Life is unpredictable. While we always wish for the best, it is smart to prepare yourself for uncertain circumstances.
If the Karta (head) of the family expires suddenly, In that case, the family faces a major financial crisis because of no source of income. The savings might not be adequate to satisfy all their financial needs of the members. It is the point when financial security is needed. A term life insurance policy ensures this financial security and supports the family with the financial loss if the Karta of the family (bread-winner) expires early.
Understanding Term insurance plan
A term life insurance policy is a plan that is usually acquired by an individual on his behalf to protect his/her family members from any financial crisis in case of his/her death. A specific tenure and money assured are accepted in this policy.
The company decides premium by keeping the factors of the individual’s pre-existing disease, age, and life anticipation. If the policyholder dies during the holding of the plan, the company pays the entire sum assured to the policy holder’s family.
How does Term Insurance work?
- A person decides the policy term, coverage amount, and premium for the Term Insurance by considering many factors like age, coverage amount, pre-existing disease, etc. This premium remains fixed during the policy term.
- A person can pay the premium monthly, quarterly, or just once.
- After the purchasing of the policy, if the policyholder dies, the insurer is liable to pay the entire coverage amount to the nominee of the policyholder.
- When the policyholder is living after the ending of the term, the coverage also ends without giving any financial benefit to the policyholder. Still, if the policy includes survival privileges, then once the policy finishes, the policyholder will get a lump sum as per terms and conditions.
- If the policy is over and the policyholder wants to renew the policy, then one can restore the policy again.
Features of term life insurance plans
Term insurance plans have the following key features which you should know to understand better –
- Term insurance plans charge a very nominal amount of premiums because the term only covers the risk of death.
- There is no limit on the sum assured in the policy. You can even choose a high coverage term for better financial security.
- The time of the plan can reach up to 30 to 35 years that facilitate you to enjoy coverage at your old time.
- There is no paid-up value in term insurance plans. If you default in paying the premiums on time, the policy will get terminated & you would not get the compensations.
- There is no bonus available under term plans. In case of death, the nominee of a policyholder will get the sum assured as per the policy.
Some term insurance plans available in India
Since term insurance plans are very crucial and valuable, all life insurance companies have started offering them.
Amongst many term life insurance plans in the market, here are remarkable term policies which you can count for your needs –
ICICI Pru Iprotect Smart Plan
- This policy covers up to 99 years of age.
- There are four types of death benefit amount option available that pays the benefit in a lump sum, monthly or quarterly.
- The entry age for this plan is 18 to 65 years
- Term of the plan is available for five years to 99 years.
- The minimum premium charged for the term plan is Rs 2400.
HDFC Life 3D Insurance Plan
- There are nine coverage choices available that can cover the need of all family members.
- Coverage can opt for entire life.
- You can increase the sum amount after your marriage or becoming parent.
- Entry age is 18 to 65 years.
- Term of the plan is available for one month to (100 – entry age).
TATA AIA Life Insurance Plan
- Entry age for this plan is from 18years to 70 years
- The sum assured amount is Rs 50 lakhs onwards.
- Noncompulsory riders are available that can increase the scope of coverage.
- You can pay the premiums during the policy term or for a particular time.
Bharti AXA Life Flexi Term Plan
- The coverage amount is available up to 85 years of age.
- Critical illness is also covered under this plan.
- Entry age is 18 to 65 years
- The term of the plan is available in 10 years to 85 years.
- You can get the sum assured the minimum of INR 10 lakhs.
AEGON Life iTerm Insurance Plan
- Coverage is available till 100 years of age.
- Three types of coverage options are supporting the policy.
- Females can secure their life with low premium rates.
- The entry age is 18 to 65 years.
- The minimum Sum assured is Rs 25 lakhs.
A list of documents necessary for purchasing term insurance plans
To get a term insurance plan, the following documents need to be submitted –
- Proposal form filled and signed.
- Address proof certificate
- Income proof certificate.
- Age proof certificate
- Identity proof certificate
- Passport size photograph of the policyholder.
Benefits of Term Insurance Plan
Your term insurance plan can support you and your family in many directions. Here are some:
- Low premium charges – The best trait about a term coverage plan is that you would get a benefit at the least premium. Plus, as soon as you buy the policy, you have to pay a very less premium.
- Complete coverage of life – Many term plans are available these days that fulfill the coverage till 100 years of age.
- Financial security – Your family will accept the claim in the form of an installment or a lump sum amount in case of your death.
- It also offers tax benefits – Premiums paid for a term insurance plan & the sum assured received on death are eligible for tax exemption under Section 80C of the Income Tax Act, 1961.