Term Insurance is a type of life insurance policy that offers financial coverage to your loved ones in case of your uncertain demise during the policy tenure. It is the simplest form of life insurance available at affordable premiums. Term life insurance offers you a range of benefits including:
There are various term plans available in the market but you should choose the one that best suits your requirements. After reading this article you will get a complete idea to choose the right term plan for yourself.
There are various reasons to buy a term insurance plan as your life is uncertain. Let’s understand the need to buy a term insurance policy.
Here are some of the common rider options you can choose with your term plan.
Name of the rider | Benefits |
---|---|
Accidental Death Benefit Rider | Offers additional rider sum assured in case of the policyholder’s demise due to an accident. |
Critical Illness Rider | Offers a lump sum in case the policyholder is diagnosed with any critical illness covered under the policy. |
Terminal Illness Rider | Offers full or partial sum assured in case the policyholder is diagnosed with any of the terminal illnesses covered under the policy. |
Waiver of Premium Rider | Future premiums are waived off but the policy continues in case of accidental total permanent disability, critical illness or death under this rider. |
Accidental Total and Permanent Disability Rider | Offers life cover in case of total permanent disability due to an accident while waiving off all future premiums. |
There are a total of six categories of term insurance plans available in the market. Let’s understand each one of them:
Type of the plan | Features | Suitable For People Who |
---|---|---|
Level term plans | These plans only provide a sum assured to the nominee in case of the death of the policyholder. No survival benefits are included and premiums remain the same in the entire policy tenure. | Want affordable coverage, Have just started their career, Have dependents |
TROP (Return of premiums plans) | These plans give the premium amount back to the policyholders only if they survive the policy term. | Want a their paid premiums back, Want maturity benefits, Want coverage with savings |
Increasing term plans | Offer options to increase the basic sum assured of plans at different milestones of life of the policyholder such as marriage, childbirth, or adoption. | Want protection against inflation, Expect growing financial responsibilities, Need flexible coverage |
Decreasing term plans | The total sum assured amount decreases over time as one part of the premium is used to pay the loan of the policyholder thereby decreasing the loan as the policy continues. | Need loan protection, Want temporary, coverage Have no dependents |
Zero-cost term plans | Offers a special exit option to the policyholder after they have completed a certain number of years with the active policy. | Can exit their policy in between due to any reason. |
Life is very uncertain, continuously surrounded by multiple risks, diseases, accidents, or death. Term insurance in such scenarios comes in handy because it offers the financial aid that is utmost needed when these things happen. Let’s look at all the features of term insurance to understand it better.
Term insurance policies come with affordable premium prices compared to other insurance policies.
The entry age for purchasing term life insurance is just 18. Most of the insurers ask for income proof as well while buying a term insurance policy. Buying term insurance at a younger age will help you pay lower premiums for a higher sum assured.
Policy term is defined as the total no. of years under which the policyholder is covered; in any unfortunate event that occurs during that period, the nominee will get a sum assured. You can choose the policy term as per your requirements.
If the policyholder survives the full policy term, under the TROP plans, they can get all the paid premiums back on completion of the policy term.
Term insurance offers flexibility to the customers for paying premiums. Customers can choose annual, half-yearly, quarterly, or monthly payments according to their convenience.
Customers can opt for tax benefits under sections 80C (max 1.5 lakh) and 80D (max 50k) under the Income Tax Act 1961
Some term plans such as HDFC Click 2 Protect Super offer you the option to increase the death benefits up to a certain percentage.
Term plans such as HDFC Click 2 Protect provide the policyholders with an option to cover their spouse under the same plan.
Various term plans such as HDFC Life Click 2 Protect Elite provide you with an option to pay premiums for a shorter duration while providing coverage for a long time.
Some term plans such as ICICI Pru I Protect Smart Term Plan offer you to choose from multiple death benefits payouts including- income, lump sum, lump sum plus income, and increasing income.
Various term plans such as Tata AIA Sampoorna Raksha Supreme offer an option to increase sum assured through a top-up option.
Problem- Mr. Ranbeer, a non-smoker was looking for a plan that covers his family financially even after his demise so that they do not face any problems.
Solution- He visited PolicyX.com on one of his friend’s recommendations. He provided his information and chose the Max Life Smart Total Elite Protection Plan. Let’s see how this plan works for him with a simple premium illustration table.
Age of policyholder | Annual premiums | Policy tenure | Premium payment term | Total premiums paids | Sum Assured |
---|---|---|---|---|---|
30 years | Rs 11,243 | 30 years | 30 years | Rs 3,37,290 | Rs 1 crore |
Takeaways- In the case of Mr. Ranbeer’s demise during the policy tenure his family would receive death benefits of Rs 1 crore.
The following people should purchase a term plan:
Before buying a term insurance plan make sure you have decided how much coverage you need. Ideally, your term life cover should be 15 to 20 times your annual income.
Here is a list of the factors you should consider before calculating your ideal term insurance coverage amount:
Key Takeaways
You can buy term insurance from PolicyX.com, the insurer’s website, their nearest branch office, or any other agent. Let’s see the buying process of term insurance.
Buying from PolicyX.com
* Once the payment is made, you will receive a confirmation at your registered email address.
Buying from the insurer’s website
You can visit the official website of the insurer and buy the plan you want by paying the premiums.
Buying from the branch office of the insurer
You can visit the branch office of the insurer from whom you want to buy the insurance.
A term plan gives a financial safety net to your loved ones even when you are not with them. You should buy a right-term plan at a younger age as the premiums are comparatively lower. Choose the right policy tenure, sum assured, add-ons, etc to avoid any kind of hassles.
If you are still confused about which term plan is right for you then you can contact us at PolicyX.com. One of our insurance representatives will contact you shortly and help you choose a plan that best fits your requirements.
Term insurance covers the insured for a specific period, whole life insurance covers the insured for a lifetime.
Any individual at least 18 years of age with a monthly income is eligible to purchase term insurance.
Yes, you can purchase term insurance for your parents.
The maximum age limit to purchase term insurance is 65 years.
Death caused by consumption of any intoxication, homicide, or disease that is not disclosed during purchasing the term plan is not covered in a term plan.
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Himanshu is a seasoned content writer specializing in keeping readers engaged with the insurance industry, term and life insurance developments, etc. With an experience of 2 years in insurance and HR tech, Himanshu simplifies the insurance information and it is completely visible in his content pieces. He believes in making the content understandable to any common man.
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