Term-Life-Insurance

Term insurance is a life insurance plan offered by an insurance company that provides comprehensive financial coverage against premiums paid for a limited period to the beneficiary of the policy; this coverage, provided under term insurance plans, is paid as death benefit upon the demise of insured during the policy term.

What is Term Insurance?

Term life insurance is one of the most popular types of life insurance that comes with a death benefit in case of a sudden demise of the policyholder during the policy term. Also popular as pure life insurance policy, the term policy can be renewed annually for another term, convert to a regular life insurance or permanent coverage or even allow to cease without a hassle.

A term plan not only offers financial security to your family but also is capable of fulfilling its future needs such as your child′s higher education, child′s marriage, etc.

Among all the life insurance products, Term life insurance policy offers the highest life coverage for the minimum premiums during the term of the policy. Some Insurance Companies also cover permanent or partial disability wherein the policyholder′s regular income is disrupted.

Note: In case of survival of the life insured the coverage at the earlier rate of premiums is not guaranteed after the expiry of the term insurance policy. The buyer has to either obtain extended coverage with different payment condition or forgo the coverage entirely.

Why You Should Buy Term Insurance?

There are various reasons to buy a term plan. However, here are the key and basic reasons that you must buy term insurance:

• The Dependency of your Family: You can use the term insurance money to meet the monthly expenses of your dependents and family when you′re not around. Moreover, it fulfils vital life goals such as education and marriage of your child.
• Protection of the Assets: A term plan allows you to take loans for assets such as a car or a house. Nevertheless, if you′re not around, your dependents and family might be burdened with the repayment of loans. In such circumstances, your family can utilize the term insurance pay-out in paying off the outstanding debts.
• Risks Related to Lifestyle: Present-day lifestyle problems often lead to various ailments and diseases. Some term insurance plans do not just safeguard your dependents and loved ones after the demise of the policyholder but also offer critical illness protection for a lifetime. This key feature pays on the diagnosis of some critical illnesses such as heart attack or cancer.

Benefits of Term Insurance Plan

A term insurance policy is a must for every person and one cannot articulate its importance completely. Term insurance plans are the only life insurance products that are especially designed to solve a sole purpose of protection. Now that everyone knows, it covers death perils and risks; here are some other core benefits of term insurance plans in India:

Safety for Loans and Liabilities

A term insurance also aids in providing safety for the dependents from your fiscal liabilities such as loans or any other debts that you have.

Cover Critical illness

Together with offering life cover, a term insurance plan also offers protection against critical illness. For a tiny add-on premium amount, Critical Illness cover offers lump sum payment when any critical illness such as kidney failure, cancer, or heart attack, etc. is first detected.

• Online Term Insurance Plan also takes care of family in case of your disability or critical illness. It provides
  • ■ Supplementary income in case of loss of income due to accidental disability or illness.
  • ■ Get lumpsum amount if diagnosed with critical illnesses.
  • ■ Additional sum insured in case of accidental death.

Higher Sum Assured at Affordable Premiums

One of the most alluring features of term insurance plans is that the premiums are always the lowest, unlike the other life insurance products. Moreover, the sum assured offered under term plans is relatively higher when compared to the premium amounts. Regular term insurance plans, including TROP plans come with a 105% return on premium benefit when the policy matures.

Tax Benefits

Term insurance plans come loaded with tax benefits on the term policy premiums paid. New-age term insurance plans along with critical illness cover also provide some additional tax benefits on the premiums paid by the policyholder. One can also avail benefits subject to the conditions u/s 10(10D) on the amount that his/her family receives in the case of an untimely demise or unfortunate event.

Support in the case of Disability

In some of the term plans, the insurance provider pays the future premiums in the case of permanent or total disability. Consequently, the policyholder′s life insurance cover continues even if s/he is not able to make payment of the premiums.

Add-on Protection

So as to amplify the security of the family, a term insurance plan offers add-on pay-out in the case of an accidental or untimely demise.

Top Term Insurance Plans in India

Term insurance offers flexible plan options to suit the need of every individual. You can choose:

• ■ The amount of preferred sum assured
• ■ Term life insurance premium payment option which can be one-time, limited pay or regular pay.
• ■ Term of the policy
• ■ Add on protection

Key Features of Term Insurance Plans

Term Insurance Plans are specifically designed to secure your family's basic financial needs in case of death or uncertainty. According to the plan, family/dependents of the life insured is/are eligible for a lump sum amount in case of death or critical illness (if applied for) of the life insured during the tenure of the policy. Let′s take a look at the salient features of the term insurance plans.

• ■ Death Benefits : On the demise of the life assured during the tenure of the policy, the nominee/ beneficiary of the policy receives the total death benefit chosen at the time of commencement. Depending on the type of term insurance plan, the death benefit may stay the same over the whole tenure of the plan (standard term plans), decrease (decreasing term plans) or increase (increasing term plans). The insurers provide various options of payment for the term insurance plan. These include a lump sum payment, lump-sum payment plus an annuity that may be monthly, quarterly or yearly, or simply annuities that are spread over the agreed number of years.
  Moreover, there are basic life cover plus monthly income term insurance plans which are specifically designed to take care of the monthly expenses of the family, even in the absence of the life insured. Under term insurance plan option, a lump-sum payout is made to the beneficiary in case of demise of the life insured. Along with the one-time payment, the term plan also offers monthly payouts for the fixed tenure of 10 years, in order to meet the daily expenses of the family.
  This term insurance plan is best suitable for individuals who are the single breadwinner of the family or whose dependents do not have any other source of income. So, with the monthly income feature of the plan, the dependents can use the money wisely and take care of their monthly liabilities.
• ■ Limited Pay: Limited premium payment term insurance plan allows the policyholder to pay the term policy premiums for the limited-term period, while the coverage continues for the longer tenure. For example, if an individual buys a term plan with policy coverage of 25 years and premium payment tenure of 10 years, then he/she will have to pay the term life insurance premium only for the term period of 10 years whereas, the coverage will continue for the tenure of 25 years. There are many different benefits of limited pay option such as:
  • ■ The premium payment term ends within a short- time period.
  • ■ The limited pay plans offer a longer duration of life coverage.
  • ■ Reduce the chances of term policy lapse. Besides this, one of the major benefits offered by limited pay option is that, under this option of premium payment, one can save up to 40% on the term insurance premium amount.

• ■ Policy Term: The minimum policy term is 5 years, with the maximum varying from 25 years to whole life span for equated monthly premium payments. For single premium policies, the policy term can vary from a minimum of 5 years to a maximum of 40 years. People can opt for the term plan period they think works for them. Experts suggests to go for term insurance plan which has a longer term-period as the premium amount generally gets locked and the insured party gets to pay the same premium over the tenure of the term plan for the same amount of cover.
• ■ Entry Age: To be eligible for term insurance plans, the minimum age of entry is 18 years, with a maximum age limit of 65 years with optional add on benefits. The premium of the term plan increases with age and people who are looking for a term policy for a longer period should opt for the best term insurance policy when they are relatively young.
• ■ Maturity Age: The best term insurance plans are those that offer cover well into the lifetime of the insured. Term insurance policy offers coverage to the insured up to 65-70 years of age. Term policy with higher maturity age may also charge a higher premium rate as they offer a term insurance cover against life risks for a longer tenure. Also, the risks increase with age and this is reflected in the premium amount.
• ■ Tax Benefits: Term insurance plans come with excellent tax benefits. You can avail lucrative tax benefits under Section 80C and Section 10 (10D) of the Income Tax Act, 1961. Additionally, the term life insurance premiums paid for the Critical Illness Benefit towards tern plan, also qualifies for a deduction under Section 80D.
• ■ Maturity Benefits: Term insurance plans don't come with any survival or maturity benefits. If one wants maturity benefits, then a TROP (Term Return of Premium) plan is suggested.
• ■ Plan Choice: Term insurance provides flexibility in terms of choosing the plan on a single life basis or joint life basis. Single life means that the term plan will only provide cover for the life of the insured party who is generally the breadwinner of the family. A joint life term plan, on the other hand, covers the life of both the husband and the wife through a single term plan. Most term insurance plans offer the term policy on a first claim basis. This means that the term plan pays the sum insured on the expiry of either of the two insured. There are also other term plans that pay on the death of both the insured persons.
• ■ Survival Benefits: A standard term plan does not have any survival benefits. However, the demand from investors has meant that various companies have opted to launch term insurance plans with survival benefits. Called Term Return of Premium (TROP) plans, the term plan refunds the premium at the end of the term plan tenure if the insured person survives the period. The TROP plan is becoming popular with people who are looking for savings as well as insurance with their term plan.
  This term insurance plan has a higher premium than the standard term plan but has the advantage of assurance that the policyholder will get back the premium he or she paid to the life insurance company for the cover. Policy holder should read the insurance terms and conditions carefully to ensure they know the amount of money they will get back as survival benefits. Check out the term insurance policy that meets your needs with our term insurance comparison.
• ■ Additional Rider Benefits: Additional optional benefits such as critical illness and accidental death/ disability or Accelerated Sum Assured are also available under the term insurance policy. The benefits can be added to the term plan by paying an additional premium amount. The best term plan in India is the one that offers these riders at a comparatively lower price than opting for such cover through individual plans. Choose the additional optional benefits for your term insurance plan with our website. Use the term plan comparison features to shortlist the additional benefits you need. Some common term insurance riders are:
  • ■ Critical Illness Rider
  • ■ Waiver of Premium
  • ■ Accidental Death Benefit Rider
  • ■ Accidental Total and Permanent Disability Rider
  • ■ Income Benefit Rider

How to Choose the Best Term Insurance Plan?

To select the best term insurance plan, a policyholder should look into the following factors:

• Claim Settlement Ratio: The record of term insurance claim settlement 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.
• Feature to Add Terminal/Critical Illness Benefit: A critical medical issue such as brain surgery or cancer costs a lot of money and cripples the finances of the family. However, if a term plan chosen by a policyholder covers critical illness or if it has the feature to add-on critical illness cover in it, then one can easily safeguard self from such risks. Most of the critical illness add-ons immediately payout upon diagnosis of the critical illness.
• Company Reliability: The reputation of a company and stability is very important in any sector of business, especially in the sector of life insurance for the customers to trust. Before zeroing in on a plan, it is important to check the credibility of the insurance company.
• Premium: 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.
• Premium Waiver Rider upon Diagnosis of Terminal Illness: If the policyholder gets affected by some terminal illness, then all the future premiums for his/her term policy will be waived off.
• Solvency Ratio: 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.
• Enhanced Cover: Some of the specific 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.
• Riders: While purchasing a term plan, it is important to check the rider benefits offered by the term insurance company in a detailed way. An insurance rider is extra to the essential plan that offers advantages far beyond the subject of the policy in case of any eventuality.
• Go for a Regular Income Payout Option: Since their inception, the life insurance plans like term insurance plans are providing a large sum of amount to the nominee of the policyholder. However, some modern term insurance policies are providing the option of regular payout along with some lump-sum. So, opt for a policy that provides a regular payout option.

Reasons to Buy Term Plan Online

Apart from the hassle-free and simple process of purchase, an online term plan offers many other benefits.

• Affordability: Purchasing an online term insurance plan is more affordable as compared to purchasing the plan offline. This is because there are no agents involved in between. The policy buyers can directly purchase the online term plan by visiting the website of the insurance company. By purchasing the plan online, the paperwork and processing fees automatically decrease as everything done online and these benefits are offered to the customers as discounts. Thus, buying an online term plan is more beneficial as compared to the offline term insurance policy.
• Sum Assured: This is yet another benefit of buying an online term insurance plan. Mostly, the sum assured amount offered by an online term plan tends to be higher on contrary to offline term insurance plan, because the overall cost of purchase is low. Moreover, while purchasing the term plan online, most of the insurance companies do not ask for any medical test. Medical test of the insurance buyer is only required in case the sum assured amount of the policy is above Rs.50 lakhs.
• Comparison: One of the perks of buying online term insurance plan is that it offers the advantage to compare term insurance policies online and then choose a particular plan as per one′s own requirement and suitability. By comparing term insurance plans online, the insurance buyers can zero in on the most beneficial plan at the most affordable premium rates.
• Reliability: The online process of policy purchase is more reliable. The online term insurance policy offers transparency while purchasing a policy. The policy buyers can know about the features, terms and conditions of the policy in a more detailed way by simply visiting the website of the insurance company. Moreover, in order to make an informed decision, the insured can also check the reviews of the plan.
• Easy Access: Unlike offline term insurance policy, the online term insurance plan can be accessed easily. The insurance holder has the convenience to access and know the policy details whenever they require. Moreover, they can also check and keep track of the policy status from time to time.

Who Should Buy a Term Insurance Policy?

Any individual with financial dependents should consider purchasing a online term insurance policy. This includes young professionals, parents, married couples and people who want to gain tax benefit as term insurance plan provides tax benefit under section 80C of Income Tax Act 1961. Hence, any individual who wants to provide life protection to their family at an affordable premium rate along with the benefit of tax exemption should purchase a term insurance policy.

• Parents: Parents are generally the single breadwinner of the family and the only financial support for their children. Thus the best way to secure the financial future of the children is to have a term insurance policy. As in term plan, a death benefit is paid to the beneficiary of the policy in case of the unfortunate demise of the insured person.
• Newly Married: A term insurance policy can work as a financial safety net for your spouse even in your absence. In case of any eventuality, the term insurance plan not only provides financial security to the beneficiary but also takes care of the liabilities.
• Young Professionals: Purchasing a term insurance policy at a young age is more beneficial as compared to buying a policy at an old age. This is because the policy offers very low premium rate to the young individual as compared to the old policy buyers. Moreover, one can also secure the financial future in the long-term by buying a term insurance plan while being young.
• Taxpayers: Along with the benefit of life coverage, one of the major advantages of purchasing a term insurance policy is that it offers the benefit to save on taxes. The premiums paid towards the policy are tax exempted under section 80C of the Income Tax Act. Thus, if you want to save on taxes along with the benefit of life cover then you should certainly consider buying a term policy