Best Term Insurance plan or a term insurance policy is a life insurance product that guarantees payout to the nominees upon the death of the insured.
What is Term Insurance?
Term insurance is a pure life insurance product, which provides financial protection to the policyholder. In case of death of the insured during the policy period, the beneficiary receives a death benefit as defined under the chosen term insurance plan.
EXAMPLE: A 24-year-old healthy, non-smoking male can secure a cover of Rs. 1 crore for his dependents for the next 25 years. If he buys a term insurance policy, he will only pay approximately Rs. 537 per month, exclusive of taxes (Premium for Max Life Online Term Plan Plus).
Why should you Buy Term Insurance?
People from all walks of life realize the importance of buying a term insurance plan best suited for their needs. Amidst the fast pace of life and rising uncertainties in the form of COVID 19 disease, every family needs financial protection under a term plan to deal with the financial impact of losing a loved one, especially the breadwinner. It also helps the family in paying off the debts, such as car loans and home loans, if any. Best Car Insurance
Here are a few reasons why buying term insurance is worth it:
1. To Secure Your Family’s Future
Being an earning member of your family, you are responsible for the overall well-being of your spouse, parents, and children. Buying term insurance is essential to ensure that you meet the obligations for your loved ones even when you are not around.
2. To Protect Assets
You might have built assets like a home, office, or vehicles through loans. With a term insurance plan by your side, you can ensure that the load of these borrowings will not cause any hardship to your loved ones after you.
3. To Minimize Lifestyle Risks
The unfortunate demise of the breadwinner in a family can turn their life upside down, making it difficult to make ends meet. Term insurance benefits, on the other hand, can make the life of your loved ones easier in such a situation, though financially.
4. To Stay Prepared for Uncertainties
Uncertainties in life can make or mar our lives in unprecedented ways. This can be well understood while witnessing the current global Coronavirus pandemic. What a term plan does best is that it makes us stay prepared for such eventualities. You can opt for a significant life cover at an affordable premium under a term insurance plan.
Who should Buy Term Insurance Plan?
Death, disability, disease, all are realities seldom talked about. However, all three are realities we cannot possibly overcome with certainty. Term insurance is one tool, which can save you and your family from the financial hardships brought upon by these three and similar disastrous conditions.
Hence, all individuals who have financial dependents should buy a term insurance policy. They can be:
A term policywill act as a source of financial support for the children, ensuring that they do not miss life’s opportunities.
Young professionals who do have many financial liabilities can benefit from lower premiums of term insurance plans.
With a term insurance plan, you can secure the financial future of your spouse, giving her a truly long-lasting gift.
Consider, for example, a family of four, where the father is the primary breadwinnerand has bought a term insurance policy. The family needs about Rs. 50,000 a month to fund regular expenses like rent, food, other groceries, electricity, water, education fee, etc. Debts, if any, are over and above this.
In case of an unfortunate event, life continues, and so do these quintessential expenses. The family will still need Rs. 30,000 to 40,000 a month to meet all their needs. Here,adequate term insurance cover comes into the picture. It provides for the family with the following:
A lumpsum to meet their immediate needs
A regular income to meet their household expenses (if opted)
The loss of life cannot be compensated. However, a term insurance plan can help to tide over the financial requirements of a family.
Benefits of Buying Max Life Term Insurance
High Life Cover at Affordable Premiums
Term insurance plans offer significant life cover at a premium you can afford. Also, the earlier you buy a term plan, the lower premium you will need to pay for specific life cover.
Protection from Illnesses
Various term insurance plans also offer critical illness benefits to help you avail good treatment for life-threatening diseases without worrying about the costs. You can avail of critical illness cover for more than 40 diseases by opting for Critical illness rider with Max Life Term Insurance plans.
Long Term Coverage
You can choose long term insurance cover till the age of 85 (subject to maximum policy term of 50 years) to leave a legacy for your family at a price you can afford.
Accidents can happen unexpectedly and may lead to temporary or permanent disability. Disability benefit with a term plan will provide you financial support in case of accidental disability(available on payment of additional premium).
Income Options in case of Unfortunate Events
You can get a regular income stream along with a lump sum benefit under a term insurance policy to ensure day to day living expenses of dependents is met.
Protection Against Liabilities
The sum assured offered under a term plan will ensure safety for dependents from your financial liabilities like a loan and any other debt. They can easily pay off the debt from the insurance benefits received.
Riders for Additional Benefits
Term plans come with add-ons/riders that you can select to get additional insurance benefits. For instance, Max Life Waiver of Premium Plus Rider [UIN: 104B029V03] offers the benefit of waiver of all future premiums based on conditions specified in the term insurance policy document.
Multiple Premium Payment Options
With term insurance plans, you also get the flexibility to choose the premium payment tenure. You can either choose regular pay through the policy period or limited pay options with your term plan.
A term insurance policy offers tax savings up to Rs. 1.5 lakh on the premium paid under section 80C on Income Tax, as per prevailing tax laws. Also, the lumpsum benefit paid under a term plan is tax-exempted u/s 10(10D).
How Does a Term Plan Work?
A lumpsum amount is payable to your family in case of death of the policy holder under the chosen term insurance plan.
You can opt to receive the benefits under term insurance in the form of regular monthly income, along with lumpsum payment basis the variant opted.
Riders can be added to the base term insurance plan for improved benefits in case of accidental death, disability, or critical illnesses at an affordable price.
Why Buying Term Insurance is a Must During COVID-19 Pandemic?
During COVID-19 times, many people have lost their lives. In such challenging times, it has become crucial to buy term insurance that provides option to add COVID-19 rider.
Term insurance plans from Max Life Insurance cover death claims caused due to Coronavirus. However, you can opt for Max Life COVID 19 One Year term Rider to get the additional benefit of diagnosis and death benefits.
Features of a Term Insurance Policy
Term insurance is that form of life insurance that is most easy to understand. There are several advantageous features of a term plan that you should know before buying one.
Save Tax U/S 80C & 80D of income tax act 1961
The premium you pay for your term insurance plan can save tax for you. Critical illness premium paid under the term insurance policy saves tax for you u/s 80D, while term insurance premium is counted u/s 80C of Income Tax, subject to conditions. Tax benefit are as per prevailing tax laws which are subject to change.
Long Policy Term
You can opt for a longer term for your term plan to stay protected. You can stay covered for up to 50 years with a term life insurance of Max life.
Low Entry Age
Most term insurance plans have a minimum entry age of 18 years; that is, you can buy term insurance cover as soon as you hit adult age.
Death Benefit as Regular Income
Modern term insurance plans allow you to give your dependents a regular income along with the lumpsum benefit in the event of your unfortunate demise.
Premiums Returned on Survival
You can now receive all your money back if you survive the term insurance tenure. Term insurance plans with the return of premium benefit offer to return all the paid premiums on the policy as survival benefit.
Disability Benefit with Term Insurance Plan
Any kind of disability due to accident or illness can affect your income earning capacity. You can add disability benefit rider with your term insurance plan at affordable prices. The disability cover is available on payment of additional premium with the base term insurance premium.
Cover Against Life-Threatening Diseases
Cancer, heart attack, renal failure are some curable diseases that can be life-threatening. Don’t let money concern you on the way to the cure from these diseases. Critical illness cover is available with term insurance plans on payment of additional premium.
High Maturity Age
Of all life insurance plans, term insurance offers the life cover for the highest age bracket. You can continue term insurance cover up to the age of 85 with term insurance plans from Max Life Insurance.
*Disclaimer. *^T&C| Max Life Smart Term Plan (UIN:104N113V03) A non-linked non-participating individual pure risk premium life insurance plan |^As per annual audited financials for the FY 19-20 | ARN: 220620/PDP/TROP.
Benefits of Term Insurance Plan
Your term plan can help you and your family in many ways. Here are a few:
Low cost of premium – The best feature of a term insurance plan is that you can get a large cover at an affordable premium. Plus, the earlier you buy, the lesser the premium you pay.
Complete life cover – May term plans come with an option of coverage till the age of 100 years. This is known as a whole life term insurance plan.
Financial protection – Your family will receive the sum assured from the insurer in the form of a regular payout or as a lump sum in case of your death. The payout will take care of your family’s needs.
Tax benefit – Premiums paid towards a term insurance plan and the money received on death are eligible for tax exemption under Section 80C and Section 10(10D) of the Income Tax Act, 1961.
Rider options – You can get multiple rider options for your existing terms insurance plan such as Terminal Illness Cover, Critical Illness Cover, Accidental Death Benefit, Waiver of Premium, Daily Hospital Cash, Personal Accident Cover, Partial/Permanent Disability Cover, and many more. Riders come at the cost of an additional premium.
Features of Term Insurance Plan
The best method of understanding a term plan is by going through its features. To help you with the same, we have created a list of term insurance’s key features.
Affordability – This is so far the most lucrative option as it will help you save money. A term plan is less expensive in comparison to other types of insurance schemes. Buying a term insurance plan will help you plan your finances and budget effectively.
Online Buying Facility – Buying a term insurance plan is not different from online shopping from an eCommerce website. All you need to do is visit Coverfox, enter your necessary details and let us do the rest. When you buy online, you are getting the policy directly from the insurance provider. Plus, the entire process is paperless and hassle-free.
Multiple Payout Option – Under a term plan, your family can receive the death benefit in the form of a lump sum amount or at regular intervals. You can select either of the options during the start of the policy cover.
Rebate and Discount – Many insurance providers offer high discounts and rebates if you go for a high sum assured. Since there is no agent involved in the online mode, there is more room for a discount.
Premium Payment Term – Under a regular term plan, you have complete flexibility to select the premium payment option – annually, semi-annually, quarterly, or monthly. You can also choose limited pay or regular payment options.
Types of Term Insurance Plans
Just like every other insurance plan, there are different variants of term insurance. Each is unique with its own set of features and benefits. But the underlying death benefit payout remains the same.
Here are the most popular term plans in the market:
Standard Term Insurance Plan
This is the most common and basic type of term plan. All insurers offer it. Under this plan, you pay the premium regularly to avail the high sum assured. In case of your death, the sum assured will be paid to your family members. There is no maturity and survival benefit in this variant.
Term Return of Premium
As the name suggests, you get back all of the premium paid in case you survive till the end of policy period. It is an excellent option to take if you want all your money back.
Increasing Term Insurance Plan
This is similar to a standard term insurance plan with an added benefit. The life cover regularly increases by a specific percentage, usually 5%-10% of the original cover annually. This plan is ideal for beating inflation.
Decreasing Term Insurance Plan
This is the opposite of the plan mentioned above. Under this policy, your life cover decreases on an annual basis at a specific percentage.
Life Stage Event Term Insurance Plan
This is a new type of term policy. Under this plan, you have the option to increase the life cover at a particular milestone of life such as marriage, the birth of children, children’s graduation, etc. You can select different milestones.
Convertible Term Insurance Plan
Under this plan, you have an option to convert your standard term policy into an endowment savings plan or a whole life insurance policy.
Joint Life Term Insurance Plan
This is a standard term insurance variant under which you can cover yourself and your spouse. In case of death of anyone, the surviving partner will receive the death benefit. In case the surviving partner also passes away, the payout will be given to the legal heirs.
Group Term Insurance Plan
A group term policy provides cover to a group of employees of a specific company. It covers all the members employed by a company. You will lose this benefit once you have resigned from your company.
Term Life Insurance Plans Offered by the Government of India
The Indian Government has taken multiple steps to ensure the financial security of the people and their dependents. These plans are also known as Government-sponsored social security schemes.
PMJJBY – Pradhan Mantri Jeevan Jyoti Bima Yojana – This is a standard life insurance plan that offers Rs. 2 lakhs as cover to the family of the deceased policyholder. It comes at the premium cost of Rs. 330 per year. Citizens between the age group of 18 to 50 years are eligible.
PMSBY (Pradhan Mantri Suraksha Bima Yojana) – This is a standard term insurance plan that offers Rs. 2 lakhs for accidental death and full disability and Rs. 1 lakh for partial disability. It comes at the premium cost of Rs. 18 per year, and individuals between 18 and 70 are eligible.
PMJDY – Pradhan Mantri Jan Dhan Yojana – Although this is a savings bank account scheme established by the Government of India, it offers risk cover to the account holders. The account provides a life cover of Rs. Thirty thousand upon the death of the life assured and a build-in accident insurance cover of Rs. 1 lakh.
Aam Aadmi Bima Yojana (AABY) – This is a group insurance social security scheme for the low working section of the Indian society. This policy covers death due to natural causes, accident, partial disability, or permanent total disability.
Compare Term Insurance Plan
Online comparison of term insurance will help you determine the right policy as per your financial budget and capacity. With Coverfox, you can make the best out of this opportunity. Once you have entered your necessary details on the website, our super-smart algorithm will do all the hard work for you.
You can sit back and compare multiple plans and their features on a single page altogether, and buy your favourite plan in under 5 minutes.
Here are a few tips and tricks that will help you make the right decision:
The premium is the first thing that should cross your mind. It will determine the amount of coverage that you want. A high cover at the cost of an affordable premium should be your goal. This will reduce the strain on your wallet and will keep your family protected. Please don’t go for a lesser premium amount as you might regret it later in the future.
Features of Term Plan
If you want to drill down to the core of your term plan, always go through each feature/benefit that comes with the policy. Read the entire policy document carefully—double-check all the terms and conditions, rules and regulations, inclusions and exclusions, and more.
As an existing policyholder, this thought must have come across your mind, ‘can I add more benefits and features to my term policy?’ Yes, you can. This is where a rider option will come to your rescue. Riders (personal accident cover, critical illness rider, terminal illness, and more) enhance your term plan’s cover. Note: Riders come at the cost of an additional premium.
Claim Settlement Ratio (CSR)
When it comes to CSR, you need to apply this simple rule; the higher the claim settlement ratio, the greater the chances of your claim being settled on time. When you are looking to compare a new term policy, keep an eye on the insurers’ CSRs.
Term Insurance Company Reliability
Before you decide to buy a term policy, make sure you check the insurer’s credentials. Look at the company’s financial health and stability, outstanding debt, Claim Settlement Ratio, plans, etc.
The solvency ratio will tell you how good the insurer’s financial position, you check the same in IRDAI Annual Report. Note: A high solvency ratio does not mean that the company is doing good and vice versa. IRDAI has stated a minimum solvency ratio of 1.5 times for life and general insurers in India.
Regular Payout Option
Many insurers offer the option of a regular payout. Under this option, the death benefit will be given to the policyholder’s family in the form of regular payouts on an annual, semi-annual, quarterly, or monthly, basis.
Critical Illness Benefit
A critical illness benefit provides a lump sum payout if you are diagnosed with a terminal or life-threatening illness/disease. Your family can utilize the payout for meeting their financial needs or clearing your debts.