Articles 208 views July 17, 2019

Everything You Need to Know About Term Life Insurance Plan & Policy

Term life insurance is very popular as well as a practical form of life insurance. You can buy a term insurance plan with high coverage at a very low rate. this is a great benefit of this form of life insurance that helps you in not one, but many different ways. You get to secure the financial wellness of all your family members. This is important because life is very unpredictable and you never know what danger waits at the next corner. To stay one step ahead in the game you, therefore, need an excellent term coverage from one of the best life insurance companies in India. Thankfully, you have many options to choose from and can easily identify find the best term insurance policy in a very simple manner. Take a look at this article to know more.

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Term Life Insurance

So what exactly do you mean by term insurance? Well, as the name suggests, term insurance is a form of life insurance that covers your life for a fixed period of time. It is extremely straightforward and easy to understand the type of insurance. If you die within the policy period, your nominee receives the sum assured and the policy terminates. If you outlive the policy period, there is nothing to expect in return.

It is a pure form of life insurance where you only pay to have your life covered. There is no return or investment element associated with it. this is a major reason why term plans are more affordable than a regular endowment life insurance policy.

Uses of term insurance

Let us now take a detailed look at the useful and handy benefits of a good term insurance coverage:-

1. Easy and hassle-free

Term life insurance, as stated, is one of the simplest forms of insurance. You can buy a term plan in a very simple manner. The documentation is simple. The policy wordings are also easy to understand. You can buy the plan online without the involvement of a life insurance agent. Online insurance, in fact, is very good to have. You get the plans at a cheaper rate. You also get to make unbiased decisions. The life insurance companies in India have excellent mobile applications through which you can view and service your plans at any time. all these features increase the ease-of-access you get when you buy a term insurance plan in India.

2. Long term cover

You can buy term insurance for a very long period of time. You can buy a cover for as long as 60 years. It is thus advisable for you to buy a plan when you are young and healthy and pay a lower price for it. You can then comfortably stay covered till as long as you please and need.

3. Affordable

The term plans are very affordable. Since there is no return component involved, the insurance companies sell these plans at a very economical rate. You, therefore, get to stay covered under a wholesome life insurance term plan even if you stay on a budget.

4. Tax exclusions

You get some very handy tax benefits when you buy term insurance. You can get a tax rebate of up to Rs 1.5 lacs for the term insurance premium that you pay. This provision is available under Section 80C of the Indian Income Tax Act of 1961. 

5. Very flexible

Term insurance has become quite flexible these days. You can buy a term cover and get it converted to an endowment life insurance or whole life insurance policy if you wish to do so.

6. Available online

As mentioned above, the term life insurance plans are easily and widely available online. You can go online, run a search and comparison and buy your plan in minutes. If your insurer asks for medical evaluation, the process takes a long time but is easy and inexpensive nonetheless.

7. Simple claim process

It is crucial for you to be absolutely honest when you buy term life insurance. You cannot lie about your age, your medical conditions, your salary or any other information on the application form. If you are honest and accurate and you pay all the insurance premiums on time, you will not have to worry about the claim settlement. After your demise, your nominee needs to follow a very simple claim process and get the claim processed smoothly.

8. Options in payout

You can opt for the staggered payout or the lump sum payout when you buy term insurance. Select the correct option after assessing your family’s financial needs, your financial liabilities such as open loans and mortgages and also after understanding your family’s money handling capacities.

9. The option of Insurance riders

When you buy a term life insurance policy, you get the option of adding some riders. Riders are add on covers that you get at an added cost. There are some very useful term insurance riders. They include:-

Critical illness rider

With this rider, you get a lump sum amount of money if you are diagnosed with a critical illness. 

Waiver of premium rider

If you lose your income due to disability or illness, the insurance premium is waived off, while the cover stays in force.  

Income benefit rider

With this rider, the beneficiaries receive a fixed salary for a stipulated period of time, after the policyholder’s demise. The sum assured is paid out in addition to this.

Accidental death rider

If the policyholder dies in a road accident, an additional death benefit is paid out, over and above the sum assured. 

Disability rider

The term insurance provider offers an added some of the money if the policyholder loses his capability to earn a living due to a permanent or temporary disability.

The term insurance riders are very handy, but you may not need each and every rider. Go over the riders in detail and see exactly which ones you need. This will help you to make your plan more flexible and better suited to your requirements.

Keeping these amazing benefits of term insurance in mind, you should not have any more doubts. Just go ahead and buy a good policy today!

Different Types of Term Insurance

Now that you know more about the benefits you get when you purchase a term plan from one of the good insurance companies, let us go through the different term life insurance types:-

1. Level term insurance

In this type of term insurance, the sum assured as well as the insurance premium remains intact for the entire policy period. This is the most common type of term insurance available in India currently with many people opting for it.

2. Increasing term insurance

As the name suggests, increasing term insurance plan cover has a sum assured that goes up as the plan goes on. The premium stays fixed throughout the term. Such a type of life insurance is designed to cover inflation. Also, if you are young and look to start a family later, this plan is well suited for you. An increasing term insurance plan is usually more expensive than the other types of term coverage, simply because of the added advantage, it provides you with.

3. Decreasing term insurance

Decreasing term insurance is the exact opposite of the increasing term insurance policies. In this case, the sum assured keeps diminishing with time, while the premium stays the same. You can buy such a plan if the purpose of buying term insurance is to cover a mortgage or any such financial liability. As you get to pay off your mortgage and it reduces in value, your term cover also reduces.

4. TROP

And finally, we have the term insurance with return of premium plan, also known as the TROP. A TROP works by offering a death benefit if the policyholder dies within the policy period. however, if the policyholder survives the insurance policy period, the premium paid over the years is paid back. A TROP plan is usually a little more expensive as compared to a term insurance plan, due to the guarantee if offers to reimburse your money.

Since the different term life insurance types offer different covers, you need to choose a type of plan that meets your requirements. Once that is done, you will be able to get the best possible value out of your term insurance coverage.

Choosing the Correct Best Insurance Plan in India

You should never be in a hurry when you look to buy a term life plan. Looking for a cheap insurance cover is always desirable, but the price tag should never be your only consideration when selecting a plan. Term insurance comparison is of utmost important as when you compare, you find the best plans at the best rates. So take your time, do a little research and then find a plan that suits your requirements perfectly. Once that is done, you will and properly covered and your family will be financially secured too. Keep all the points mentioned above in mind and then buy the ideal term insurance cover. You will get the needed coverage as well as a lot of mental peace.

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