Life is unpredictable, and it is surrounded by many hazards such as incapacity, sickness, accident, or death. Such hazards occur unexpectedly and have a significant financial and emotional impact on one’s life. It is essential to make a financial plan for such unforeseen events in order to keep your family safe and secure.
Term insurance plans are the purest type of life insurance policy, allowing you to protect your family at the lowest possible cost financially.
People often confuse insurance with investments and are too concerned with the return on investment, which is a significant error.
Insurance and investments should not be combined since they will not meet your family’s whole financial needs in the event of your untimely death.
What is Term Insurance Plan?
A term insurance plan is the most basic type of life insurance policy, providing coverage for a certain number of years. If the insured dies within the policy’s term, the nominee receives a lump sum payment equal to the amount promised.
For example, suppose a 30-year-old guy holds an Rs. 1 crore term insurance plan with a policy period of 30 years. If the policyholder passes away before the conclusion of the policy term, the whole Rs 1 crore would be paid to his nominee.
Term insurance plans are the easiest to grasp life insurance policies to understand and provide some very distinctive ideas that make them a highly appealing plan. Here are some of the most important elements of term insurance plans that you should be aware of:
1. Most Cost-Effective plan
Term insurance plans are among the most affordable types of life insurance. Because these plans do not have an investment component, their premiums are much cheaper than those of conventional insurance policies. However, because the essential purpose is to keep your family financially secure and independent in the case of an unexpected incident, the little cost of a term insurance plan does not cause damage.
For example, a 30-year-old non-smoker man may presently get a term insurance plan with an amount insured of Rs 1 crore for a monthly premium of Rs 750 – Rs 800. You may estimate your insurance cost by utilising an online term premium calculator.
2. Pay the Policy Premium Only Till Retirement
Choose to be insured until the age of 85, but pay premiums only until the age of 60. Isn’t this a win-win situation? You do not have to pay premiums for the full duration; simply pay when you are working. For example, if you are just 35 years old, you may cover your life with a 50-year term insurance policy. That is, until you reach the age of 85. You may, however, choose a premium payment duration that falls well within your retirement age.
The advantage of a shorter premium payment term is that you won’t have to worry about paying your life insurance policy premium after retirement when your normal monthly income quits. Your term insurance will continue to protect your family members even after you retire for the duration of the policy.
This advantage, however, may be obtained by paying an extra fee. This is an important element to consider since it protects your family’s financial future if any financial issues persist after retirement.
3. Choose Riders As Per Your Choice
Riders or add-on benefits supplement insurance coverage by providing additional coverage to the insured. These riders, which come at an extra fee, are available inside term insurance plans:
Waiver of premium rider:If the policyholder becomes seriously sick or incapacitated, this rider relieves him of the responsibility to pay any further premiums.
Critical illness rider:If the policyholder is diagnosed with a serious illness, he or she will get a lump sum payment.
Accidental death benefit rider: The term insurance payment is enhanced if the insured dies in an accident. For example, if the insured has term insurance with an amount guaranteed of Rs 50 lakh and an accidental rider of Rs 15 lakh, the policy would pay Rs 65 lakhs to the nominee in the event of the policyholder’s death as a result of the accident.
4. Easy to Buy
You may purchase a term plan in the same way that you can buy clothing, shoes, and home items online. Purchasing a term insurance plan is simpler than purchasing other forms of life insurance policies or financial instruments.
A term plan’s structure is basic; you don’t have to be concerned about what returns the plan will provide, where the corporation will invest your money, and so on.
It is a straightforward strategy that needs you to choose the right amount guaranteed based on your financial goals, level of life, financial obligations, and so on. You may also use internet calculators to get the correct total guaranteed amount.
There are 2 ways of buying term insurance:
Offline: Purchasing is done via an insurance intermediary, such as a broker or agent.
Online: Online purchasing entails purchasing directly from the insurance business in a digital environment at your leisure with a few mouse clicks and an internet connection. Online term plans are less expensive than offline plans, have no physical paperwork requirements, and are processed quickly. Because the insurance business saves on intermediary fees and other connected expenses by selling the policy online, the firm passes the savings on to the client. Online term plans are 5 to 20% less expensive than offline term plans.
5. Non-working spouse cover
You get the greatest term plan for the financial security of your loved ones, and it is essential to have coverage for your spouse as well. When purchasing a term insurance policy online, seek a feature that enables you to include your spouse in your policy; you won’t have to purchase a separate policy for your husband. The finest term plan will allow you to join a spouse to the policy and get a reduction on the spouse’s charges.
Wrapping It Up
The basic goal of insurance coverage is to safeguard you and your family in an emergency financially. As a result, when purchasing a term insurance policy, ensure that the insurer you pick is a reputable brand with a solid financial foundation and a consistent track record of claim settlement ratio.
The claim settlement ratio represents the total number of claims resolved by the insurer over the fiscal year in the insurance industry. The greater the number, the better.
