Term insurance is a type of life insurance that provides coverage for a specific period of time or years. This type of life insurance provides financial protection to the nominee in case of any unfortunate event with the policyholder during the policy term. Term Insurance policies provide high life cover at lower premiums.
Life is too unpredictable and uncertainties can rip you off emotionally, financially and physically too. This is because no one has control over one's death, neither, can anyone predict it. Death of the breadwinner of the family can cause disastrous turbulence in the family member's life.
To find solutions for these problems, term insurance plays a vital role in your life. Moreover, term plans are an excellent way to build a financial safety net and are the simplest and most affordable type of term life insurance. It will help your family to settle your loans and pay-off certain requirements in your absence. The death benefits are paid to the beneficiary or the nominee only upon the insured's death.
Ideally, everyone should buy a term plan. However, if you are the sole breadwinner or are contributing to the family's income, then you must purchase a term plan. Nevertheless, the below mentioned people should definitely buy a term plan:
Anyone and everyone one who does want to see their loved ones struggle to maintain their standard of living after the loss of the earning family member must buy a Term Insurance Plan. It is most apt for people falling under the below mentioned profiles.
The COVID-19 pandemic has brought in a lot of uncertainty. Many people have lost their lives, and several families have been shattered. While no one can replace the loss of a loved one, a term insurance plan that covers COVID-19 life claims can offer grieving families financial security and protection.
Term insurance is especially important at a time like this as it can help your loved ones move on with their lives with dignity.
The right time to buy a term insurance plan is as soon as you can. The chances of getting lifestyle diseases increase as you age, and so do insurance costs. When you invest in a term plan at a young age, you get an insurance policy at an affordable premium. Hence, it may be advised to invest in term life insurance when you are young. This will save a lot of money in the long run. Moreover, it will also provide you and your loved ones with extended coverage and financial security from an early age.
The premium for a term insurance plan is calculated based on a number of factors. Various aspects of your health and lifestyle, such as your gender, age, habits, past or current medical ailments, hereditary diseases that are likely to affect you, and other aspects are considered before deciding upon a premium amount.
Here are some things that determine the value of your term insurance premium:
The age limit varies based on the particular plan you choose. The minimum age is 18 years and the maximum age is 65 years.
A – Yes, Life insurance plans including Term Life insurance cover death caused due to health issues. This stands true for death caused due to Coronavirus as well. If an unfortunate event occurs with a person who has purchased Term Insurance policy due to COVID-19, his/her nominee will be paid the sum assured.
If your main purpose is to financially protect your family like your partner, children or parents in your absence, then you could opt for a Term Insurance Plan. Term Insurance plans give you adequate life insurance cover at a much lower cost. However, if you are looking for insurance as well as savings returns, then you may go for traditional life insurance policies like endowment plans or ULIPs.
As a thumb rule, you should opt for a policy term depending on your retirement age. By then you would have paid off all your liabilities. However, in case you have some loans or liabilities, which will continue even after your retirement, you may choose your policy term accordingly.
E.g.: If your current age is 30 and you expect to retire at the age of 60, you should opt for a term life cover for 30 years policy term.
Ideal Policy Term = Your Expected Retirement Age – Your Current Age
OR
Your Expected Age to attain Zero Liability – Your Current Age
Yes, Term Insurance premiums are deductible under Section 80C^^ of the Income Tax Act 1961. You can claim upto 1.5 lakh deduction for term insurance premiums paid over the year.
You will need to upload your PAN card, an age and address proof (passport, driving license, Aadhaar card or voter’s ID), and income proof documents (ITR, salary slips, bank statements or Form 16).
We suggest, your term insurance cover should be about 10-12 times your annual income. For e.g.: if you are earning 7.5 lakh per annum, you must secure yourself with a cover of about 75 lakh.
Additionally, you may also consider the following liabilities if applicable:
I. Loans & Liabilities
II. Children’s Education Cost
A simple rule of thumb for calculating Sum Assured in a Term Insurance policy is - Minimum Sum Assured = Annual Income x 10 times + Loans/Liabilities.
Limited Pay lets the customer pay off their entire premium in a limited period while enjoying the benefits of the plan for the entire policy term. This lets you free from the burden of paying premiums early on while keeping your family secured for a long period of time. While the premiums to be paid now are higher with Limited Pay, you can end up saving up to 65%`` on total premiums paid over the course of the policy. This is a good option for people who don’t have many financial obligations currently and can manage to pay high premiums. However, if budget is a constraint, then you can go with the Regular Pay option where you pay throughout the policy term. You can choose to pay the premiums monthly, half-yearly or annually.
You can change specified personal and policy details at any time during the policy tenure. You can download the relevant form from our website and submit it at our branches to ask for changes in details such as:
But the policy tenure cannot be modified after you buy the plan. However, your insurance needs might change as your financial liabilities increase
No, you cannot change the policy period of Term Insurance after the policy is issued.
Once your policy matures or reaches the end of its term, it ceases to exist which means the Term Life Insurance Policy expires and your coverage stops.
All kinds of deaths are covered under a Term Insurance Plan, including natural, accidental, murder, illnesses and natural calamities. Only death due to suicide in the first year of policy is not covered.
During the policy period, the nominee of your Term Plan can be changed as many times as you want. This change must be communicated to the insurer in writing, which shall ensure that the person who you think should benefit from your life cover receives the pay-out on time.
After the policyholder is no more, if an unfortunate event occurs with the nominee before the sum assured is paid, then the policy benefits are received by the legal heir(s) or representative(s) or succession certificate holder(s).
No, you don’t get your money back on survival till the end of the policy term in a Term Insurance plan.
Term Insurance premium increases if the probability of the policyholder’s death rises. Smokers have a higher death rate than non-smokers. Hence, they are charged a higher premium.
Your Term Plan premium is decided when you buy the plan and remains unchanged throughout the policy period. However, the insurance provider may not take into consideration any claim arising as a direct consequence of alcohol consumption. Read your policy document carefully to understand all the exclusions related to alcohol use.
You should also disclose any change in your lifestyle and health condition, including smoking habits, to your insurer. It will ensure a hassle-free claim settlement at a time when your family needs the sum assured the most.
grace period for payment of premium of 15 days applies for monthly premium payment mode and 30 days for other modes of premium payment. If the premium is not paid even within the grace period, the policy shall lapse and the cover will cease.
If you become an NRI after purchasing a Term Plan, your policy remains intact and continues to provide life cover anywhere in the world.
You can save up to approx 50% on the total premium if you opt to pay off your premiums early with Limited Pay option of 5, 7 or 10 years. This also ensures lesser liabilities but sufficient cover for the later part of your life.
Terminal Illness, is a condition which, in the opinion of two independent medical practitioners specialising in the treatment of such illness, is highly likely to lead to death within six months. The terminal illness must be diagnosed and confirmed by medical practitioners registered with the Indian Medical Association and approved by the company. The company reserves the right for an independent assessment.
Term Insurance provides pay-out to your nominee only if an unfortunate event occurs while the cover is in force. If you survive your policy period, your life cover will end on the policy maturity date. Your policy will terminate, and you will not receive any pay-outs.
How to File a Term Insurance Claim in the Event of Death?
Lodging a Term Insurance Claim
The first step is to lodge a claim. The nominee/claimant must intimate the insurance company and lodge a claim on the death of the life assured. To lodge a term insurance claim, the nominee/claimant needs to contact the insurance through any of their established claim reporting channels like:
In case of a natural death
In case of an accidental death