What is Term Insurance?
Term insurance can be described as a type of pure protection life insurance that can be availed for a fixed period of time and provides financial security to the family of the insured in case of any eventuality. The term insurance plan is more affordable as compared to other life insurance policies, as it does not provide any maturity benefits.
In term insurance plans, the death benefit is provided to the beneficiary in case of the insured’s demise within the tenure of the policy. All most all major insurance providers of the country provide term plans.
Term insurance is the most basic form of a life insurance plan that provide an excellent opportunity to create a financial safety net for your loved ones in the most economical way. In order to avail the most beneficial plan according to one’s own suitability the life insurance buyers can compare term plans online and zero in on a plan.
Why Should Buy Term Insurance?
“Family is everything”- we certainly agree! We’re sure that you love your family too. If you are the sole earner in your family, there must be a question in your mind, bothering you about “how will my loved ones manage their finances in my absence?”
As the density of risk that life throws in our paths cannot be measured, we can only take necessary precautions whatsoever. However, there are times when situations are beyond our control. Since life is unpredictable, you certainly wouldn’t want your family to face financial hardship followed by the repercussions during their hard time. Here comes term insurance handy!
It assures that your family is in financially safe, in case you are unable to earn due to any disability. Term insurance is the assurance for ultimate protection in financial terms, as a lump sum is offered to your family as the death or disability benefit.
Don’t ignore the viability of term insurance. Get yourself insured, today!
Benefits of Term Insurance Plan
- Provides Lump sum amount to the beneficiary of the policy in the event of sudden death.
- Take care of all the liabilities and loans.
- Provides financial protection to the family of the insured so that they continue to have a good lifestyle.
- The term policy also secured the family in case the insured is suffering from critical illness or disability.
- The term insurance plans provides supplementary income if the insured suffers from loss of income due to illness or accidental disability.
- The term insurance plans provides additional sum assured amount in case of accidental demise of the insured person.
Benefits of Buying Online Term Plan
Apart from providing financial security to your family, term insurance plans have many other benefits to offer. Having a term plan is important for every individual, especially for those who are the sole earners of the families. In today’s age, in order to fulfill the requirements of the insurance seekers, a wide range of insurance plans offered by the various insurance companies in India. Let’s take a look at some of the benefit offered by online term plans:
- Offers lump-sum benefit to the nominee, in the event of the unfortunate demise of the insured
- Looks after the liabilities of the insured
- Provides financial security to the insured’s family so that they can maintain their existing lifestyle
- Provides financial support to the insured, in case they suffer from any type of disability or critical illness
- Online term plans provide simple and hassle-free process of purchase. It also provides the advantage to compare term plans quotes online and choose the most beneficial plan according to one’s own requirement
- Offers supplementary income if the insured suffers from the loss of income due to an accidental disability or illness
- Provides the nominee with the sum assured in case of accidental death of the insured
Best Term Insurance Plans in India
|Insurers||Term Plan||Entry Age||Maturity Age||Sum Assured||Claim Settlement||Premium( For coverage amount of 1Cr)|
|Max||Online term +one time lump-sum plan||Minimum-18 years
Maximum-No upper limit
|PNB Metlife||Mera Term Plan||Minimum-18 years
|75 years||Minimum-Rs.10 lakhs
Maximum-no upper limit
|Aegon Religare||I Term||Minimum-18 years
|75 years||Minimum-25 lakhs
Maximum- No upper limit
|Bharti Axa||Life eProtect||Minimum- 18 years
Maximum- 65 years
Maximum-No upper limit
|IDBI||IDBI Federal iSurance Flexi Lumpsum Plan||Minimum- 18 years
|80 years||Minimum- Rs.50lakh
Maximum- no upper limit
|Bajaj Allianz||iSecure||Minimum-18 years
|70 years||Minimum-Rs.20 Lakh
Maximum- No upper Limit
|Edelweiss Tokio||My Life||Minimum-18 years
|80 years||Minimum-Rs.25 lakh
Maximum- No upper limit
Types of Term Insurance Plans
To cater the requirement of the insurance seekers there is a wide range of term plans offered by the insurance companies. According to one’s own requirements, an individual can compare term insurance plans quotes and choose the most suitable plan. Let’s take a look at the different types of term plans available in the market.
Standard Term Insurance Plans
Standard term insurance is the simplest and most common form of term plan that provides life coverage to the family of the insured in form of the death benefit in the event of the insured demise.
Group Term Insurance Plans
This term insurance plans are particularly designed for companies, businesses, associations, and societies. Group term plans provide insurance coverage for all the members of the group. The benefits provided by group term insurance plans are similar to an individual term plan. However, the overall coverage offered by the policy is generally more as compared to the individual policy.
Term Return of Premium (TROP)
TROP is a simple term insurance plan that comes with a little variation of providing survival benefit. In case, the insured survives the entire tenure of the policy then the entire amount of premium paid by the insured is, excluding tax is paid back to them. TROP plans are best suited for that individual who wants the dual benefit of saving cum insurance.
Increasing and Decreasing Term Plans
- Increasing Term Plan-
In increasing term insurance plans, the coverage offered by the policy increases at specifies duration while the policy is in force. The policy evaluated the risk as per the rising cost during the tenure of the policy and compensate accordingly. The coverage offered by the policy keeps growing until the time the policy attains 1.5 times higher value than the actual cover.
- Decreasing Term Plan-
In decreasing term insurance plan the premium amount, as well as the death benefit offered by the policy, decreases at a particular rate during the entire tenure of the policy. Decreasing term insurance plans are generally used by financial institutions and banks that covers the risks of the home loan or mortgage provided to their customers.
Offline and Online Term insurance Plans
Offline term plans are traditional method of selling term insurance plans through a branch or an agent. However, keeping the comfortability of the insurance seekers in mind, most of the insurance companies offer online term insurance which is much affordable as compared to the offline term plans. The insurance buyers can buy online term plan in a simple and hassle-free way. Along with the flexibility of payment option the insurance buyers also has the advantage to compare term plans online from wide range of policies and choose the most beneficial plan at an affordable premium rate. Moreover, one can also save a lot of time and money by buying online term plan and check the reliability of the insurance company by visiting the website.
Features of Term Insurance Plan
The prime objective of a term insurance plan is to provide financial security to the family of the insured in the event of death or eventuality. Apart from this, a term plan has several other features. Here are some of the salient features offered by the term insurance plans.
- Death Benefit-
In the event of the death of the policyholder the beneficiary of the policy receives the death benefit as the total sum assured amount. Depending on the type of term plan chosen by the insured the sum assured amount of the policy can remain the same during the entire tenure of the policy, increase or decrease. The insurer provides different payment options for the policy. According to the policy type the insurer can pay the sum assured amount as a lump-sum payment or as lump-sum plus annuity in particular intervals of monthly, quarterly or yearly basis or simple annuity that is distributed over the agreed number of years.
- Maturity Benefit-
The pure term insurance plans does not come with maturity benefits. But, if an individual wants a maturity benefit then he/she can choose term return of premium plan (TROP).
- Tax Benefit-
Term plans come with an option to save on taxes. The insured can avail the lucrative benefit of tax deduction under section 80C and section 10(10D) of Income Tax Act 1961. Moreover, the premium paid towards the critical illness benefit is also eligible for tax deduction under section 80D of Income Tax Act 1961.
- Survival Benefit-
The pure term insurance plans does not offer any survival benefits. However, in order to cater the requirements of the insured many insurance companies have launched term insurance policies with survival benefits. This is known as term return of premium plans (TROP). The TROP plans provide the return of premiums at the end of the policy tenure in case the insured survives the entire tenure of the policy. As compared to the standard term insurance plans the term life insurance plans have the higher premium amount and is beneficial for those individuals who want to avail the dual benefit of saving cum insurance.
- Additional Rider Benefits-
The term insurance policy provides extra coverage as add-on rider benefit along with the basic insurance coverage offered by the policy. By paying an extra premium amount the insurance buyer can buy the rider benefit offered by the policy. Here are some of the rider benefits offered by the term insurance plans.
– Accidental death benefit rider
– Critical Illness Rider
– Premium waiver rider
– Hospital cash rider
– Total and permanent disability benefit rider
How to Select Best Term Insurance Plan?
- Convenience- As there is a wide range of best life insurance plans available in the market, the insurance buyers should compare term plans the various plans online and choose the most beneficial plan according to their requirements.
- Company Reliability- While picking a term insurance online it is very crucial to check the reputation of the insurance company. Knowing the reliability and reputation of the insurance company is very important as term insurance policy is a long-term Checking the FISCO score of the company is a good way to know the reliability and stability of the insurance company.
- Expenses– the key factor that should be considered in selecting a term insurance plan is the premium amount paid by the insured for the life coverage offered by the plan. As the term plans have tenure up to 20 years, the premium amount paid by the insured is significant. Thus, the insurance seekers should prefer choosing plans that offer reasonable protection in affordable premium rate. Moreover, with the help of term insurance premium calculator the insurance seekers can compare term insurance premium rates and zero in on a policy.
- Claim Settlement Ratio- Claim settlement ratio is described as the number of claim settlements done by an insurance company per 100 claims. The insurance companies that have a higher claim settlement ratio are considered a better choice and more reliable.
- Terms and Conditions of the Policy-it are very crucial that the insured should read the terms and conditions of the policy thoroughly prior signing the documents. Reading each and every detail of the policy helps the insured to understand the minute details related to the exclusion and inclusion of the policy.
Documents Required to Buy Term Plan Online
While applying for a term plan it is very important for the insured to keep all the documents handy. Here is the list of documents that are required to buy a term plan.
- PAN Card
- Identity proof like voter ID, passport, driving license, aadhaar card, authority verifying identity or letter from a public
- Age proof
- Address Proof
- Income Proof
- Recently clicked photograph
Claim Process of Term Insurance Plans
If the insurance holder dies during the term of the policy, their nominee will have to file a claim in order to receive the sum assured amount. In most of the cases, the claim process is very simple and easy to follow. Let’s take a look at the step-by-step process to make claim for term insurance policy.
Step 1- Inform the Insurer about the Claim:
The first and foremost step of filing a claim for term plan is to inform the insurance company about the claim. The beneficiary of the policy will have to inform the insurer about the eventuality so that the insurer can initiate the process of claim settlement.
Step 2- Submit the Required Documents:
After informing the insurer about the claim, the beneficiary will have to submit all the important documents required to support the claim. The important documents needed to be submitted by the beneficiary are proof towards the claim, policy documents, death certificate of the deceased insured, medical report, etc. in order to further verify the claim some of the insurance company might as the nominee to submit additional documents.
Step 3- Claim Settlement and Payout:
Once the documents provided by the beneficiary are verified by the insurer, the insurance company initiates the process of claim settlement and the payout is given to the beneficiary of the policy.
Term Insurance Premium Calculator
As the premium rate plays the most important role in selecting a policy, there are various insurance companies that offer the facility of the premium calculator on their website. With the help of a premium calculator, the insured can calculate the premium amount of the policy, compare term insurance plans and estimate the number of premiums they will have to pay.
In order to know the premium amount with the help of online term insurance premium calculator, the policyholder will be required to enter some details like date of birth, gender, smoker or non-smoker. Moreover, the insured will also have to enter the required sum assured amount for which they want to pay the premium.
Once the insured enter all the details on the premium calculator, the premium amount of the policy is displayed on the screen. On basis of the maximum tenure of the policy offered by the insurer, the premium amount is calculated. Any add-on benefits incorporated as part of the plan is displayed below the payable premium amount.
Factors Affect Your Term Insurance Premium Rate
There are various factors that determine the premium rates of the online term plans. These factors are:
- Medical History of the Family
- Lifestyle Habits
- Smoking and Drinking
Eligibility Criteria’s for Term Insurance Plans
The insurance buyers are required to fulfill the certain eligibility criteria while purchasing a term insurance plan online. These are as following:
- The minimum entry age of the policy is 18 years.
- The maximum entry age of the policy depends on the minimum term of the policy.
- Most of the term insurance plans have the maximum maturity age of 75 years.
- The minimum maturity age of the policy is determined on basis of the minimum entry age and minimum policy tenure.
- The sum assured of the policy is also one of the factors in computing the eligibility as there many policies that have a fixed minimum sum assured.
- A medical check-up is required prior zeroing in on a policy.
Term Insurance FAQ’s
Can the beneficiary/nominee re-apply for the claim if it is rejected once?
Ans. Yes, the beneficiary/nominee can re-apply for the claim in case the claim is rejected once. Moreover, the dependent can also approach to the insurance company grievance redressal cell if required.
Can a term insurance plan be switched to another insurance provider during the policy tenure?
Ans. No, the insurance holder cannot switch the term insurance plan to another provider during the tenure of the policy.
Can I change the duration of the policy coverage after the plan is issued?
Ans. The duration of the policy coverage cannot be changed after the plan is issued.
Can I avail loan on term insurance plans?
Ans. As term insurance plan does not provide any maturity benefits, policyholders are not eligible for loans against the policy.
Will the term plan be still valid if I become NRI after buying it?
Ans. Yes, the plan will continue even after the insured becomes an NRI. However, it is important to note that the term plan will not be valid for the first two years if the insured does not inform the change of status to the insurer. The insurance holder will be required to update the KYC status as Non –Residential in all the existing policies. In case the insured fails to do so, then the policy will not be renewed and the insured will receive the claim amount in the same account from which the premiums were paid.
Is it possible to take more than 1 term insurance plan?
Ans. Yes, an individual can buy more than 1 term insurance plan.
What is a free-look period in a term insurance policy?
Ans. Free-look period in term insurance policy is the time period of 15 days offered by the insurance company during which a new life insurance policyholder can cancel the policy if he/she is not satisfied with its terms and conditions.
What is a grace period in term insurance policy?
Ans. A grace period of 30 days is provided by the insurance company to the insured to clear all the due premiums in case they fail to pay the premium within the due date of the policy.
Are terror attacks covered under term insurance policy?
Ans. Yes, a term insurance plan provides coverage against death caused due to any type of terrorist attacks. However, the amount of coverage may differ from insurer to insurer. It important to have a proper look at this kind of specific coverage while zeroing on the policy.
What are the different factors that determine the premium rate of term insurance plans?
Ans. The factors that determine the premium rate of term insurance plans are:
- Medical history of the family
- Insured health history
- Drinking alcohol