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Term life insurance is an agreement between the policyholder and the insurance company, where in case of the policyholder's untimely demise, a specific sum is paid to the insured person's family by the insurance company. Term plans are significant when it comes to long-term financial planning which offers comprehensive financial protection to your family members against life's uncertainties.
To have a clarity about the Term Plan, one needs to understand the following features:
Term insurance policies are some of the most affordable life insurance products. Usually the premiums in comparison with other Life Insurance policies are much lower.
The minimum entry age for Term Insurance Plan is 18 years. Buying a term plan at a young age helps in getting sizeable coverage at very reasonable premium.
Term insurance provides coverage for specified number of years, known as the policy term. In case of an unfortunate event during this period, your nominee will receive the sum assured in your policy. Term insurance tenures can start from 5 years and extend up to your 99th birthday if you choose the whole life insurance option.
Term insurance provides financial protection to the Insured family in case of an eventuality. It is
not meant to be used as an investment instrument. Thus, it does not offer any return on the premium
that Insured pays. However, you can get substantial coverage, enough to cover the current and future
expenses of your loved ones at a quite affordable premium.
Also, one can opt for term insurance with a return of premium feature if you want some maturity
benefits. After the policy matures, you will get back the entire premium you had paid throughout the
policy tenure with such plans.
Term Plan premiums can be paid as per insured's convenience. Annual, semi-annual, quarterly, or
monthly premiums are some of the premium payment frequencies one can choose. Such regular premium
payments are ideal for salaried individuals with a stable income.
A one-time, lump sum premium payment option is also available. Alternatively, one can go for a
limited pay option and pay off the premiums within the initial few policy years. Insured's life
cover remains active for the entire term plan tenure.
A term plan keeps the Insured's family secure from financial challenges if an unfortunate event occurs. It provides a life cover of choice at affordable premiums. With this life cover, Insured's loved ones get an assured sum in case of an unwanted incident during the policy period.
Riders are available with term as under:
Critical Illness Rider
Accidental Death Cover
Waiver of Premium Benefit in case of a permanent disability
The scope of the base coverage may be extended with additional premium.
A term plan keeps the Insured's family secure from financial challenges if an unfortunate event
occurs. It provides a life cover of choice at affordable premiums. With this life cover, Insured's
loved ones get an assured sum in case of an unwanted incident during the policy period.
For example, after marriage, birth of child one can enhance the coverage, suiting to the financial
needs of life.
Term plans offer many tax benefits. Under Section 80C of the Income Tax Act, 1961, you can claim deductions up to 1.5 lakh on the premium you pay for your term plan. The pay-outs are also tax-exempt under Section 10(10D). Moreover, with an add-on health-related rider, you can avail of tax6 benefits under Section 80D on the premium paid for the rider.
This benefit waives off all your future premiums in the case of a disability caused by an accident. Hence, even if you fail to pay the premiums due to any income loss from a disability, you will still be able to keep your family's future secure.
Claim settlement ratio is an indicator of the claims received V/s settled, the one with higher ratio is better for consideration.
Solvency ratio indicates the financial capability of the Insurer, to settle claims. It is suggested to go with the Insurer whose solvency ratio is at least 1.5
It is advisable to choose a term plan which gives you multiple benefits like waiver of premium, accidental death benefit, and income benefit.
To arrive at the amount of coverage, one needs to take into account insured's age, requirements, Life style, income and loan liability.
This helps in covering the insured from high cost of treatment in case of a critical illness.
Term Insurance provides Financial security to the Insured's, family. If the Insured is a primary earning member in the family, buying a term plan would take care of the monthly financial needs of Insured's family, in the absence of the Insured Person.
In cases where Loans have been taken for, education, home, personal loan, or a vehicle loan. The proceeds from Insured's term insurance plan pay off the loans and ensure that the financial burden does not fall upon Insured's family.
The probability of developing a lifestyle disease increases with age. Some term insurance plans also offer critical illness protection which not only protects your family in case of uncertain eventualities but also during your lifetime. Critical illness benefit provides financial security against various life-threatening health conditions such as cancer & heart attack.
The insured's stakeholder needs to ensure the following, for filing Claim under Term Insurance:
Inform the Insurance company about the claim.
Claim Form duly filled up.
Death certificate of the insured person.
Policy document.
Identity proof documents of the Nominees e.g. Aadhar Card, PAN details etc. along with passport size photographs.
Legal evidence of title, in case the policy is not assigned or nominated.
Form of discharge executed and witnessed.
Last medical attendant's certificate.
Post Mortem report, wherever applicable.
Also, if applicable, hospital certificate, Employer's certificate, police inquest report may be required.
Term Insurance claim may be rejected if :
Correct details have not been provided in the Claim form.
Requisite documents not submitted along with the claim.
Nominee details not updated in the policy.
Policy lapsed due to non-payment of premium.
Correct medical history not disclosed at the time of taking the policy.
Hiding lifestyle habits like tobacco or alcohol consumption.
Term insurance eligibility can differ for each plan and insurer. All insurance providers offer plans with unique terms and conditions. However, as per the general norms, the minimum age limit for buying a term insurance plan is 18 years. Likewise, the maximum age limit for buying a term insurance plan is 65 years
The insurance company considers a lot of factors before deciding premium. The main ones are - age, gender, personal and family's medical history, geographical location, occupation, BMI index, and lifestyle.
"Riders" are add-on benefits or amendments attached to your basic term insurance plan. These can be purchased at a nominal rate. They allow the policyholder to customize the plan according to their needs
Terminal Illness benefit pays out a lump sum amount to the policyholder if they are diagnosed with an end-stage illness and are expected to die within 12 months. This additional benefit provides cover for an unforeseen disease which is not curable.
Yes, deaths outside India are covered in term insurance plans, provided the insurance company is informed about the accident well in time, along with the required details. However, the company may reject the claim if the death occurs due to travelling to unsafe countries.
Yes, you can buy a term insurance plan for your spouse. In fact, joint term insurance plans are quite popular for the many benefits that they offer. These plans cover you and your spouse under a single policy. Buying a joint term plan for yourself and your spouse can be a simple, hassle-free, and cost-effective way to buy term insurance.
