, water sports etc.

* In case of suicide, the court will ultimately decide whether the death is because of suicide or not. In the early stage, a medical expert will try to determine the root cause of the death of the insured. In this way, a death certificate would be issued. The beneficiary would need to submit this certificate to the respective insurer from where the policy was purchased during the process of claim. Once the death certificate is received, the insurer begins with the investigation process. There are chances of the claim to get rejected if the cause of death is suicide, taking into consideration the state of mind of the insured (sane or insane).

Apply for an Online Term Insurance Plan

There are two different way of buying the term insurance plan, one is through the online mode whereas another is through the offline mode.

In India, buying an insurance plan online is the easiest and economical way of buying an insurance plan. You simply have to rest on your couch and find the best fit by visiting the online portal of the respective insurance company or by logging into a web aggregator online portal/insurance broker.

The process of buying the online term insurance might vary from one insurer to another; however, the below-mentioned steps are the most common ones:

• Log on to the company website

• Enter the sum assured

• Choose the policy term you wish to pay the premiums for

• Choose the premium paying term (it could be monthly, quarterly, half-yearly or annually depending on the type of plan you opt for)

• You will see the premium amount based on your inputs

• Select your bank to make the premium payment

• You will see an acknowledgement on a successful transaction

• Within a period of usually three weeks, the insurer will come back to you on whether or not your insurance policy has been approved by its underwriting team

• Subject to approval you will receive a soft copy of the policy which will be followed by a hard copy

This process is the most convenient and the fewer clicks and website speed, the better the experience. The lesser the number of clicks necessary to buy insurance, the simpler it becomes for users. And slow website speed with higher response time while navigating to the bank website for premium payment, can be a turn-off.

Apply for an Offline Term Insurance Plan

For someone, who is not comfortable with the online method can go with the offline mode of buying the term insurance plan. Under this mode of buying the insurance policy, you can simply download the form and fill the required details along with the necessary documents and submit it to the insurer company.

 

If you are the one who is not comfortable with buying the insurance policy online, then you can check the details online and clarify your doubts and queries by calling to the insurer or online broker/web aggregator in their toll-free number. Once your doubts are clarified you will be in a better position to make an informed decision.

Term Insurance Claim Process

The death of your loved ones might be very painful and moreover, it can put you under financial debts or instability if the insured was the only breadwinner of the family. One can follow the below-mentioned process in order to make the claim.

 

1. You should lodge a Claim

Though the situation during the demise of your loved ones would be very painful, it also important that the nominee or the claimant should intimate the insurer about the death of the life assured at the earliest. The nominee can lodge a claim by directly contacting the insurance company on their toll-free number. Also, It is highly preferable to lodge death claim through a call rather than using any other media to lodge the claim.

 

2. Claim Processing

In order to begin with the claim process, the nominee needs to submit the valid and supportive claim documents, which are listed below in case of natural and accidental death. Once, the insurance company receives the necessary documents, the claims assistance team of the insurance company then takes over the case. After that, the Claim Assistance team will assess the claim, submitted documents, nominee declaration and verification of the same. There are can be cases wherein this team may ask you to submit other required documents, if necessary.

 

3. Acceptance and Payout

The last stage of this process is the acceptance and the payout stage. Once the claim process proceeds and all the relevant documents are submitted, after the acceptance of the claim, the insurance company will settle down the claim. However, there are certain insurers who prefer to pay the payouts to the beneficiary through ECS. The company will ask to submit bank details – cancelled cheque or photocopy of the bank account passbook (may require to get attested by bank authorities). While lodging a death claim, you are requested to support the claim with documents.

 

Documents required to claim the policy in case of Natural Death

• Duly signed and filled claim form (as provided by the insurer)
• Life insurance policy document
• Original / copy of the Death Certificate

 

Documents required to make a claim of the policy in case of an Accidental Death

• Medical attendant’s certificate/ Attending Doctor’s Statement
• Hospital certificate
• Employer’s certificate
• Medical reports – Admission and Discharge summary, Death summary, Test reports
• Post mortem report
• Final Police Investigation Report
• Police FIR report

Why Term Insurance Claim can get rejected?

Have you have ever wondered what would happen if your term insurance policy gets rejected. You already been in the grief of losing your loved one and, moreover, highly stressed for the upcoming financial liabilities. Hence, in order to avoid such situations one must take care of the following things in order to avoid your term insurance claim from getting rejected:​

• Instead of handing over the responsibilities of filling and submitting the insurance form to the agent, it’s better to fill the form and check it thoroughly before submitting it

• Providing incorrect information or hiding significant facts could be one of the most common reasons for claim rejection. Hence, it is important that the insured maintains total transparency by providing true and correct information to the insurer in order to avoid any unpleasant surprises in the future

• There are certain jobs which carry high risks or even life-threatening. Hiding such information with the insurer might lead to rejection of the claims. Hence, it is vital to share such information with the insurer in advance while buying the policy

• There are many people who hide their medical history while buying the insurance policy. However, doing so might make a huge impact on claim acceptance or rejection. Ensure that you provide all the necessary information to the insured well in advance in order to avoid any surprises

• Do not refrain from medical tests. Whenever you opt for a higher sum assured and if required go with the required medical tests. If you ignore such test, chances of facing a claim rejection would be high.

It is always better to be safe than to regret in the future, hence maintain complete transparency can help in smooth and easy claim process thereby avoiding any surprises for you in the future. The proper information to the insurer will help you to save your efforts and will save your money from getting wasted.

Should you buy term insurance for tax savings?

People often tend to buy an insurance plan with the intention of saving on tax. But is it the only reason to buy the term insurance plan or should one buy it for that reason?

 

By making a financial mistake can come back to bite you when you least expect it. One such financial mistake made by people is that in their hurry to make last-minute tax-saving investments, they miscalculate their insurance needs and overlooking getting a risk cover. People end up buying an insurance policy just to avail the tax benefit that premium payments can fetch them, without considering their insurance needs.

The premiums paid towards a term insurance plan qualify for a tax benefit under section 80C of the Income- tax Act, 1961. Under this, you can claim a deduction up to Rs 1.5 lakh a financial year for the premium paid for yourself, your spouse, and your children.

But the tax benefit should not be the only factor to consider while buying an insurance plan. A term insurance plan acts as an income replacement tool for a family when the primary earner dies. Also, it is highly suggested to have a term insurance plan is such that even financial planners suggest taking a term life cover even before starting to invest for long-term goals.

Handpicked Guideline to Buy Right Term Insurance Plan

You can buy a term insurance plan either through the online mode or through the offline depending on your convenience. Also, you can purchase the term insurance cover either directly from the insurance companies’ website or through by logging to an insurance aggregator/insurance broker.

 

Buying through an insurance web aggregator or online broker gives you an option to make comparisons of several products available with their features so that you make a wise choice as per your preferences. Also, comparing the plans before buying it helps you to get the best of the plan under the desired premium cost. Moreover, since the online mode does not include any underlying cost of the agents, the premiums of the plans are comparatively lower.

 

For the ones who are not so comfortable with the online mode can buy the policy through the offline mode as well. Such a buyer can visit any of your nearest branches with your KYC documents and fill in the application form to complete the buying process. You can also purchase an insurance cover with the help of agents and brokers.

In case of your demise, your dependents/nominees/beneficiaries can have their needs fulfilled with the sum assured received from the insurer.

You can also ask yourself questions such as how long will you work or at what age you will retire to decide in order to decide the tenure and the sum assured of the plan. Taking into consideration factors such as the dependants, children’s responsibilities, if wife is a homemaker or a working professional (if working then till what age she wishes to continue the job), by what age will your child will be dependent, expenses involved in the child’s higher education, your liabilities, loan or debts if any etc will help you to take the wise call as per your budget and needs. The most common maturity age for a policy term is 65 to 85 years of age. So you can decide the term as per your current age.

I want to leave a legacy and something for my family, is term plan of 1 crore a good option?

There are certain factors that you must consider before buying a term insurance plan of Rs. 1 crore. This include how many of would be you able to earn and save Rs. 1 crore in life?

This method could be a good option/way to ensure you can leave something for your loved ones so that they are financially independent. However, with the increasing Inflation would Rs. 1 crore be a sufficient amount?

 

Moreover, the coverage or the sum assured is basically limited to 20-25 times of your annual income. If your income is not eligible to get a cover of Rs. 1 crore, you can opt for Rs.50 Lakhs or Rs. 75 Lakhs and later when your income increases, you can increase term life cover by opting to another optimum policy.

Top Term Insurance Term Plans in India (2019)

1. Birla Sun Life Future Guard Plan:

• This plan is designed such that it offers financial support to the family of the insured if he or she passes away. The policy comes with two plan: Plan A and Plan B depending on the tenure of the plan. The minimum entry age for this plan is eighteen years whereas the maximum entry age is sixty-five years.

• The policy terms for this plan are 10, 15, 20, 25, 30 years based on the individual’s age of maturity

• Under this plan,
Plan A – provides 100% of return on the premiums which are paid
Plan B – provides 110% to 150% return on the paid premiums

• The premium payment term for this plan is regular whereas the payment mode is yearly, half-yearly, quarterly and monthly

• The minimum sum assured is Rs. 5 lakhs whereas there is no limit on the maximum sum assured

 

2. HDFC Click2Protect Plus:

• The plan is designed such that it ensures a guaranteed sum to your family in your absence.

• The plan comes with four advanced options of term insurance cover

• It comes with the option of lump-sum payment

• 10% of the sum assured as lump sum payment and the remaining as monthly income for 15 years is provided under the income option

• Under the income plus option, 100% of the sum assured on death is provided and arrears on 100% of sum assured on a monthly basis

• The minimum entry age of this plan is 18 years whereas the maximum entry age is 65 years

• The minimum sum assured is Rs. 25 lakhs, on the other hand, there is no limit on the maximum sum assured

• Here one has the flexibility to pay the premiums in yearly, half-yearly, quarterly or monthly basis

• The premium paying term is regular, limited or single

 

3. Reliance Nippon Life Online Term:

• Designed to meet the requirements of the current generation, this online term plan can be the best pick to keep your family financially equipped during unforeseen situations

• The minimum entry age at entry is 18 years and the maximum entry age is 55 years

• The policy term for this plan is 10, 15, 20, 25, 30 and 30 years whereas the premium payment term is the same as the policy term

• The minimum sum assured is Rs. 25,00,000 whereas there is no limit on the maximum sum assured

• The minimum premium amount is Rs. 3,500 and there is no limit on the maximum amount of premium paid

• Under this plan, the mode of the premium is on a yearly basis

 

4. Aegon Life iTerm Insurance Plan:

• One of the distinct features of this effective plan is that this plan offers coverage to 80 years of age

• Also, the insured has the flexibility to extend their coverage based on the growing needs at different stages at life

• The minimum entry age of this plan is 18 years whereas the maximum entry age is 75 years

• The minimum term period is 5 years whereas the maximum term period is 40 years – 75 years based on the premium you have selected

• Under this plan, the mode of premium paid is either a single payment or on a yearly basis

• The minimum sum assured is Rs. 10,00,000 whereas there is no such limit on the maximum sum assured

• 25% of the sum assured can be paid in advance if the diagnosis proves as the terminal illness

 

5. LIC’s Jeevan Rakshak:

• One of the finest term insurance plan offered by one of the largest insurance company in India – LIC is its Jeevan Rakshak plan

• Under this plan, the policy accrues loyalty additions after every five years

• Also, this plan offers an option of accidental death benefit rider

• The minimum basic sum assured is Rs. 75,000 whereas the maximum basic sum assured is Rs. 2,00,000

• The minimum policy term is 10 years while the maximum term of the policy is 20 years

• The minimum entry age is 8 years while the maximum entry age is 55 years

• The maximum age at maturity is 70 years

• Talking about the payment mode of the premiums, this plan offers flexibility to its customers with annual, semi-annual, quarter and monthly mode of payments

• Moreover, the policy will lapse if the premiums are not paid within the grace period. Also, the lapsed policy can be revived within two years

What is the difference between Single and Joint Term Insurance

Features

Single Term Insurance Plan

Joint Term Insurance Plan

Coverage

If one partner is no more, then the surviving partner is paid the sum assured and the policy terminates thereafter leaving the surviving partner without any life cover

It offers protection to a legally married couple which include both the insured as well as the beneficiaries.

Payout option

Here the payout is done only once

There are two payouts once at the death of each of the insured partners

Online Term Insurance Calculator: Compare Best Online Term Plans

One of the most efficient tools which specially designed to help you calculate your monthly/annual premium for your life insurance policy is the term insurance premium calculator. The tool comes with results regarding the premium amount that you should pay to get to your desired sum assured, as per your financial objectives.

The process is quite easier as it automates the process of computing premium and also saves your time. Moreover, this calculator minimizes the scope for errors that may occur during manual calculations.

In addition to this, the calculator also enables you to regulate the sum that you would like your nominee to receive in case of your absence. The calculator is designed such that it can be customized according to your preference and convenience.

 

This calculator helps you to overcome the challenges one has to face to compare the wide ranges of life insurance policies offered by different insurers in India. Spending hours in research, carrying out time-consuming calculations and then finding out the financial goal is as hard as chewing a bone. The term insurance calculator is the best way to compare the premiums payable for all the available insurance policies.

 

There are certain factors that are used to calculate the term insurance premium. These factors include:

• Insured’s age
• The previous health record
• Total policy tenure
• Overall coverage
• Sum assured
• Personal habits if any (for e.g. smoking habits, chewing tobacco etc)

 

Now that we saw some of the key features of this online term insurance calculator. Let us dive into the benefits of this tool.

 

This calculator helps you to know the exact premium amount for your chosen coverage amount. Also, this tool makes your comparison more simple and convenient. In addition to this, you end up making an informed decision as you get to see the plans offered by different insurers. You also get the option of comparing the features and rates of the plans. Also, coming on the commercials this tool is cheaper and simple to understand as well.

Term Insurance Plans - FAQs

Most frequent questions and answers about term insurance plan

1. What is a term insurance plan?

Term insurance plan is one of the types of the low-cost plan which is provided by insurers who offer comprehensive financial coverage against premiums paid to the beneficiary of the policies if the insured passes away during the policy term. This plan is one of the safest and finest insurance policies which provides financial protection and also pays off active car loans, housing loans, etc.

 

The term insurance plan is an apt pick to keep your family financially equipped in case of sudden death or critical illness of the insured. You can also enhance your plan by adding various riders to it. This extended plan helps you to cover certain factors which won’t be covered with a plan term plan.


Let us take an example of Rajesh who is a 36-years old IT professional. He is the only breadwinner of the family with two kids, a wife (who is a homemaker) and two old parents.

If due to any unforeseen situation such as an accident, if Rajesh gets disabled or loses his life; the term insurance plan will help his family to cover the financial expenses.

 

The amount received from the term insurance plan will help Rajesh’s family to be financially equipped at such critical situation thereby not making them financially independent at such stage.

2. Is term insurance a good idea?

Yes, the term insurance plan is definitely a good idea as it is a life insurance policy which comes in comparatively low premiums as compared to other plans. In addition to this, the plan offers financial coverage to the family or dependants of the insured if the insured passes away during the policy term.

 

One of the distinct features of the term insurance plan is that it is the most affordable life insurance plans to provide comprehensive financial protection to your loved ones in your absence. The plan offers a lump sum amount as a death benefit to the nominees of the policy if the insured loses his or her life during the tenure of the policy.

 

Apart from the above-mentioned benefits, the amount obtained from this plan can be used in the following ways. These include:

• Securing your child’s future by fulfilling the higher education expenses
• Monthly household expenses
• Covers the expenses involved in your child’s marriage
• Paying off your loan

 

Owing to the highest life coverage for the minimum premiums you pay, this plan is highly advised for the middle-class family. This plan is cost-effective as well as easy on the pocket with the maximum benefits it comes with. In addition to this, the plan comes with a protection time period of 10, 15, 20, 30 years or maximum renewal age. The insured is allowed to choose the tenure as per his need and convenience. If the insured dies within this tenure, the benefits associated with this plan is offered to his or her nominee.

 

There are some insurers which also cover permanent or partial disability wherein the policyholder’s regular income is disrupted.

 

However, one must note that in case of survival of the insured, the coverage at the earlier rate of premiums is not guaranteed after the expiry of the term insurance policy. Here, one can obtain extended coverage with different payment condition or forgo the coverage entirely.

3. Which is a better term or whole life insurance plan?

Deciding whether to go with the term insurance plan or whole life insurance plan might be a tough choice, however, it completely depends on the needs of you and your family’s needs. Life insurance can be a flexible option to achieve your financial objectives by providing financial security.

 

Term Life Insurance Plan

Whole Life Insurance Plan

Provides death benefits

Covers you for life

Easiest and affordable plan to buy

Comes at a comparatively higher price

Becomes expensive after a certain age

Takes about 12 to 15 years of age to build up a decent value

Can be converted into whole life insurance

Initially, this plan might be expensive but ultimately this plan can save money over the life of the policy for a considerable number of years

So, while choosing a term life insurance plan and whole life insurance plan, there is the number of things that you must take into consideration. Few of the factors include your current age, financial needs, your children’s age, current health state, and your intention to set up a trust, your need for retirement plans, future needs of your family, your current debts, and mortgages etc.

4. Which is the best term insurance?

List of some of the best term insurance plan include:

• ICICI Pru iProtect Smart
• HDFC Life Click 2 Protect 3D Plus
• SBI Smart Shield
• PNB Metlife Mera Term Plan
• Bajaj Allianz eTouch Online Term Plan
• Aviva iLife Plan
• Aegon Life iTerm Plan
• Max Online Term Plan Plus
• LIC e-Term Insurance Plan

5. What is Claim Settlement Ratio in Term Insurance?

The claim settlement ratio in a term insurance plan can be defined as the percentage of claim settled by the insurer as compared to the overall claims received.

One can express it in terms of formula which says,

Claim settlement ratio = (Number of claim settled / Total number of claim received) * 100

By finding this value, it is quite easier for the policy seekers to get an idea of the number of claims settled by the particular insured in the specified financial year.

The insurers who have the maximum claim settlement ratio is considered to be more reliable and the finest one.