A human life has a cycle that includes money, love, deception and many other things, but what it’s devoid of, is the assurance of life itself. Therefore, to secure the future of your loved ones, one must invest in term insurance plans.
Term insurance, simply put, provides financial support to the family of the deceased, if one dies under the cover of a term insurance plan.
Notwithstanding the popularity of the Life Insurance Corporation of India among Indians, life insurance premium is, even today, considered to be an expense rather than an investment.
Instead of securing their life, people think of securing cash. But this trend is slowly changing, thanks to the new insurance initiatives in India.
Definition Term Insurance –
Most insurance companies offer term insurance, which fall into the life insurance category. A term insurance coverage includes a specific life term for which a policyholder is covered against death. In case a policyholder dies during the term of the policy, the family of the policyholder receives a sum amount of the policy as a death benefit.
Term Insurance Types –
Not many are aware but, there are five different terms plans available in the Indian life insurance market.
- Pure term plan – Affordable and an easy term plan with pre-determined sum assured.
- Return of premium plan – Keep in mind that term insurance plan is not saving scheme. Hence, as coverage increases, increases the outlay of the premium. However, attracting, the return of premium is a costly option.
- Decreasing plan – Here, the policyholder can see his/her sum assured as the premium keeps decreasing each year.Not a very popular product among policyholders.
- Increasing plan – Contrary to a decreasing plan, a policyholder receives his/her sum assured as well as premium increased every year. This plan is not preferred either among policyholders.
- Convertible plans – In this term plan, a policyholder enjoys dual benefits of the plan as well as savings. Here, the premium can be converted into investments.
Guide to select a term insurance –
Buying an insurance can be a daunting exercise as each plan comes with a set of terms and conditions. Choosing the right term insurance product that benefits you and your family requires time and proper information.
That is why, there are some key features that you need to consider, when buying a plan.
- Sum Assured: Sum assured is an Amount your life is covered for by the insurance company. In simple terms, the amount your family will receive in case of eventuality. The concept is to have an insurance cover that is 10 times of your annual income.
- Entry Age: Starting insurance policy at the early stage is always advisable, as it provides wider coverage for lesser premium. If you don’t want to risk your family for long, ideally start a term insurance plan between 20 and 25 for approximately 30 to 35 years.
- Maturity Age: The maturity age plays vital role in deciding the policy. One should choose policy that offer long time protection even after the retirement. Like Max Life Term Plus that covers life till 75 years for the premium paid until age 60 only.
- Tenure: Term insurance policy comes with flexible time span. As mentioned in the above aspects, one should expect term policy to serve the purpose for long time, like 30 to 40 years – the ideal term plan tenure that reduces premium cost.
- Claim Settlement Ratio: Promises are many by Insurance companies when you are to buy an insurance coverage. However, you should seek some replies about the claim settlement ratio, claim processing time, and post-claim submission services. Max Life enjoy the best reputation among all when it comes to offering family claim settlement comfort.
- Riders: Insurance documents are long text and not all are talked about by your agent. Hence, going through the rider is important. In some cases, the premium waiver or reduction in premium with increased sum assured are part of Rider.
Benefits of term insurance plans –
The reason being term insurance plans are preferred compared to others is they are easy to understand and easy to fulfil the terms. Term plans offer better flexibility in terms of sum assured, policy tenure, and premium types.
Since, it’s a popular plan, premium costs are extremely competitive. Going by the insurance industry norms, Term Insurance Plan is the cheapest protection plan that comes with great return for you and your family.
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