A term insurance plan provides compensation to the beneficiary for the unfortunate loss of the life assured during the policy period. The sum assured is known as the death benefit that is provided to the nominee/family of the life assured in case of unforeseen demise of the life assured during the policy tenure. Term insurance is the simplest form of life insurance that helps an individual financially secure their loved ones in their absence. Term insurance plans are very affordable; an individual can get a high coverage amount at the most affordable premiums.
A term insurance plan is the simplest form of life insurance. One of the primary benefits of term insurance is its affordable cost. As compared to other life insurance policies, a term insurance plan is available at a premium that one can easily afford. Another important benefit of term insurance is that the earlier you buy term insurance, the lower premium you have to pay.
As a pure life cover, a term insurance plan does not have any investment component in it. You have to pay the premiums, and the insurer covers your life for a fixed duration to offer the benefits of term insurance.
Term insurance plans come with riders that you can choose to enhance the term insurance basic benefits. You can add these riders to your term insurance plan by paying an additional nominal premium.
Term insurance plans can also provide tax benefits. The premium you pay for your term insurance plan is tax-deductible, the payouts also come with tax exemptions as per the existing tax laws.
While buying a term insurance plan, the buyer must evaluate the following features:
The insurer’s claim settlement ratio provides a clear picture of the insurance provider to the prospect policy buyers. The ratio of claim settlement is released by the Insurance Regulatory and Development Authority (IRDA) India every year. A claim settlement ratio that is consistently good indicates that the insurance provider has been quick and robust in its claim settlement process.
The solvency ratio is something that tells whether the insurance provider chosen will be capable financially for settling the claims if the requirement arises. As per IRDA, every life insurance provider should maintain a solvency ratio of 1.5 at least.
This is the reward that insurance companies offer you when you do not raise any claim request during the policy tenure. It is similar to a no-claim bonus in car insurance and the benefits that you can reap vary from insurer to insurer.
Some insurance companies offer the option of enhanced cover in the term insurance policy. In this option, the policyholders can enhance the coverage of the policy under particular circumstances or critical situations.
While purchasing a term plan, it is important to check the rider benefits offered by the insurance company such as terminal illness, critical illness, etc. An insurance rider is extra to the essential plan that offers advantages far beyond the subject of the policy in case of any eventuality.
The premium rate of a term insurance plan plays a vital role while purchasing the plan. Hence it is important to compare term insurance policies online and choose the term plan which offers higher coverage at an affordable premium rate. Additionally, choose a company that provides discounted premiums to non-smokers.
Anyone who has financial dependents should buy a Term Insurance Policy. This includes SIP investors, young professionals with dependent parents, married couples, parents, business people and self-employed, and in some cases, even retirees.
Investors in mutual fund SIPs (Systematic Investment Plans) invest a fixed amount each month in a fund. Wealth creation in a SIP is driven by a stream of regular installments that compound with time. However, an unfortunate event for the investor can stop the investment flow. Term Insurance can protect your SIP by providing the nominees of the insured person with funds to continue your SIP.
Young professionals are just starting their careers. Most of the young professionals are not yet married and don't have any financial dependents. However, this is likely to change in the future when they get married or support their parents/relatives. Such individuals should not wait and buy term insurance now. This is because at the age the policy is purchased, the premiums stay the same throughout the period.
Gifting your partner roses, chocolates, and movie tickets is great, but here’s a truly long-lasting gift – term insurance. Gifting your spouse term insurance will give them more than momentary joy, and it will secure their future. Term Insurance assures your spouse of financial support in case of a mishap with the insured person and should be purchased as you get married.
Parents are the sole source of financial support for their children. An unfortunate event with any of the parents can put their future at risk and deprive children of life’s opportunities. Parents should ensure that this scenario does not come to pass if they purchase a term insurance policy. This policy will pay out a lump sum and/or income to satisfy their children’s expenses, in the event of any mishap of any parent(s).
As a self-employed person, you may face many challenges. Unlike salaried individuals, you do not earn a fixed income monthly; you have an uneven source of income that depends on the ups and downs of the market. A term life insurance policy can ensure that your family remains financially secure even when you are not around.
Retired persons also need to have term insurance if they have families or dependant spouses. Buying term life insurance can also be a way of leaving an inheritance for your family. This is because Term Insurance is paid out to nominees in case of any mishap with the person that is insured. The Term Insurance payment is tax-free subject to conditions under Section 10(10D) of the Income Tax Act,1961.
You are responsible for the overall well-being of your spouse, parents, and children, being an earning member of your family. To ensure that you meet the obligations to your loved ones even when you are not around, buying term insurance is essential.
You might have assets like a home, office, or vehicles through loans. With a term insurance plan by your side, you can ensure that a load of these borrowings will not cause any hardship to your loved ones in your absence.
Uncertainties in life can affect you in unpresented ways. This can be well understood while witnessing the current global pandemic - Coronavirus. What a term plan does best is that it makes us stay prepared for all such eventualities. You can opt for significant life cover at an affordable premium under a term insurance plan.
The unfortunate demise of the sole earning member in a family can turn life upside down, making it difficult to make ends meet. Term insurance benefits, on the other hand, can make the life of your loved ones financially easier in such a situation.
Yes, more than one claim, from different insurers can be entertained, provided that these claims and the detailed nature have been declared at the time you purchase the policy.