Table of Contents
- 1 Best Term Insurance Policy & Plans in India- 2019
- 2 What is Term Insurance in India?
- 3 Best Life Insurance Companies in India- 2019 Updated List
- 4 Why Should You Buy Best Term Insurance Plan in 2019?
- 5 What are the Benefits of Buying Best Term Insurance Plans in India || 2019-20?
- 6 List of Best Term Insurance Plans of 2019 in India
- 7 Major Features of Buying Term Life Insurance Plan in India
- 8 How to Choose Best Term Insurance Plans in 2019 for Your Family’s Financial Security?
- 9 List of Different Types of Best Term Insurance Plans Available in India-2019
- 9.1 Level term plans
- 9.2 Increasing term plans
- 9.3 Decreasing Term Insurance Plans
- 9.4 Monthly income term insurance
- 9.5 Term return of premium (TROP) policies
- 9.6 Premium charges of term insurance plans
- 9.7 Term insurance riders
- 9.8 Term insurance Claim Settlement Ratio (CSR)
- 9.9 Quality of customer care service
- 9.10 The solvency ratio of insurance companies
- 9.11 Ease of buying
- 9.12 The reputation of the insurer concerned
- 10 Different Types of Term Life Insurance Plans Available in India
- 10.1 Level term plans
- 10.2 Term Return of Premium (TROP) plans
- 10.3 Increasing Term Insurance Plans
- 10.4 Decreasing term plans
- 10.5 Convertible term plans
- 10.6 Term plans with riders
- 11 Frequently Asked Questions (FAQ’s) About Best Term Insurance Plans of India in 2019
- 11.1 Q1. Can I buy term insurance plans for my spouse and children?
- 11.2 Q2. Can I switch from one term insurance company to the other considering that the other may include additional benefits not available in the former?
- 11.3 Q3. Will my nominee(s) still receive the claim amount in case I die within one year of buying the term insurance policy?
- 11.4 Q4. How long does an insurance company take to settle a term insurance policy?
Best Term Insurance Policy & Plans in India- 2019
The web of life can be overwhelming, especially for those not prepared to deal with the worst. Death is a fact that one can’t dare ignore. However, not many people realize the need to financially cover their loved ones against the possible loss of income stemming from sudden and unfortunate events including death. Buying term insurance ensures that policyholders have a life cover in place in addition to securing a financial cover for their loved ones.
When it comes to assuring a pure life cover, nothing suits better than having a term plan in place. Term insurance plans do not include any savings or profits component and, hence, are considered the most basic form of life insurance. Tem Term insurance plans are comparatively inexpensive and affordable when compared to any other form of financial instrument. Opting for them enables policyholders to opt for an adequate amount of life cover in lieu of nominal premium charges.
What is Term Insurance in India?
Not many people are aware of the concept of term insurance or how term insurance plans operate. Term insurance or term life insurance is actually a kind of life insurance that guarantees coverage to the insured for a certain specified period that may extend to 10, 20, 30 years or even more depending on the extent of cover the policyholder is looking for. If the insured dies during the policy period, then the insurance company is liable to hand over the sum assured to the nominee(s) as mentioned in the policy proposal. This is, however, subject to the condition that premiums have been paid regularly and the policy is in force.
The amount of sum assured or death benefits is predetermined while buying the term plan. Though many people choose a sum assured equal to 12-15 times their annual salary, the ideal way is to take into account lingering debts like home loans, nature of investments made, other sources of income, children’s education and marriage and the kind of lifestyle family members are used to. Including a term plan insurance in your investment portfolio implies that your loved ones are assured of death benefits either in a lump sum or as regular payments for a definite period.
Reasonably priced and straightforward, term insurance is the best and simplest kind of life insurance that continues to cover and protect your loved ones even when you are not there. Term insurance scores over other life insurance options and fiscal instruments as it is:-
- Hassle-free in contrast to other investment options;
- Much cheaper than any life insurance policy;
- Greater life cover at low premium rates;
- Rider options available to enhance the utility of the term policy;
- Flexibility to enhance the life cover during critical stages of the policyholder’s life;
- Paying premiums equivalent to the coverage required.
Best Life Insurance Companies in India- 2019 Updated List
Below we have listed the most popular life insurance companies in India to buy best term insurance plans according to your financial needs:-
Why Should You Buy Best Term Insurance Plan in 2019?
Term insurance plans bought early incur low premium charges. Moreover, term plans do not include any waiting period clause which means that one is covered from the day of paying the first premium amount. Life’s uncertainties may manifest themselves as chronic disorders or sudden accidents leading to permanent disability or death. It is important to secure cover that helps your loved ones face the hurdles of life with essential financial support. If you have started working, it is important that you consider the idea to create additional financial support apart from your daily savings for your dependents. Buying a term plan is the best way to allocate a small part of your earnings towards availing prolonged monetary protection to family members dependent on your income.
The multiple benefits associated with the early purchase of term insurance plans explain why one should buy term insurance in 2019. Some of them include:-
Higher premium with growing age
The risk of diseases rises with growing age. Growing old is synonymous with critical disorders while sedentary habits contribute to lifestyle problems. Since the probability of diseases is low in young people, insurance companies charge lower premiums compared to middle-aged and old customers who opt to buy term plan during the later stages of their lives. Selecting or buying term insurance early relieves customers from the risk of having to pay higher premium rates down the line.
Providing much-needed protection to your dependents
Irrespective of gender or age, the sudden death of an earning member results in loss of income for the family, thus, causing unforeseen financial strain. Moreover, your family will have to bear the brunt of paying off any loan that you may have taken when alive. Investments made for a specific period bear profit only after a certain period. The mar of paying off for daily expenses including children’s education can prove to be back-breaking in the long run. Having a term insurance plan in place means that your dependents are handed over the amount of sum assured by your insurer, thus, relieving them from day-to-day monetary constraints. You may either opt for a lump sum payment of death benefits or in regular monthly installments over a span of few years depending on the requirements and financial acumen of your loved ones.
A stress-free future
Your career trajectory has a lot to do with the financial goals you have in mind. Many people take loans to get married, have children, buy a house or pay for a car. These are major milestones in one’s life that necessitate a sufficient amount of money and continued savings to ensure timely repayment of debt stemming from loans. However, unfortunate events like death or disability can undo all your aims as your loved ones realize that they are not left with enough money to meet daily expenses, leave alone reimbursement of the liabilities incurred by you.
Opting for term life insurance that would take care of the financial needs of your dependents even in your absence ensures that family expenses and loans are taken care of. Also, term insurance comes with an added benefit that you can increase or decrease the amount of coverage depending on your need. You may opt for level term plans, term return of premium (TROP) insurance, increasing term insurance or decreasing term insurance depending on your requirement. Increasing and decreasing term insurance allow you to augment or lessen your coverage levels at important stages of life like marriage, children and complete relief from loans.
Tax saving measure
Saving money can also help you to grow your earnings. This explains why we plan our investments in a way so that we may save on paying taxes. Buying term plans can be an excellent tax saving measure. Under Section 80C of the Income Tax Act 1961, premiums paid towards term insurance are deductible from income to the tune of Rs. 150,000. Apart, the sum assured handed over to your nominees in the event of your death is exempt from tax under Section 10(10)D of the Income Tax Act. However, the latter tax benefit is subject to the condition that the annual premiums paid towards term insurance must be less than 10 percent of the amount of sum assured.
Since the term plan is the simplest kind of life insurance one can buy, early purchase of the same is advised. Many people tend to postpone the decision of buying term-insurance as they consider it as an unnecessary expenditure as opposed to a necessary financial instrument. Online shopping habits are becoming increasingly pervasive and the same holds true for those looking to buy online term insurance. To ensure prolonged cover and security, it is important that you must buy term-insurance today.
What are the Benefits of Buying Best Term Insurance Plans in India || 2019-20?
Bad news never had good timing, and this can be rightly said about death. The uncertainties of life prompt us to create a kind of cover that would continue to secure our loved ones against any kind of financial constraint stemming from the loss of income due to sudden death. While many people continue to pile up on their savings and investments in the hope of establishing a sound fiscal future for their families, there are others who pursue the idea of buying term insurance.
Some people wrongly assume that term life insurance is an unnecessary expense. Very few realize how paying for a term plan can go a long way in mitigating the financial risks associated with a family member’s death or disability. The key benefits of having a term insurance policy include:-
Simplicity is the hallmark of term plans
Unlike most financial instruments, where people have to determine the savings and investment components and the complexities that go into earning returns at the end of the investment term, term plans buyers do not have to worry about the market movements governing the quantum of returns. Term insurance is associated with pure risk cover. This means that in return for regular premium payments, the life of the policyholder is financially secured throughout the entire policy period.
Higher life cover at low premiums
Compared to most investment options or monetary plans, term plans are relatively inexpensive. The foremost benefit of buying any term plan insurance is that it is cheap. The premium charges get reduced further if bought online. Term plans prove to be cheaper if bought early. This explains why today’s youth is advised to start looking for an adequate term policy, that suits their needs and budgetary requirements after they get a job.
Assured death benefits
According to any term insurance proposal, the insurer promises to pay the nominee(s) of the policyholder a sum assured in the event of the latter’s death during the policy period. The amount of sum assured, also called death benefits, is predetermined while buying the policy. The nominee may be handed over the money in lump sum or as monthly payments or a combination of both depending on the terms and conditions included in the policy.
Term insurance, in itself, may prove to be a sufficient financial cover for most people. However, some prefer to enhance the nature and extent of financial cover by opting for riders that can be availed by paying an amount over and above the basic premium amount. These riders promise an additional amount on death or disability due to accident or waiver of premiums due to critical illness or dismemberment in an accident. Some insurers also have the option of Income Benefit rider, which assures income creation even after the policyholder’s death. With this rider in place, the nominee(s) of the insured continues to get an additional amount per year for the next five to ten years in addition to the promised amount of sum assured.
Dual Income Tax Benefits
Many people without realize the actual significance of buying term plans pay for them only to avail tax benefits. Term life policies, in addition to keeping a family secure on a financial footing, ensure dual tax benefits too. While the premiums paid towards the policy are deducted from the income earned under Section 80C of the Income Tax Act 1961, the death benefits received by the dependents are exempt from tax under Section 10(10D).
List of Best Term Insurance Plans of 2019 in India
While buying term insurance, many people inquire about the best term insurance plan in India. It is important to seek information about the various kinds of term plans being sold by insurance companies in India, the nature and extent of benefits they provide and their corresponding premium charges. While term insurance plans in India are compared based on myriad attributes and features, many people prefer to contrast the plans based on their claim settlement ratio in the past.
|Insurance Plans||Claim Settlement Ratio||Annual Premium Charges (Rs.)||Sum Assured Amount||Maturity Age (Max. Years)|
|Max Life Online Term Plus||98.3%||19,599||Min: Rs. 50 Lakhs|
Max: No Upper Limit
|TATA AIA Sampoorna Raksha||98%||14,101||Min: Rs. 50 Lakhs|
Max: No Upper Limit
|HDFC Life Click2Protect Plus Term Plan||97.8%||11,318||Min: Rs. 25 Lakhs|
Max: No Upper Limit
|Aegon lIfe iTerm||97.1%||10,252||Min: Rs. 25 Lakhs|
Max: No Upper Limit
|SBI Life eShield||96.7%||11,778||Min: Rs. 35 Lakhs|
Max: No Upper Limit
Major Features of Buying Term Life Insurance Plan in India
Simply said that term insurance is nothing short of a cover that makes up for the financial loss in the face of life’s uncertainties. As life continues to mauled by myriad risk factors including death, disability, and disease, it becomes important to buy term plans that serve as the purest form of life insurance. Listed following are major features of term life insurance plans in India that elucidate on why term insurance continues to be the most effective and sought-after insurance product in the country.
The affordability of term plans is its most attractive feature. More so, because term insurance promises a guaranteed life cover in lieu of nominal premium payments. Unlike most other life insurance products, term plan acts as a pure risk cover in which the insurance company is liable to pay the sum assured, also called death benefits, to the nominee(s) in the event of the policyholder’s death during the term of the policy. Since the nominee(s) of the policyholders can only lay claim to the death benefits promised, the premium charges are much lower, thus, making this plan affordable.
Ease of buying
Unlike market-linked products whose returns depend on market movements, term plans promise only death benefits. Buying term insurance plans is comparatively easier than any other kind of life insurance product or monetary instrument. There is no savings or investment component in term insurance. The entire amount of premium goes towards payment of mortality charges in addition to the administrative costs for policy issuance. The simplicity of this plan explains its ease of buying as customers do not have to align this policy with their financial objectives. Instead, people buy this policy to protect and preserve the financial future of their loved ones.
Also, the web has made it possible for insurance companies to upload details of their products on their respective sites while tying up with online insurance aggregators who sell their products on their portals. Buying online insurance is cheaper as opposed to offline insurance purchase as the former is bereft of expenses on agents’ commissions or other operational expenses. This explains why online term plans are nearly 10-20 percent cheaper than their offline counterparts. Also, the online version is a paperless process and, hence, completely hassle-free in nature, thus, ensuring ease of buying for interested customers.
Varied payout options
Most insurance companies in India promise lump sum death benefit in a claim to the loved ones of their policyholders. However, ensuring a lump sum amount after death is not enough. You need to be sure that your nominee(s) or dependent(s) have the necessary financial acumen to deal with such a huge amount of sum assured. Keeping this in mind, many insurers now offer the option of allowing staggered claim payout which means that only a part of the sum assured is paid in a lump sum while the rest of the amount is paid in equal installments over a period. While the part lump sum payment enables the nominee(s) to pay off any lingering debt or loans that had been taken by the insured, the staggering payouts ensure that the daily expenses of the dependents are met till they do not gain enough financial independence on their own. The policyholder has to take the option to take staggered payout while buying the policy.
Premium paying flexibility
Insurance companies offer their customers the flexibility to pay premiums to be it yearly, half-yearly, quarterly or monthly. And there are others too that require their customers to pay premiums only once during the policy period or allow the benefits of making limited premium payments. Premium paying flexibility allows the policyholders to choose the payment options based on their budgetary needs and convenience of paying towards the policy.
Return of premiums option
Many people are apprehensive of buying term plans as they assure only death benefits in case the policyholder dies during the policy period. This has led to many insurance companies selling new-age term insurance plans that allow the option for policyholders to claim maturity benefits in case they survive the policy period. These plans also called term return of premium (TROP) policies that allow policyholders to claim back the entire amount they had paid as premiums towards the term plans. These plans, however, cost more than the vanilla term plans as the former offer maturity benefits in addition to death benefits. The payout at maturity is different across different term plans sold by insurers in India.
Healthy habits awarded with discounted premiums
Opting for a higher sum assured does not imply more premiums. In fact, many insurance companies in the country charge lower premiums for higher amounts of life cover promised. Also, customers with smoking and drinking habits are required to pay greater amounts of premiums as the risk associated with their lives are more. This implies that insurers prefer to award their non-smoking and non-drinking customers by charging them with lower premium rates. Most working women do not realize that their untimely deaths can cause a financial dent in the lives of those dependent on their incomes. To promote the idea of buying term insurance among working women, many insurance companies charge less premiums from women inclined to pay for term plans to ensure a secure life cover for their loved ones.
How to Choose Best Term Insurance Plans in 2019 for Your Family’s Financial Security?
With so many insurance companies in India selling myriad kinds of term plans, it is difficult to pinpoint that one particular kind of term insurance policy that would fit in perfectly with our needs and budgetary constraints. Different families in the country have different financial coverage needs. Depending on the extent and nature of responsibilities, burden of debt and current financial condition, one may choose between level term plans, increasing or decreasing term life insurance, term return of premium (TROP) policies, and monthly income term plan insurance.
Premium charges also matter as the insurance company is liable to pay death benefits to the nominee(s) of their customers subject to the conditions that premiums have been paid regularly throughout the entire policy period and the policyholder had died during the term mentioned in the policy document.
The best term insurance plan need not be the one that your peers rave about but the one that you have bought after a careful analysis of your loved ones’ financial requirements in your absence. However, looking at the following tips may enable you to understand how to choose and buy from some of the top term insurance plans that make up for the loss of income in case of your sudden and unfortunate death. These include:-
Evaluate your dependents’ long-term financial needs
Assess your family’s need for financial coverage in the long run. While calculating the amount of sum assured, keep in mind your loved ones’ future needs, unpaid loans and debts, children’s education and marriage and the amount your family would need to run its daily expenses. Term plans are cheap in nature and, hence, opting for a higher coverage amount must not be a problem. For those who find it difficult to estimate the sum assured with the aforementioned methods, the thumb rule says to either determine the amount equal to 12-15 times your annual expenses or arrive at the amount equivalent to 8-10 times your yearly income.
List of Different Types of Best Term Insurance Plans Available in India-2019
Your choice of term insurance has a lot to do with your financial condition and the nature of financial objectives you wish to achieve at a later date. For example, you may contemplate taking a home loan or car loan to buy a house or vehicle in the future or are planning foreign education for your children. Currently, the following types of term policies being sold in the market include:-
Level term plans
This is a regular form of term insurance in which the amount of sum assured remains unchanged throughout the entire tenure of the policy.
Increasing term plans
This is a unique kind of term plan that allows the amount of sum assured to increase at par with the inflation rate. You may either opt for an increasing term plan in which the sum assured goes up by a specific percentage each year. Alternatively, there is another kind of term plan insurance sold in which the sum assured goes up only during major events in life including marriage, children’s education, etc. However, these kinds of plans necessitate greater premium payments than what is charged on level term plans.
Some people opt for a financial cover only to compensate for certain expenses to be made in the future. As one accomplishes the objective in life and manages responsibilities, financial obligations also decrease. This has a lessening impact on insurance needs, thus, prompting many customers to opt for these kinds of plans.
Monthly income term insurance
This plan promises more than just the sum assured amount. Dependent family members and loved ones are assured a definite amount of income each month for a predetermined number of years other than death benefits in a lump sum.
Term return of premium (TROP) policies
Many customers are dissatisfied with the fact that term plans promise death benefits only and, hence, misinterpret these plans as an unnecessary expenditure. Hence, many insurers have now started selling these plans that promise maturity benefits in case the policyholder survives the policy period.
Premium charges of term insurance plans
Term plans promise death benefits in lieu of regular payment of premiums. However, not all insurers charge the same for the term insurance plans they sell. Premium charges do not determine the reliability of any plan nor validate the quality of an insurance company. However, opting for a comparatively inexpensive plan does not mean that you are in for a loss as most term plans actually cost very less due to their pure risk cover component only. It is important to choose term policies based on their benefits and associated conditions as opposed to contrasting them based on only premium prices. Opting for an overtly expensive policy does not help as buying a very cheap policy that fails to serve its policy until the end.
Buying term policies through the web may prove to be cheaper as the online version does not involve payment of agents’ commissions nor includes any additional operational expenses characteristic of offline insurance purchase. Online insurance aggregators serve as term plans compare portals, thus, enabling informed buying decisions.
Life’s uncertainties have resulted in customers seeking protection that what is assured by basic term plans. To secure the future of loved ones in the face of sudden accidents or unfortunate incidents like critical illnesses, terminal disorders or unfortunate deaths stemming from them, many insurers now allow their customers to pay additional amounts for rider benefits that help protect against certain risks. These riders can be attached to the base term policies by paying an amount in addition to the premiums charged by the insurers. Some common term plan riders include Accidental disability rider, the Accelerated sum assured rider, Critical illness rider, and Hospitalization benefit rider.
Term insurance Claim Settlement Ratio (CSR)
The claim settlement ratio implies the efficiency of the company to settle claims versus the number of claims received by the company. Deemed as the most effective determinant of the quality of any insurance company, it is important that you check the CSR of the insurer you wish to approach for buying your choice of the term plan. Prefer to opt for insurance companies with a high CSR as it highlights the company’s intent in regard to the settlement of claims on term insurance.
Quality of customer care service
Not all are adept in matters of insurance, which means that you will need the services of your insurance company’s customer care department for added support. Find out about the insurance company’s customer service department and its efficacy in dealing with customer grievances. This is because once you have bought the term plan, the ability of the customer care employees will determine the pace of resolution of your complaints and queries.
The solvency ratio of insurance companies
An insurance company’s solvency ratio determines its ability to pay out death benefits during claims made by nominees of its customers. It is an important indicator of your company’s quality. However, it is important that your insurer’s assets’ value must be more than its liabilities. This is helpful so that your insurance company must have enough funds in place to honor claims made by its customers. Opt for a company with a higher solvency ratio.
Ease of buying
Everyone prefers hassle-free purchase, be it of insurance or any other service. Prefer to buy term plans from companies that sell their products online to ensure lesser costs on premiums in addition to ease of buying through the web. With e-policies in place, one does not need to go through the hassles of submitting essential documents in paper format as the electronic version of the same can be emailed to the insurance company. Check for convenience level before choosing your insurance company.
The reputation of the insurer concerned
Reputation matters and that is why many people prefer to pay more for branded products as opposed to those new in the market. The same applies to buy term insurance plans too. Do some essential research to check on the reputation of the company you are looking to buy from. Check for news updates about the company or press releases published by it. You may also look for the corporate governance record of the insurance company, details of their assets under management in addition to the number of times the company management has been reprimanded for violation of rules declared by the Insurance Regulatory Development Authority of India (IRDAI).
Different Types of Term Life Insurance Plans Available in India
Due to their basic nature and traditional format, term insurance plans are the most preferred kinds of life insurance policies. While the benefits of buying a term plan are numerous, not all kinds of term life insurance products are the same. The flexibility of term insurance regarding the extent of its coverage makes it one of the most sought after financial instruments by those looking to extend a protective financial cover on their loved ones. Based on the kind of coverage and advantages, term life insurance policies may be classified as under:-
Level term plans
This is the simplest kind of term plan insurance in which the predetermined amount of sum assured remains unchanged throughout the entire policy tenure. As per the proposal contract, the death benefits are handed over to the nominee in case the insured dies within the policy period. The policyholder may choose policy terms for up to 10, 15, 20 or 30 years.
Term Return of Premium (TROP) plans
These plans are unlike the term plans that promise death benefits only on the death of the insured. These plans promise maturity benefits in case the policyholder survives the policy period. The premiums paid by the policyholders are returned to them when the policy ends, thus, explaining the plan’s name.
This can be explained with the help of an example. Consider a policyholder who has bought a TROP plan worth Rs 500,00,00 for 20 years, the yearly premium of which is Rs. 5000 only. If the policyholder survives the term, the insurer is liable to pay back the premiums paid over the entire term of the policy. This means that the insured will receive an amount of Rs. 100,000 from the insurance company.
Whether you are planning to buy an online term plan or an offline term policy, deciding an adequate amount of sum assured to relieve your family of the financial burden in your absence is important. Many people take into account the probable income deficit after their deaths in addition to the quantum of liabilities taken to arrive at the amount of sum assured. However, many people forego the impact of inflation that can have an augmenting effect on their expenses in the long run, thus, mandating an increased amount of coverage in the long run.
An increasing term plan serves the purpose as the amount of sum assured continues to increase by a specified amount since the commencement of the plan. However, many insurance companies agree to issue this plan only after verifying the health conditions of the prospective policyholder. The amount of premium may or may not remain the same throughout the policy tenure. Just like level term plans, increasing term insurance policies pay death benefits only on the demise of the insured. The insurance company would pay out the amount of sum assured that would be applicable post an increase at the start of that policy year in which the insured had died.
Decreasing term plans
Many people invest enough to ensure that their loved ones do not have to struggle for financial cover in the event of their deaths. Thus, insurance requirements only keep decreasing over time. Policyholders who buy term insurance only to ensure that their dependents do not feel financially strained while paying off the loans taken initially prefer to pay for decreasing term plan insurance. The sum assured in these plans keeps decreasing as the policyholder pays off the EMIs of the loan taken. This type of term plan is essentially a mortgage protection insurance as this is bought only to offset the burden of the loans taken. However, premium charges of decreasing term plans remain unchanged just like level term insurance and ensure that policyholders do not pass off their debt to their dependents.
Convertible term plans
The idea behind these plans is clear as the name suggests. The policyholders paying for these plans have the option to convert these plans into any other kind of insurance product. Many customers who have bought term plans for a specified period prefer to change them into permanent life insurance products or endowment assurance plans of equivalent value sans the need to undergo any medical examination or underwriting measures. As opposed to term plans that allow death benefits only, conversion into an endowment plan ensures the customer maturity benefits too in addition to the earlier promised death benefits. For example, any customer who has a convertible term plan worth Rs. 100,00,000 can get it converted into a whole life policy of the same value without going through any kind of medical examination.
Convertible term plans also allow scope for inclusion of optional riders by paying additional premiums. Some common riders that customers may opt to buy include Accidental Death and Disability Benefit Rider, Critical or Terminal Illness Rider, Waiver of Premium Rider, etc.
However, it is important to understand that the conversion option is triggered only after the policyholder makes a formal request to the insurance company. If the policyholder fails to move an application in favour of conversion, the term plan continues to operate without any change and expires either on the death of the policyholder or exceeding the maturity date mentioned in the plan. This optional benefit of conversion is available either as an inbuilt coverage feature or an add-on option depending on the insurer you have chosen.
The benefits of any kind of term insurance plan are subject to payment of premiums regularly and timely. Irrespective of whether policyholders choose the conversion option or not, the premium charges remain unchanged. The amount of premiums to be charged throughout the entire policy period is predetermined based on the age, amount of sum assured, policy period and premium paying term and remain the same throughout.
Tax benefits under these plans are similar to that available on pure term plans. The premiums paid towards these plans are deductible under Section 80C of the Income Tax Act 1961 while the benefits available, be it death benefits or maturity benefits, are exempt from tax evaluation under Section 10(10D) of the Income Tax Act.
Term plans with riders
Additional benefits are always welcome, especially when it comes to term insurance plans. Riders are essential additions made to term plans to enhance their performance or ensure greater coverage to the policyholder. Opting for riders implies that policyholders in addition to availing death benefits will get a host of additional benefits, not otherwise available in vanilla term life insurance. While some riders are included as a part of the basic term plan insurance, there are others that mandate additional premium payment for inclusion in the policy benefits. Some of the riders include:-
Accidental Death Benefit Rider
Accidental deaths are common in India. Unfortunate and unforeseen deaths due to accidents can result in dependents reeling under immense financial crisis. To counter the adverse effects of sudden deaths due to the accidents, some insurance companies advise their customers to opt for accidental death benefit rider that guarantees an added payout over and above the basic sum assured. The added amount of death benefit is a percentage of the original amount of sum assured and varies between insurance companies. Insurers charge extra premiums from customers availing this rider option. However, the premium charges remain fixed during the entire policy period. Policyholders working under hazardous conditions or prone to accidents owing to their frequency of travels or the region where they live must opt for this rider.
Accelerated Death Benefit Rider
Some illnesses are terminal in nature. The amount expended on hospitalisation and medical treatment of such people can extend to lakhs of rupees, thus, causing acute financial distress to family members. Nominee(s) of the policyholders who had opted for this rider are handed over a part of the sum assured in advance to ensure timely treatment. Policyholders must opt for this rider while buying the policy. The percentage of sum assured that would be paid in advance is decided at the time of signing the policy proposal. Available at very nominal costs, this rider is beneficial during times of medical emergencies, thereby, ensuring enough money for proper treatment.
Accidental Disability Benefit Rider
Accidents, especially, those on the road are pervasive. This explains the increasing popularity of this rider as more people are now opting to pay for it. The rider comes into force if the policyholder becomes temporarily or permanently disabled due to the accident.
Critical Illness Benefit Rider
Changing landscapes, climatic variations, rise in pollution levels, unhealthy eating habits and sedentary lifestyle have resulted in a host of chronic disorders that many people suffer from. These critical diseases may include cancer, stroke, cardiac arrest, paralysis, arterial problems, kidney failure or major organ transplantation. Depending on the terms and conditions of the policy as detailed by the insurance company, the policyholders may choose to either continue or discontinue the policy. Some insurers hand over the sum assured to the insured on being diagnosed with critical illnesses and the policy ends there and then. There are other companies that give only a part of the sum assured amount to the insured to enable their treatment. However, this affects the final payout to the nominee as it gets reduced to the extent already given by the insurer.
Waiver of Premium (WOP) Rider
Grievous accidents or critical illnesses may result in permanent disability, thus, causing loss of regular income. Opting for this rider while buying the term plan insurance ensures that future premiums are waived off. However, this does not mean that the policy expires. The term plan remains in force and serves similarly to policies with all premiums paid throughout the entire policy tenure. Without this rider option, the policyholder, if unable to pay premiums due to income loss or disability, will not avail the benefits of the policy as initially envisaged. The policy will expire and no death benefits will be paid to the nominee(s) of the insured.
Income Benefit Rider
This unique rider is not provided by all insurance companies, and, hence customers must inquire about the same. While term plans guarantee financial coverage in the event of the policyholder’s death, this rider ensures that the nominee(s) or dependents continue to remain covered for a longer period even after the insured is no more. As per this rider, the loved ones of the policyholder continue to get an additional income each year for the next five to 10 years apart from the predetermined sum assured amount. This rider is not inbuilt within the term insurance cover but can be availed by paying an additional premium amount.
Frequently Asked Questions (FAQ’s) About Best Term Insurance Plans of India in 2019
Q1. Can I buy term insurance plans for my spouse and children?
Answer: You may buy a term insurance plan in your name to secure the financial future of your dependent(s). However, if you want the life of your spouse to be covered, you would have to procure a separate term insurance policy in his or her name. Simply said, one term policy can cover only one life at a time.
Q2. Can I switch from one term insurance company to the other considering that the other may include additional benefits not available in the former?
Answer: The answer is NO. Unlike health insurance policies that are renewable at the expiry of the policy period, thus, allowing you to opt for a different insurance company, policyholders cannot switch their term plans from one term insurance company to the other. However, if you are keen to avail a separate term insurance policy with a greater quantum of assured benefits, you may consider surrendering your current policy and pay for a new one. However, surrendering your term policy is never advisable considering the uncertainty of life in today’s scenario.
Q3. Will my nominee(s) still receive the claim amount in case I die within one year of buying the term insurance policy?
Answer: Insurance companies do settle the claim in favour of the insured’s nominee(s) or dependents in case of death within a year of buying the term insurance plan. However, a lot depends on the terms and conditions of the insurer you had opted for. While buying any term plan, it is important for the policyholder to read the terms and conditions published in the policy document thoroughly to prevent any scope of ambiguity later.
Q4. How long does an insurance company take to settle a term insurance policy?
Answer: In most cases, the insurance company does not take more than 15 days to settle a term insurance policy. However, a lot depends on the terms and conditions of your current insurance company. Though the claim settlement procedures may vary between insurance companies, in most cases it is a hassle-free process.