Popular Pick On Term Insurance
Questions You Should Ask Before Purchasing Term Insurance
If you are in the market for a washing machine and visit a showroom to check out some models, isn’t it natural that you would ask the salesperson some questions regarding the various functions and working of the machine? This is a common practice almost for almost everyone who is looking to purchase a new item, in order to ensure that we are buying what is suited to our needs. Same is the case with insurance. When you are planning to purchase a term insurance policy, it is absolutely necessary that you ask all questions you may have pertaining to the policy, besides what the policy brochure or the insurance agent says. To help you on your way, we have listed down some of the most important questions you must remember to ask before you even select or purchase a term insurance policy. After all, it’s a matter of your hard-earned money that will get you your policy.
What is Term Insurance?
Term insurance can be defined as a type of insurance that is availed for a certain period of time or a fixed term (number of years). The basic differentiating feature of term insurance is that unlike other types of life insurance policies, a term insurance policy is less expensive since it does not have any cash value. The policy comes useful only if the policyholder dies within the timeframe during which the term insurance policy is in force.
Term insurance policies are offered by almost all major insurance providers and these come for various terms like 10 years, 20 years, 30 years etc. The most significant point about term insurance policies is that most of these policies have a built-in feature to get converted to permanent life insurance policies irrespective of the state of health of the term insurance policyholder.
Best Online Term Plans in India
Online term insurance plans are offered by insurance companies for the convenience of their customers. Some of the significant advantages of buying term insurance online are:
- When you buy term insurance through an online portal, you may benefit from lower policy cost when compared to buying it the conventional way. From the insurer’s perspective, for online sales the involvement of life insurance agents and field officers are limited, making it a more economical way of selling insurance. Hence, the insurance company passes on this benefit to the customer.
- The entire process of online application happens in a hassle-free manner.
- The customer is not influenced by an insurance advisor or agent while purchasing the plan.
- The customer is serviced in the same manner, irrespective of the way in which he/she buys the plan, i.e., online or offline.
- Although the premiums for these plans are low, you need not be apprehensive about buying these policies. Online plans have low premiums due to two main reasons:
i) There is no intermediary in the deal.
ii) The online buyer is considered to be a low-risk customer for the insurance company. He/she would be educated, earning well, and is likely to have health insurance. In the event of an emergency, he/she would be in a position to reach a hospital on time and get access to quality medical facilities. These factors contribute towards the low risk and reduction in premium.
Some important points to keep in mind while buying online term insurance are as follows:
- Premium may vary in the future - The online price quote you receive is provided on the basis of an assumption that you carry normal risk in terms of health, occupation, and your family’s medical history. After you submit all relevant documentation, the insurer may request you to undergo medical tests to arrive at the actual policy cost. In case the medical reports indicate that you are exposed to certain risks, the premium for your insurance may rise.
- Do not let the policy move into lapsed status - The act of buying an online insurance plan is certainly a smart move. However, you should not let the policy lapse by missing premium payments. Since there would be no insurance agent reminding you of the premium payment due date, it is easy to miss renewing the insurance. It is advisable to send an ECS mandate to your bank so that the premium amount is automatically deducted on the due date. Setting up an alert on your mobile phone or computer is also a great way to remind yourself of the payment date.
- Do not hide relevant facts while applying - If you are a smoker or use tobacco in any other form, your insurance premium will be 25%-30% higher than that of an individual who does not use tobacco. However, you should never hide this information in your application for insurance. At the time of a claim, if the insurer finds that the customer had concealed information, the claim will be rejected. The insurer may also cancel the policy, as applicable.
Your insurance policy is the backbone of your family’s financial security. So, you should not get into a situation where the insurer annuls the plan.
|Term Plans||Entry Age (Min / Max)||Maturity Age||Policy Term||Premium Payment Option||Minimum Sum Assured||Payout Type||Claim settlement ratio (FY 15- 16) as per IRDA|
|LIC's e-Term||18 / 60 Years||75||10-35years||Annual||Rs. 25,00,000 for Aggregate category Rs. 50,00,000 for Non-smoker category||LumpSum Only||98.33%|
|Max Life Online Term Plan||18 / 60 Years||70||10 - 35 years||Annual||Rs 25,00,000||Lumpsum & INcome Options||96.95%|
|BSLI Protect@Ease||18 / 55 Years||80||5-30 years||Monthly (ECS), Annual & Single||Rs. 50,00,000||LumpSum Only||88.45%|
|Tata AIA iRaksha Supreme||18 / 70 Years||80||10-40 years||Annual, Semi-Annual, Single||Rs 50,00,000||LumpSum Only||96.8%0|
|ICICI prudential - iProtect Smart Plan||18 / 65 Years||75||5-40 years||Monthly, Halfyearly, Annual & Single||Subject to minimum premium paid||Lumpsum & Income Options||96.20%|
|PNB Metlife - Mera Term Plan||18 / 65 Years||75||10-40 years||Monthly & Annual||Rs. 10,00,000||Lumpsum & Income Options||85.36%|
|Bajaj Allianz iSecure||18 / 60 Years||70||10 | 15 | 20 | 25 | 30 years||Monthly, Quarterly, Semi-Annual, Annual||Rs.250,000 for general category Rs.20,00,000 for the categories split by Preferred Non-Smoker1 , Non-Smoker1 & Smoker||LumpSum Only||91.30%|
|Kotak Preferred e Term Plan||18 / 65 Years||75||10-40years||Monthly, Yearly, Single||Rs 25,00,000||LumpSum Only||89.09%|
|HDFC Life Click 2 Protect Plus||18 / 65 Years||75||10 – 40 years||Monthly, Quarterly, Semi-Annual, Annual||Rs 25,00,000||Lumpsum & Income Options||95.02%|
|AEGON Life iTerm Plan||18 / 65 Years||75||5 - 40 years; or upto 75years||Annual||Rs10,00,000||LumpSum Only||95.31%|
|Canara HSBC Life - eSmart Term Plan||18 / 70 Years||75||10 | 15 | 20 | 25 | 30 | 35 | 40 years||Annual||Rs. 25,00,000||LumpSum Only||92.99%|
|SBI Life - eShield||18 / Max: 1.For Level Cover & Level Cover with Accidental Death Benefit: 65 years 3.For Increasing Cover & Increasing Cover with Accidental Death Benefit: 60 years||70||Min: For Level Cover & Level Cover with Accidental Death Benefit: 5 years For Increasing Cover & Increasing Cover with Accidental Death Benefit: 10 years MAX- 30 years||Annual||Rs. 20,00,000/||LumpSum Only||93.39%|
|Reliance Online Term||18 / 55 Years||75||10 | 15 | 20 | 25 | 30 | 35 years||Annual||Rs 25,00,000||LumpSum Only||93.82%|
|Future Generali - Flexi Term Plan||18 / 55 Years||Min: 10 years , Max: Smoker: 65 years minus Entry Age, Non-smoker: 75 years minus Entry Age||Annual||Rs. 50,00,000||Lumpsum & Income Options||90.26%|
|Aviva I Life||18 / 55 Years||70||10 - 35 years||Half-Yearly, Yearly||Rs 25,00,000||LumpSum Only||81.97%|
|Bharti Axa Life – eProtect||18 / 65 Years||75||Fixed Policy Term - Minimum - 10 years, Maximum - 30 years Customised Policy Term - Up to 60 years, Up to 65 years, Up to 70 years, Up to 75 years||Annual||Rs. 25,00,000||LumpSum Only||80.02%|
|IDBI Federal - iSurance||18 / 50 Years||75||10-25 years||Annual||Rs 50,00,000||LumpSum Only||84.79%|
|IndiaFirst Life - Anytime Plan||18 / 60 Years||70||5-40 years||Monthly (ECS), Half-Yearly, Annual, Single||Rs. 10,00,000||LumpSum Only||71.87%|
|Edelweiss Tokio - MyLife+||18 / 60 Years||80||10 | 15 | 20 | 25 | 30 | 35 | 40 years; & 80years minus Age at Entry||Annual||Rs. 25,00,000||Lumpsum & Income Options||85.11%|
Best Offline Term Plans in India
Offline term insurance plans are more expensive than online plans. Irrespective of that, they provide a good amount of life insurance coverage for relatively low premiums. Offline term insurance policies are far more cost-effective than endowment or money-back insurance policies. Some of the advantages of taking an offline plan include:
- Policyholders get the assistance of insurance agents while applying for the plan.
- Customers can get reminders from insurance agents on premium payment due dates, leading to timely payments.
|Term Plans||Minimum Entry Age||Maximum Entry Age||Policy Term||Sum Assured||Payout Type||Riders Available|
|Bajaj Allianz iSecure More||18||60||10, 15, 20 & 25 years||Rs. 2,50,000||Income||Yes|
|HDFC Life CSC Suraksha Plan||18||55||5 years to 15 years||Min-Rs. 30,000
Max- Rs. 2,00,000
|SBI Life - Smart Shield||18||60||Min: 5 years||Min: Rs 25,00,000 (in multiples of Rs.1,00,000)||Income||Yes|
|SBI Life - Grameen Bima||18||50||5 years||Min: Rs. 10,000
Max: Rs. 50,000*(*Aggregate Sum Assured under this plan will be capped at Rs. 50,000 for each life. )
Why Do You Need to Buy Term Insurance?
Term insurance is generally overlooked in comparison to other insurance products. The main reason for this is the belief that term insurance plans do not offer significant returns or any additional benefits besides the Sum Assured on the policyholder’s demise.
However, there are several advantages of buying a term insurance policy. These include:
- Financial security - Term insurance plans are an excellent way to build a financial safety net. This is especially true in today’s world, as such a plan makes provision for the financial security of the policyholder’s dependents in the event of his/her demise.
- Basic insurance product - Instead of opting for a plan with a host of other add-ons and ending up paying a high premium, opt for a term insurance plan with a fixed, affordable premium for almost the same features.
- Greater returns - Term plans also fit everyone’s needs. A term insurance plan is one where the benefit received is much more than the sum invested, resulting in higher returns without the hassle of having to manage investment funds. Regular plans as well as TROP plans offer as much as 105% return on premiums paid as a benefit upon maturity.
- Sufficient coverage - You can choose the sum assured under term insurance policies so that it offers you sufficient coverage. Financial advisors are of the opinion that sufficient cover is equal to 10 times your annual income. It should be noted that inadequate coverage defeats the purpose of being insured. Along the same lines, it is important that you review your insurance cover and identify areas where you can cut down, so that you are not over-insured.
- Survival benefits - While a regular term insurance plan does not have any survival benefits, a number of insurers have designed plans, i.e., Term Return of Premium Plans (TROPs), that offer survival benefits in the form of premium refunds at maturity.
- Policy term - Term insurance plans offer you coverage for a fixed term. This indicates that you can take term insurance for a fixed duration wherein your family is financially protected. Following this, you can retire comfortably.
- Low claim rejection - Claim rejections are observed to be lower if a life insurance policy has been active for more than 10 years. Hence, it is ideal to buy term insurance to ensure that your claims are honoured.
- Flexibility - Most term plans offer you the flexibility of buying the policy online or offline. In addition to this, many insurers do not insist on health check-ups if the sum assured under the plan is Rs.50 lakh or less.
- Riders - Term plans can be enhanced through the use of riders that offer extra protection. These riders can be bought from the insurance company at nominal costs. Some of the riders available under term plans are accidental death benefit, critical illness, partial or permanent disability, waiver of premium, etc.
- Low brokerage - In case you opt for an offline term insurance policy, you will be paying the lowest amount as broker commission. Brokerage is usually calculated as a percentage of the premium paid. Since the premium for term insurance policies are usually low, the overhead of broker charges is also reduced. If you choose an online plan, there will be no broker fees as well.
- Flexible payment options - Term insurance policies offer flexible premium payment options, allowing policyholders to choose a payment plan based on their convenience. Premiums can be either limited pay, single pay or regular pay. Policyholders who choose limited or regular pay plans can pay their premiums either monthly, quarterly, half-yearly, or annually.
- Choice of plan - A number of insurers offer policyholders a choice when it comes to the type of plan they wish to opt for. Policyholders can choose between single or joint life plans, depending on their need. They can thus choose to extend coverage for dependent spouses or choose a plan exclusively for the breadwinner of the family.
- Tax benefits - Last, but not the least, premiums paid towards a term plan is eligible for tax benefits under Section 80C of the Income Tax Act. The death benefit received by the nominee under the plan is eligible for tax deductions under Section 10(10D) as well.
How does Term Insurance Works?
A term insurance policy can be considered one of the most traditional forms of insurance. Most of the term insurance plans have a premium that increases in small amounts over a period of time. This is to account for reduction in the value of money as years pass by. It also covers the increase in mortality risk and the extra levies imposed for a longer coverage term.
To understand how it works, you can look at it in these three situations:
- Buying the policy: To be able to buy a term insurance policy you don’t need to put aside tens of thousands of rupees every year. Many of the insurance policies can offer you a sum assured of up to Rs. 1 crore for a premium that could be as little as about Rs. 10,000 per annum (These are indicative figures. The actual premiums may differ depending on the sum assured and the insurance providers).
- Keeping the policy: Just like any other insurance policy, you pay the premium towards these policies at a frequency chosen by you. These premiums can be paid every month, every quarter, every 6 months or once a year. They can also be paid as a lump sum instead of being paid at regular intervals.
- Redeeming the benefits: Term insurance plans don’t usually come with any maturity benefits.Term insurance plans don’t typically come with any maturity benefits, except for term insurance with. Their main objective is to provide life insurance cover and that is exactly what they do. In case the policy holder passes away, the person who is named as the beneficiary of the policy will receive the sum assured.
The way it works is also one reason why you will notice that a lot of the time insurers refer to these plans as pure protection plans. There are no frills attached to the plan. You pay the premium and you get a fixed sum if case something happens to you.
Types of Term Insurance Plans:
Insurance companies offer a wide range of term insurance plans with exciting features and benefits to stand out amongst competitors in the insurance space. Term insurance can be classified into the following types:
Regular Term Insurance Plans:
A regular term insurance plan is a no-frills insurance plan that provides coverage against a specific set of risks on payment of a pre-decided premium amount. These plans offer no benefits upon maturity. Premium payments can be made periodically or they can be paid at once (single pay). The options for insurance cover can go as high as the insurer is willing to underwrite and the policy tenures can be as high as 20 years. When the policy matures, the insurance cover ceases, as does the need to pay premiums for such a cover.
This is the most basic form of life insurance protection. Regular term insurance also comes with low premiums and high sum assured. This ensures that the policyholder can receive maximum benefits from the plan in a cost-effective manner.
These are policies offered to a group of individuals by an employing organization, association, or trusts and societies. It provides coverage to each and every member insured under the plan. It is also less expensive compared to an individual term insurance plan. Group term plans offer more or less the same benefits as individual plans, however, the only disadvantage is that the coverage expires once the employment or membership ends.
As is made obvious by the name, a group term insurance plan is meant to be an insurance instrument that can be used by a group to secure its members against untoward occurrences. These plans can be taken by any group of people or companies for their employees but can come with one essential clause or mandate set by the insurer where the policy will require a minimum number of people participating in it. For example, if a policy says that it will cover groups of at least 20 people then a small company that has less than 20 employees won’t be able to purchase the policy.
Other features of group term insurance plans include:
- Limited coverage - The benefits of group insurance schemes are similar to individual policies but the list of illnesses and other factors are not as exhaustive as individual plans. The coverage is limited on the basis of a variety of factors i.e., time in membership, number of dependents, annual salary, etc.
- Easy to participate in - Most group term insurance plans are easy to secure. If an individual wishes to participate in a group term insurance plan through employment, he/she can do so by filling up a simple form and submitting it to the employer.
- Medical underwriting not required - The members of a group policy are usually not required to undergo medical check-ups to avail coverage because the insurance provider offering the policy pools the risk of all members and adequately prices the risk.
- Policy ownership - As the owner of the policy the employer/other entity keeps the original insurance policy, also referred to as the master contract. All the individuals covered under the plan are referred to as members and will receive a certificate of insurance. This is not an actual insurance policy but proof of insurance. Group insurance plans also allow you to select a beneficiary like individual plans.
- Riders - The coverage of group term insurance plans can be amplified through the use of riders offered by the insurance company. Some of these riders are accidental death benefit rider, partial and permanent disability rider, and critical illness rider.
Convertible Term Insurance Plans:
A convertible term plan allows the policyholder to convert his/her policy into a permanent one during the policy tenure. Some insurers provide this as an additional benefit rider while others offer the same as a standalone plan. As far as the terms and conditions have been met, converting a term life policy into a permanent policy should not be a difficult process.
The key features of convertible term insurance are described below:
- Even before a policyholder converts the term insurance into whole-life insurance, the policy will be more expensive. The coverage offered by a standard term insurance policy and that by a convertible policy may be the same. However, the convertible insurance plan will have higher premiums, owing to the built-in cost attributed to the conversion facility.
- Another advantage of a convertible term insurance plan is that the life assured is not usually required to appear for a medical examination while switching the plan from term to permanent. This is particularly useful because if the life assured’s health has waned after buying the convertible plan, he/she will still be able to avail whole life coverage that would not have been possible otherwise.
- If the policyholder pays all premiums on time he/she can keep the policy in-force with the option of conversion later on in life.
- You should buy a convertible policy now if you are unable to afford whole life insurance. In the future even if you are able to buy whole life insurance, your health may disqualify you from doing so. In effect, you choose the affordable insurance now while also creating a path to the lifetime option in case your insurance needs and health condition changes over time.
- When buying convertible insurance make sure that you are aware of the timeframe within which you should convert the plan. You should keep a close eye on this aspect and also on the investment part of the plan.
- When you have a convertible term insurance policy, every year that you wait to convert will make the conversion rate go up by 10%-15%. This is because you will be moving up into higher rate bands as you grow older. If you are sure that you will be going for a conversion, it is better that you do it while you are young and in a low rate band.
Difference between convertible and renewable life insurance:
While shopping for term insurance plans, you may have come across schemes that are “renewable”. There is a misconception that the two are synonymous. The fact is that renewable and convertible policies are two different products.
If a policy is referred to as being renewable it means that the plan can be extended even after the end of the term. The premiums for renewal of the policy may however be much higher than the original premium. On the other hand a convertible policy provides you the ability to switch from term insurance for a specific duration to whole life insurance. Renewable plans usually do not offer this option.
Term Return of Premium (TROP) Plans :
TROP plansare standard term life insurance plans with a slight variation in the method of providing survival benefits. On survival, policyholders are returned the total amount of premiums paid by them during the policy tenure, excluding tax. Such a method ensures that the money spent on the policy is returned to you after a specific interval.
Key features of Term Return of Premium plans are:
- Just like a regular insurance plan, a TROP offers a refund of the premium upon the policy’s maturity, provided that the policyholder survives till that date.
- A TROP plan generally allows policyholders to add riders or benefits to their existing plans to increase the coverage.
- TROP plans have a slightly higher premium amount compared to regular term insurance due to the premium repayment facility.
- Term Return of Premium plans offer you tax benefits on the premiums paid, under Section 80C of the Income Tax Act. These plans also enable you to enjoy tax benefits on the payouts from the policy under Section 10(10D).
- Some insurers offer returnable TROP plans. This means that if the policyholder opts to discontinue the premium payment and return the plan, the premiums that have been paid till date will be reversed. However, there will be deductions pertaining to medical examination costs and stamp duty charges. You should discuss this facility with your insurance advisor before investing in a TROP plan.
- The policyholder has the option to stop paying premiums towards a ROP plan after a predefined duration, usually 3 years. The policy will then move into paid-up status. The death and maturity benefits in this case will be reduced by a ratio of total premiums paid to the total premiums payable under the plan.
You should keep the following points in mind before investing in a ROP policy:
- Read all policy-related documents carefully. This is very important as it helps in understanding the inclusions and exclusions under the plan.
- In the event of an unforeseen incident, the sum assured under the plan should be sufficient to help your family survive the difficult phase. So, choose the plan coverage judiciously.
- Opt for an insurance company of repute. Since there are many players, private and public, in the market today you should not fall for marketing messages or advertisements. Instead use your best discretion when selecting an insurance provider.
- When looking to buy a plan, you should check the claim settlement ratio of the insurance company. Ensure that the insurer has a good customer service/grievance cell as well.
- Before finalising on a plan, understand the premium payment frequencies and flexibilities the scheme offers. This way you will be well-equipped to make the purchase.
Trops Versus Fixed Deposits:
There have been debates on the returns offered by TROP plans. There is a general belief that TROP policies have inflated premiums with respect to the survival benefits offered. Many compare TROP schemes to fixed deposits as well.
It is understood that fixed deposits (FDs) yield higher returns in comparison to TROP plans. While TROP policies pay back the full premium as survival benefit, there are no interests or other incentives offered. On the other hand, an FD account returns the principal amount and compounded interest at maturity, which is far higher than the survival benefit under a TROP plan.
But the vital life insurance coverage that TROP policies provide the life assured should not be ignored.
Decreasing And Increasing Term Plans:
The insurance market is flooded with various types of policies that it often becomes difficult for the buyer to choose the best suited plan. Decreasing and increasing insurance policies are two of the commonly used terms in the insurance realm. Let’s take a look at the features and benefits of the aforementioned policies:
Decreasing Term Insurance: In this type of policy, the sum assured on death as well as the premium decreases at a certain rate throughout the policy term. Such plans are generally offered by financial institutions to insure the property held as collateral against the loan offered. It is an additional safety component which ensures that the bank will get back the amount released as loan, in case of the worst scenario. The duration of the policy term can vary between 1 and 30 years.
The essence of decreasing term insurance is that a person’s requirement for high insurance coverage decreases with age, as certain liabilities do not exist beyond a point. Decreasing term insurance plans are not suitable for individuals who have no other form of life coverage. If you buy only one life insurance package, it should be a pure term insurance policy, as it would offer you a level death benefit throughout the tenure.
While the main advantage of choosing decreasing term insurance is that it can be used for personal asset protection, small businesses also use these plans to insure indebtedness for startup expenses or operational costs.
Increasing Term Insurance: Under increasing term insurance plans, the insurance coverage increases at specified durations when the policy is in full force. It evaluates risks on par with the rising costs at any given time in the future and compensates accordingly. The cover usually keeps increasing till the time it attains a value which is 1.5 times higher than the original cover.
- Increasing term life insurance policies are configured to offer respite from inflation. It also ensures that the death benefit is substantial when it is finally paid out to the nominee.
- One of the main disadvantages of the increasing term insurance plan is that the premium increases according to the benefit. Hence, these policies get more expensive over time.
- Increasing term insurance is less common than other forms of term insurance.
- These plans are particularly suitable for couples who plan to have a child in the near future, and would like to save up for the same.
Aegon Life Insurance offers an increasing term insurance plan that is a variant of the regular scheme. The sum assured under the policy increases by 5% every year till the value reaches twice the initial amount in 20 years. After this point, the sum assured remains constant. It should be noted that the sum assured cannot go beyond double the original sum assured. The rise in the value of sum assured cannot be stopped either.
As the name suggests, joint term insurance plans are those schemes which allow the person insured to cover his/her spouse under the same policy. It is a comprehensive financial protection solution with multiple benefits for couples. It basically ensures that the family equilibrium remains intact during hardships, or in the worst case, during the absence of one of the two or both. These policies are well suited for married couples with dependent children.
Key features of joint term insurance plans include:
- Some joint life plans pay out on the basis of the first claim. This implies that if one of the insured members die, the sum assured is paid out and the policy ends immediately.
- Certain joint life insurance plans offer payment at the death of each insured member.
- Some joint life policies offer payout to the surviving member at the first death. The surviving member also receives a regular payout in the form of an income for a fixed duration.
- Joint-life term insurance plans offer tax benefits on premiums paid and payouts received, under Section 80C and 10(10D) respectively.
- Some plans provide additional payments if the death was caused in an accident. In-built terminal illness coverage is also offered by some joint life plans.
Joint Life Term Plans Versus Individual Term Plans:
If you and your spouse are looking to buy term insurance and are confused about the product that you should buy, you can go through this checklist to identify the right plan for you:
- A joint-life cover will provide insurance for both spouses under the same terms and conditions. On the other hand, if you choose to purchase separate individual term plans, the policy terms and conditions and cost can be selected by each spouse on the basis of his/her insurance needs.
- Suppose you purchase a joint-life policy with a single death payout. In the unfortunate event of an accident in which you and your spouse face death, the policy will only pay a single death benefit to your nominee. However, if you both were insured under individual term insurance plans, then the nominee would receive two separate death benefits. There is a significant difference between both options on the financial front.
- After the first death benefit payment, the coverage under some joint-life term plans terminate. This leaves the surviving spouse without insurance coverage. Also, purchase of insurance later in life may cost more due to the age of the surviving member or him/her having developed health issues. This problem will not crop up if individual term plans were taken.
- In the case of a joint policy, if the couple choose to get divorced, complications would arise in the plan coverage and premium payments. This issue is avoided if term plans were taken.
- The premium for joint-life term plans are usually lesser than that for individual policies. So, if you are on a tight budget, it is advisable to take joint life coverage. Moreover, the ease of policy management and simple documentation are some additional factors that make joint-life plans an attractive option.
Online Term Insurance Plans:
The digital advancements of the recent past has created significant changes in every sphere of activity, especially in the way business transactions take place these days. Most of the insurance companies have started offering term life insurances online, without involving mediators. All the information related to the policy will be hosted on the insurance company’s website which makes it easy for the buyers to compare and choose the best suited plan.
Features and Benefits of Term Insurance:
Flexible Payment Options:
Term insurance policies offer flexible premium payment options, allowing policyholders to choose a payment plan based on their convenience. Premiums can be either limited pay, single pay or regular pay plans. Policyholders who choose limited or regular pay plans can pay their premiums either monthly, quarterly, half-yearly or annually.
High Sum Assured for Low Premiums:
Term insurance premiums are some of the lowest in the insurance sector, allowing for a prudent and relatively inexpensive way to safeguard the policyholder’s dependents in case of untimely demise. The Sum Assured associated with term insurance plans are also relatively high when compared to the premium amounts. Regular plans as well as TROP plans offer as much as 105% return on premiums paid as a benefit upon maturity.
Choice of Plan:
A number of insurers offer policyholders a choice when it comes to the type of plan they wish to opt for. Policyholders can choose between single or joint life plans, depending on their need. They can thus choose to extend coverage for dependent spouses or choose a plan exclusively for the breadwinner of the family.
On the death of the policyholder during the policy term, his/her dependents stand to receive the amount chosen at the time of choosing the policy. The amount would depend on the term plan, with the amount increasing, decreasing or remaining the same irrespective of at what juncture of the policy tenure the policyholder’s death occurs.
Policyholders can claim tax exemptions under various sections by virtue of opting for a term insurance policy. Tax exemptions can be got under section 80C of the Income Tax Act on premium amounts.
Policyholders can also claim exemptions under Section 10 (10D) of the Income Tax Act for benefits received through insurance policies.
While a regular term insurance plan does not have any survival benefits, a number of insurers have designed plans that also offer survival benefits in the form of premium refunds on maturity.
On maturity of the policy, surviving policyholders stand to receive benefits under a TROP policy only. In the case of a TROP policy, the policyholder will receive the premium amount paid over the policy tenure as one lump sum.
A number of individuals have begun to opt for add-on features to their regular term insurance policies. These add-on plans will push up the price of the premium being paid but provide additional benefits in case of accidental death, critical illness, total and permanent disability benefit etc.
How to Choose a Term Insurance Plan:
The market is flooded with term insurance policy options, with varying policy terms, benefits and sum assured amounts. Navigating this maze of policies and making sure you choose the one that fits best and meets your requirements is a difficult task.
The following points should be kept in mind when looking for a term insurance plan:
- Claim Settlement Ratio:
- Riders / Add-on covers:
- Policy comparison:
- Engage an insurance advisor:
- Policy terms and conditions:
When picking an insurance policy, it is always advisable to look at the insurance company’s reputation. This is important as a term insurance policy is a long term investment and as a policyholder, you should not be left in the lurch in the event the company shuts down or meets with any difficulties. Checking the company’s FICO score would be a good way to gauge its stability and reliability.
The insurance company’s claim settlement ratio is an indicator of the number of claims settled out of every 100 claims received by the company. Insurance companies with a healthy claim settlement ratio are seen as more reliable and a better choice, as a higher settlement ratio is considered favourable. The IRDA publishes the claims settlement ratio for all insurance companies for a particular year.
The riders provided by the insurance company in addition to the regular policies are also to be considered. A policy that provides the basic coverage and also offers additional benefits and riders is seen as a secure one, and insurers who provide a wide range of riders are considered a good option.
The amount you would be paying in terms of premium for the protection offered is a key factor in selecting a term insurance policy. Given that these policies can have a tenure of up to 20 years, the amount being paid annually as premium is a significant amount. Thus companies that offer reasonable protection for low premiums are preferred by policyholders.
When selecting a term insurance policy, take into account factors like inflation. Term insurance policies are usually taken for 10-20 years, during which time inflation will erode the value of the rupee, resulting in lower returns at the time of maturity. To offset this, consider companies that offer plans where the cover increases by 5% - 10% annually to keep in line with inflation.
It is advisable to compare insurance plans online so that you have a clear idea of the options available to you. The facility of policy comparison is offered by neutral third-party financial websites, free of cost. So, it is wise to make use of this facility as much as possible.
In case you feel that you are unable to decide on a plan by yourself you can always seek the assistance of an insurance advisor for the same. This way you can be assured of expert insurance advice/suggestions that would enable you to pick the right policy.
It is vital that you read the terms and conditions within the policy document thoroughly before signing the dotted line. This enables you to understand the minute details pertaining to the inclusions and exclusions under the plan, so that there are no confusions in the future.
Documents Required for Term Insurance:
All insurance companies mandate that you submit a set of relevant documents while applying for term insurance. Following is the list of documents you will need to provide when taking a term insurance plan. Document requirements may also differ from insurer to insurer.
- PAN card
- Proof of identity using documents like passport, Voter ID card, Aadhaar card, driving licence, letter from a public servant or authority verifying identity.
- Proof of age with documents like passport, birth certificate, driving licence, PAN card, etc.
- Proof of address with documents like utility bills (electricity, telephone), ration card, bank account statement, Voter ID card, or passport.
- Proof of income with documents like Income tax returns, employer’s certificate, or Income Tax assessment order.
- Some recently clicked passport sized photos.
Exclusions for Term Insurance Plans:
Term insurance plans cover a list of specific events and circumstances. Depending on the type of plan selected, this could be an exhaustive list. However, there are some exclusions that term insurance policies do not provide coverage for. Given below is a list of exclusions:
- Suicide: Suicide is an exclusion in all term insurance policies. Insurers will not pay dependents in the event of the policyholder committing suicide within a year of purchasing the policy. In the case of group insurance, suicide will not be liable for compensation as well.
- Death due to war, terrorism drought: Death due to natural calamities and acts of war are not covered under a term insurance plan.
- Death due to actions by the insured: Accidental death brought on by the actions of the policyholder (such as extreme sports etc.) are not covered as these are viewed as self-imposed risks by the policyholder.
- Death due to intoxication or narcotics: If the policyholder’s death was brought about by or as a result of consumption of alcohol or narcotic substances, the insurance company is not liable to compensate dependents.
Term Insurance Claim Process:
In case the life assured policyholder passes away, their dependents will be required to file a claim in order to receive the amount which the insurer has assured to pay on such an event. The claim process is usually quite simple and easy to follow in most cases. Given below is a step-by-step guide to file your claim for a term insurance policy:
Step 1 – Inform the Insurer About The Claim:
The initial step to filing a claim involves intimating your insurance company regarding the claim. To do this, you must contact your insurance provider via any available channel i.e. via phone, email or by visiting the branch. Only when you have informed the insurer about the claim will the claim settlement process be initiated.
Step 2 – Submit Required Documents:
Once you have informed the insurer about the claim, you will be required to submit the necessary documents to support your claim. Documents usually required for supporting a claim include the original insurance policy document, proof towards the claim, deceased life assured’s death certificate and medical records, apart from some other documents. Some insurers may also ask you to submit additional documents to further verify the claim.
Step 3 – Claim Settlement and Payout:
The final step in the claim process is the decision regarding the claim and subsequent settlement. After the required documents have been provided to the insurer, the claims department will verify the documents and the claim before taking the decision on the settlement. The insurance company may honour the claim if everything is in order or may deny it if there is any discrepancy in the claim and proof provided for it.
Term Insurance Premium Calculator:
Insurance companies providing term insurance are often fielded with questions regarding the premium to be paid for a particular policy. As the premium amount is integral to selecting a policy, a number of companies have a premium calculator on their websites which allows policyholders to calculate the premium they would be paying for particular policies. The premium calculator facility is available to all individuals who wish to calculate an estimate of the premium to be paid.
The premium calculator for most insurance companies requires you to input details such as your gender, date of birth and mention if you are a smoker or non-smoker. The coverage amount required (depending on your needs) is to be entered as well.
On doing so, the premium amount to be paid will be displayed on screen. The premium amount would be calculated based on the maximum policy term offered by the insurer.
Any additional benefits included as part of the policy would be displayed below the premium amount payable. Some insurers provide an estimate based on the insurance plan selected, and will provide the premium amount based on the type of plan and coverage it offers. The premium calculator is an excellent way for individuals to check their premium contribution if they wish to opt for a particular term insurance policy.
Popular Term Insurance Plans in India:
Some of the popular term insurance plans in India are mentioned below:
LIC e-Term Insurance plan offers policyholders coverage from a minimum of 10 to a maximum of 35 years. It covers individual policyholders only and cover is provided up to 75 years. The policy is available exclusively online, with the minimum Sum Assured being Rs.25 lakh. The policy makes provision for riders and add-ons as well, and has a 30 day free look period. The policy cover can be extended if the policyholder wishes to enhance coverage.
ICICI Pru iProtect Smart Plan
The ICICI Pru iProtect Smart Plan provides term insurance for individuals as well as dependents. The plan is offered exclusively online. The plan covers policyholders for a minimum period of 5 years and a maximum of 40 years, with cover provided up to a maximum of 75 years of age.
There are three options - the Life Option, Life Plus Option and the Life & Health Option which offer varying coverage depending on the policyholder’s requirement.
The options offer coverage ranging from death benefits, terminal illness cover, permanent disability cover as well as accidental death benefit cover.
Bajaj Allianz iSecure More
The Bajaj Allianz iSecure More plan is a term insurance plan offering a range of options to the policyholder. The plan is an individual coverage plan which can be extended to cover the policyholder’s spouse. The plan provides coverage for a minimum of 10 years and a maximum of 25 years.
The plan also features an increasing cover every year, with a 5% increase in the Sum Assured, up to a maximum of 2 times the Sum Assured at the time the policy was purchased. The minimum Sum Assured is Rs.2,50,000. Policyholders can choose to receive the death benefit amount in instalments over a 5-10 year period.
HDFC Life Click2Protect Plus Term Plan
HDFC Life Click2Protect Plusplan offering from HDFC provides policyholders with a variety of cover options, namely the Life Cover option, Extra Life with accidental death benefit option, Income option and Income Plus option. There is provision for both individual as well as joint coverage plans. The plans provide coverage for a minimum of 10 and a maximum of 40 years, with the plan providing coverage up to a maximum of 75 years. The minimum Sum Assured for these plans is Rs.25 lakh, with dependents receiving up to 125% of the premium in case of the policyholder’s demise.
Max Life Online Term Plan Plus
Max Life insurance offers an affordable yet competent term plan known as the Online Term Plan Plus. This is a pure term plan which offers protection for your family at an affordable cost. There are various benefits which this plan offers such as 100% sum assured provided as lump sum on death, option to enhance plan cover with riders, waiver of premium option in case of dismemberment, or if policyholder is diagnosed with a critical illness, or in case of death, discounts on opting for a high sum assured amount, simple and hassle free online application process, premium discounts for non-smokers, etc.
This plan comes with a term of 10 to 40 years and the minimum sum assured provided is fixed at Rs.25 lakh. The premium payment term will be equal to the policy term and premiums can be paid on a yearly, semi-yearly, quarterly or monthly basis. This plan only provides a Death Benefit and no Maturity Benefit.
PNB MetLife Mera Term Plan
PNB MetLife Mera Term Plan is a non-linked, non-participating term plan which offers the benefit of customization so you have the flexibility to choose from the available range of payout options as per your requirement. This plan comes with multiple benefits like coverage till the age of 75, affordable premiums, tax savings under Section 80C for premiums paid, hassle-free cover for your partner, increasing monthly income and the flexibility to increase your life cover to accommodate the needs at every stage of life.
Birla Sun Life Insurance Protect@Ease Plan
Another popular term plan available in the market is offered by Birla Sun Life insurance and is known as the Birla Sun Life InsuranceProtect@Ease Plan. This is another affordable term insurance plan which offers all-round financial protection to your family. The plan is available in 2 options – Level Term insurance and Increasing Term Insurance. Customers have the option to increase the plan coverage at significant milestones of their life and also have the option to cover their spouse under the same policy. Policyholders can choose from multiple options for receiving their death benefit. The plan comes with rider options to enhance coverage and offers special rewards in terms of premiums for those maintaining a healthy lifestyle.
The entry age for this plan is 18 years to 65 years. The policy term ranges between 5 years to 40 years. The premium payment term for this plan is single pay, regular pay or limited pay for 5 or 7 years. Premiums can be paid on a monthly or annual basis. The minimum sum assured provided under this plan is fixed at Rs.30 lakh and there is no maximum limit on same.
Edelweiss Tokio Life Total Secure+
The Edelweiss Tokio Life Total Secure+ is an all-round online term insurance plan which not only provides life cover but also protects against 35 critical illnesses, including cancer and diabetes. The plan offers several options in customization for features like life cover, policy term, premium payment term, critical illness benefit, and benefit pay out. Under this plan, you can choose to pay premiums as single pay, regular pay till the policy expires or limited pay for 5, 10, 15, 20 and 25 years. With this plan, you also save tax as per the provisions of Section 80C and 80D of the Income Tax Act, 1961. To enhance the protection provided by the plan, you can also choose from a range of add-on riders available with this plan.
Future Generali Flexi Online Term Plan
The Flexi Online Term Plan by Future Generali is a non-participating, non-linked pure term insurance plan that is not only affordable but also flexible and convenient. This plan ensures that your family stays financially protected and stable in case you may not be around to provide for them in the future. Premiums for this plan start as low as Rs.4,223 per annum and customers have the option of receiving the Death Benefit as a lump sum or in monthly instalments. You can choose between two plan options which are Basic life cover and income protection. Other benefits offered under this plan include life cover till the age of 75 years, preferential premium rates for non-smokers, discounts on high sum assured and lower premium rates for women.
The entry age for this plan is between 18 years to 55 years for the basic cover option and 25 to 55 years under the income protection option. The minimum policy term for both options is 10 years. The premium payment term will be equal to the policy term and premiums can be paid annually or monthly.
Among the scores of term insurance plans available, the Aviva iLife is among the best. This is a pure term insurance plan which is not only affordable but also provides convenience as it can be purchased online. This plan offers a death benefit in case the life assured policyholder passes away during the policy term. Tax benefits can also be availed as per the provisions of Section 80C of the Income Tax Act, 1961.
The entry age for the iLife plan is 18 years to 55 years while the maturity age is set at a maximum of 70 years. The policy term ranges from 10 years to 35 years and is the same as the premium payment term. Premiums can be paid on a yearly and half yearly basis. The plan also offers discounts on high sum assured amounts and to female policyholders.
How Much Term Insurance Do I Need?
There is no set formula that can be applied to answer the question of how much insurance is enough insurance. What can be done, when trying to answer this question, is to take into consideration the factors that have the maximum impact on the sum assured. These factors will include things like how much you can afford to pay as a premium, what is the sum assured that you think will be adequate for your families future expenses and is the sum assured you want available.
Eligibility Criteria of Term Insurance:
Before anyone can take a life insurance policy, they will have to meet certain eligibility criteria which can be:
- The minimum age of the policyholder will have to be 18 years old when taking the plan.
- The maximum entry age will depend on the minimum tenure of the policy.
- The maximum age at the time of maturity for these policies can be 75 years but this could change from one insurer to the next.
- The minimum age for maturity will be determined based on the minimum age at entry and the minimum tenure offered.
- The sum assured will also be a factor in calculating the eligibility as many policies have a fixed minimum sum assured.
- This may not be mandatory but some insurers may ask you to undergo a medical check-up prior to taking the policy.
Things to know about term insurance plans:
As explained, buying a term insurance plan is the most economical way of securing yourself and your dependents. There are multiple features and benefits associated with term insurance policies which makes them stand out from the rest of the insurance options. Let’s take a look at some of the must know features of term insurance policies.
An economical approach towards financial security:
Most of the insurance companies offer term life plans at lower rates of premium, because these plans offer coverage only for a predefined duration. What makes these plans cheaper is that, most of the times the person insured survives the policy term, in which case the company will have to pay nothing in return. However, this is not the case with TROP plans where the premiums are returned on survival of the policyholder. A simple term plan can be compared with a vehicle insurance policy which compensates only at times of an accident.
Even term plans can offer better returns on investment:
Even though term plans are opted widely by people worldwide, a considerable few are still hesitant to go for it because of the zero returns on survival of the term. However, some insurance companies offer a Term Return of Premium (TROP) plans, under which the person insured will be paid all the premiums that he/she has paid during the policy tenure. Generally, TROP plans are priced a bit higher than normal term insurance plans.
A monthly income for dependents of the policyholder:
Buyers at the time of application can choose whether the death benefits should be paid as a lump sum to the nominee or in installments. However, if at the time of claims the nominees choose to take the entire amount as a lump sum, they can avail the same at a reduced value.
Enhancement of insurance coverage:
In term plans, you also have an option to increase the level of insurance coverage at different stages of your life. The percentage of increase depends purely on your insurer and on the type of plan selected.
Choose your premium term and policy term:
Your term insurance plan allows you to choose the tenure at the time of policy inception. It’s an excellent feature which helps you to choose the plan based on your financial situation. This particular feature of term plans makes it a better risk management planner for loans and debts.
Term Plan Vs Endowment Policy Vs ULIP:
There are a lot of life insurance products that are available to customers and they can range from a term plan to an endowment plan to a ULIP. So the question really is how term insurance stacks up against ULIPs and
|Term Insurance||Endowment Plans||ULIPs|
|Premium (for Rs. 1 crore)||Approx Rs. 9,000||Approximately Rs. 60,000||NA|
|Max sum assured||No limit||No limit||Depends on fund value|
|Premium payment||Offers single pay, monthly, quarterly, half-yearly, yearly and limited pay options||Offers single pay, monthly, quarterly, half-yearly, yearly and limited pay options||Offers single pay, monthly, quarterly, half-yearly, yearly and limited pay options|
|Maturity benefits||None unless it’s a TROP||Does offer maturity benefits||Maturity benefits linked to market investments|
|Risks||No risks||No risks||Has risks since the premium is invested in the equity and debt markets|
The interpretations that we can draw from the table are:
- For a sum assured of Rs. 1 crore, the premium for a term plan is about Rs. 9,000 whereas for endowment plans, it is much more and ULIPS don’t always offer a fixed sum assured.
- The premium payment options are the same for all the insurance plans.
- While ULIPS come with an inherent risk due to investments made in equity and debt markets, term insurance plans are quite safe.
- If you opt for a tem insurance with a return of premium option then when the policy matures, you stand to get 100% of your premiums back.
Term Insurance FAQ’s
Q. Will every insurance company offer the riders?
A.No. The riders are offered at the desecration of the insurance providers so they can differ from one provider to the next.
Q.Can I take more than 1 term insurance plans?
A.Yes, you can take more than 1 term insurance plans.
Q. What if I want a sum assured that is in excess of Rs. 10 crore?
A.In case the sum assured is really high, the decision to provide the policy will rest with the insurer and the policy issued only if the insurer is willing to insure for such high amounts.
Q. Are there any situations under which the claims won’t be honoured?
A.Yes. If your claim falls under any of the exclusions mentioned in the policy, the claim won’t be honoured.
Q. What are some of the exclusions?
A.The exclusions can include indulgence in activities that are illegal. They also include participating in activities that are known to be dangerous, example extreme sports. In the case of the policyholder committing suicide within the first year, only the premium paid may be returned.
Q. What do insurers mean by healthy lifestyles?
A.A healthy lifestyle can mean that the policyholder is not indulging in any activity that could harm their health. An example of this would be smoking.
Q. What is the benefit that I get for health lifestyles?
A.The main benefit that insurers offer for healthy lifestyles is a discount on the premiums payable.
Q. Can I take a term insurance plan if I am an NRI?
A.Yes. If you are an NRI then you can still take term insurance cover.
Q. Does term insurance have a free-look period?
A.Yes. Term insurance has a free-look period of 15 days, from the day you receive the policy document, within which you can surrender the policy in case you are not satisfied with it and get the premium refunded. There may be some deductions involved.
Q. Do I have to pay penalties if my payment is late but within the grace period?
A.Late payment policies may differ from one company to the other but generally if payments are made within the grace period then no interest is charged on the payment.
Q. What is accidental death benefit?
A. Accidental death benefit is a rider or add-on to term insurance policies by which the dependent will receive a pre-determined amount of money in the event of the policyholder’s death due to an accident.
Q. What is the age limit for a term insurance policy?
A.Different insurers and plans have different age limits for term insurance policies, with the limit ranging from 55 years to 70 years.
Q. What is term insurance with monthly income?
A.In such cases, the Sum Assured is decided on the policyholder’s monthly income after taxes. The death benefit paid out is 12 times the monthly income, inflated at 5% annually throughout the term of the policy.
Q. Can I alter the duration of the coverage after the policy has been issued?
A.No, it is not possible to change the duration of the coverage after the policy has been issued. However, some policies allow for extensions in the coverage period.
Q. What is the maximum tenure for a term insurance plan?
A.The maximum tenure for a term insurance plan depends on the insurance company and the type of plan opted for. The maximum tenure available is 40 years.
Q. I smoke occasionally. Will I have to declare myself a smoker at the time of applying for the policy?
A.If you have smoked in the last 12 months, you are required to declare yourself a smoker at the time of applying for a term insurance policy. If you do not and the insurer is made aware of this, you could risk losing your policy benefits.
Q. How do I cancel my insurance policy?
A.Cancelling your insurance policy can be done by notifying the insurer within 15 days of the policy being issued.
Q. What are the eligibility criteria when applying for term insurance?
A.The eligibility criteria for term insurance are as follows:
- Should be a citizen of India.
- Should be above the minimum entry age (18 years).
- Should be below the maximum entry age (depends on insurer and plan).
- Should be able to pay the plan premium.
Q. Can I switch my term insurance plan to another insurance provider during the policy term?
A.No, you cannot switch your term insurance policy to another provider during the policy term.
Q. Can the dependent/nominee re-apply for a claim if it was rejected once?
A.Yes, the nominee/dependent can re-apply for a claim if it was rejected before, and can approach the insurer’s grievance redressal cell if necessary.
Q. What is a term insurance policy?
A. Term insurances are the most inexpensive way of availing insurance coverage for a specific period of time. It is merely a risk cover and does not provide any benefits on survival.
Q. What are the main reasons for buying a term insurance plan?
A. Term insurance policies come with a multitude of benefits to suit the requirements of buyers. A common few are listed below:
- It offers financial protection to your family
- Takes care of your liabilities
- Term plans come at easily affordable prices
- Offers tax benefits under Section 80C and 10(10D) of Income Tax Act
- You can avail additional benefits such as accidental death or disability rider, critical illness rider, etc.
Q. Should I opt for a term insurance plan even if my employer provides an insurance coverage?
A. Yes, it is advisable that you choose a term insurance plan even when your employer provides you an insurance coverage. This is because the insurance cover offered by your employer expires once you change the job.
Q. What are the documents required for buying term insurance plans?
A. The following documents are needed for buying term insurance plans:
- Proof of age
- Proof of residence
- Photo identity proof
- Salary proof
Q. What are the maturity benefits offered under term insurance plans?
A. Except for TROP plans, term insurance plans do not offer maturity benefits. The sum assured is offered to the beneficiary only in case of death of the person insured.
Q. Can I get loan on term insurance plans?
A. No, policyholders are not eligible for loans as the policy doesn’t come with maturity benefits nor does it attain surrender value.
Q. What happens when I change my country of residence a few years after choosing the plan?
A. The term insurance plan will continue to be active even when you relocate from India. However, make sure that you keep your insurer informed about such a change.
Q. Is there any advantage in buying a term insurance plan at a young age?
A. Generally term insurance plans are available at lower prices for people who in an early stage of their life. Therefore, buying a term plan at a young age is definitely beneficial.
- Term Insurance Policy for 5 Year
- Term Insurance Policy for 10 Year
- Term Insurance Policy for 20 Year
- Term Insurance Return of Premium
- Term Insurance Survival Benefits
- Term Insurance Maturity Benefits
- Term Insurance Without Medical Checkup
- Term Insurance With Riders
- Term Insurance vs Endowment Policy
- Top Term Insurance Plans India
- Term Insurance Premium Calculators
- Term Insurance Plan for Couples
- Term Insurance Plan for Family
- Term Insurance for Groups
- Term Insurance for Senior Citizens
- 1 Crore Term Insurance Plan
- Term Life Insurance for Smokers
- Term Life Insurance for Tax Benefits
- Term Life Insurance for Cancer Patients
- Term Insurance Life Cover Calculation
- Term Insurance Plans Comparison Parameters
TERM INSURANCE RELATED ARTICLES:
Term Insurance With Return of Premium Plan (TROP)
When we talk of term insurance, most people remain under the impression that term plans do not offer any survival benefit, maturity benefit, or return of premiums. Term plans are considered to be the purest form of life insurance which only offer death benefit in case the policyholder passes away before the end of the policy term. However, not many people are aware that there are also term plans available in the market which provide a return of premiums paid.
These type of term plans are known as Return of Premium Plans which offer you not only affordable protection against uncertainties but also return your premiums after the term of the plan is over. In this article, we discuss more about Term plans which offer return of premiums, the survival benefits offered under such plans, benefits which one an get from opting for such a plan, and a short guide on how to choose the best return of premium term plan. You will also get to read about some of the top return of premium term plans that are available in the market currently.
20 year Term Life Insurance Policies in India
Unpredictability is a part of life. However, life insurance is a wise way to prepare and protect your loved ones against the adverse of an unpredictable event. Among life insurance plans, term plans have been the most popular for a long time, owing to their affordability and benefits.
Term plans are available for varied durations and here, we will discuss about 20-year term insurance plans. Read on to know more about the various benefits offered by such term plans, who they are ideal for, how they work, and some of the top 20-year term plans that are available in India.
10 year Term Life Insurance Policy
Life insurance is now a very important part of everyone’s life. As life becomes more and more unpredictable, life insurance has become a smart way to ensure that our dependents are financially protected from any uncertainty that life might bring. Under life insurance, term plans continue to be one of the most popular option because of the variety of benefits they offer.
Term plans are available in a variety of tenures which is fixed for a certain number of years. In this article, we are going to throw some light on 10-year term insurance plans. You can find out about why such term plans are beneficial, who they are better suited for, how they work and also read about the top 10-year term plans that are currently available in India.
5 Year Term Life Insurance Policy in India
With the unpredictability that surrounds us, life insurance has become an absolute must-have. Without an insurance policy, the loss of income can have an adverse impact on your dependents’ lives. Term insurance, as we all know, is one of the most preferred and affordable types of life insurance which one can get to protect their dependents.
There are various durations for which a term plan can be taken, but here, we talk specifically about 5-year term plans that are available in India. You can read about the various benefits offered by such term plans, who they are ideal for, how they work, and some of the top 5-year term plans that are available in India.
News & Latest Articles On Term Insurance
Why Choose Whole Life Insurance
What is whole life insurance?
As the name suggests, whole life policies are life insurance plans which provide cover for a lifetime. Under a whole life plan, policyholders usually have the freedom to choose the sum assured, and tenure of the policy, besides other things. The policy provides survival or maturity benefit and premium collection may be done either or a specified period during the policy or throughout the policy tenure.
Benefits of Whole Life Plans
Lifetime coverage – One of the most important benefit provided by a whole life plan is that it provides insurance coverage for your entire life. Whole life policies are also known as permanent policies for this reason. There is no specific time period defined for the policy’s tenure and it goes on indefinitely. This eliminates the hassle of having to look for a new policy as your policy will go one till you die.
Predictable Premiums – The other benefit which whole life policies offer is consistency in premiums. Premiums for whole life policies will stay the same, which means that you don’t have to worry about any hike in premium as you grow older or your health deteriorates.
Cash Value – Lastly, when you purchase a whole life policy, you don’t lose your money in premiums. The policy accumulate a cash value as the policy term progresses. A part of your policy premium is redirected towards the providing coverage while the rest is redirected to a savings account. Compare this with a term plan where if you survive the policy term, you are not entitled to any benefit. The money that goes into savings accounts earns dividends and will increase over time. Hence, it is safe to say, whole life policies are an ideal insurance and retirement coverage option.
22nd November 2017
Getting A Loan Against Your Insurance Policy
Not many people are aware that their life insurance policy can often also become a blessing in disguise in more than one ways. For instance, if you ever find yourself in urgent need of cash, you can take a loan against your life insurance policy. While many banks allow people to pledge their life insurance policy for a loan, many insurers also provide their customers with loans in times of need. Here’s how it works.
Policies against which loans can be taken
To begin with, it is important to know the types of life insurance policies which you can get a loan against. Commonly, one can avail a loan against an endowment policy, and a money-back policy. However, loans are usually not provided against Unit Linked Insurance Policies (ULIPs) and term insurance policies.
How is loan amount determined
After you have confirmed that you are eligible for a loan against your policy, the next thing to find out is the loan amount that you are eligible for based on your policy. For loans taken against life insurance policies, the loan amount is usually determined based on certain factors like the policy’s surrender value, number of premiums you have paid towards the policy, and the number of years that the policy has completed. The surrender value of a policy is the policy’s current value in the time it is terminated voluntarily by the policyholder. Therefore, if you have paid a higher number of premiums towards your policy and the greater the number of years that the policy has been in force, the higher will be it’s surrender value. As a result, the higher the surrender value of the policy, the greater will be the loan amount you can be eligible for against the policy. For instance, your policy which provides cover for up to Rs.10 lakh, has a surrender value of Rs.4 lakh. The loan amount that you could be eligible for against your policy could be anywhere around Rs.3.20 lakh to Rs.3.60 lakh.
Also, the eligibility of getting a loan against your life insurance policy will also depend on the policy being in force for a minimum period of 3 years. Hence, premiums on the policy must be paid for a minimum period of 3 years for one to be eligible to take a loan against it.
The bank/insurance company may or may not charge a processing fee for loan taken against an insurance policy. Also, interest charged on loans taken against an insurance policy are relatively lower than those charged by with a personal loan.
21st November 2017
Good teamwork & sound processes the reason behind IndiaFirst’s success, says CEO RM Vishakha
IndiaFirst, one of the country’s leading insurance provider, commenced operations 8 years ago. Celebrating their anniversary recently, the company’s CEO, R.M. Vishakha took the occasion to speak about the company’s philosophy and core mission of securing lives and creating value.
IndiaFirst started operations as the 23rd entrant in the insurance industry. Over the years, the company has grown to and now sits at the 13th position from the top, aiming to break into the top 10 list in the near future. Since its inception, the insurer has served about 10 million customers and currently has nearly 4.5 million on their books.
The company made its first profit at the end of its 5th year of operation. In the last fiscal (2016-17) recorded a profit of Rs.35 crore on a gross written premium of Rs.2,265 crore. The insurer’s individual premiums grew at 82% in the last fiscal, while this fiscal, the figures continue to climb at a whopping 108%.
Ms. RM Vishakha attributes this more than impressive growth to a balance of good teamwork and establishment of sound processes, which collectively have started to deliver results. She also mentioned the importance of setting up processes which help retain the passion of the sales force so that there is a balance which is always maintained between passion and processes.
Also a part of retaining this balance is to weed out defects in the process which often resulted in mis-selling earlier. The company has set guidelines and a rule engine when it comes to selling policies to potentially vulnerable customers. This process helps check whether or not the policy has been sold to the right customer. In the same way, after the sale of the policy, the insurer carries out a back-end check which is part of the pre-issuance process where the customer is asked whether or not they have understood the product they have purchased and also to find out whether or not the policy may have been mis-sold to them. The company has also modified its sales process wherein any mis-selling of policies by sales persons will result in consequences. This move has cut mis-selling of policies by half and has increased customer persistency ratios from 63% to 74%.
20th November 2017
SBI Life Likely To Lower Premiums To Gain Back Market Share From Private Players
In an effort to catch up with its private sector rivals like ICICI Prudential Life, and HDFC Life, SBI Life is likely to lower the premium rates on it’s term plans by over a quarter in an increasingly competitive insurance market. SBI Life is expected to bring down their premium rates by as much as 30%.
When compared, a 30-year-old, male, non-smoker individual shells out Rs.13,796 for a Rs.1 crore cover under the e-Shield term plan offered by SBI Life. After the premium cut, this cost would fall down to almost Rs.10,000. However, the same person would be paying Rs.10,798 for a similar plan by ICICI Prudential; Rs.8,968 at Kotak Life, and Rs.11,480 at HDFC Life.
SBI Life said the reduction of premium rates has been facilitated by the lower costs for issuance of online term policies. When compared to other private players, SBI Life has the lowest expense ratios. The insurer has also improved its expense parameters which have, in turn, helped with effective pricing of the products.
17th November 2017
HDFC Standard Life Insurance Debuts On Bourses On Nov 17
Following a very positive response on their public issue, HDFC Standard Life Insurance Company is all set to make their debut on bourses on 17 Nov 2017. The life insurance provider is a subsidiary of HDFC, one of India’s biggest housing finance company. For their debut, the issue price has been fixed at the higher end of the price band of Rs.275-290 per share.
After ICICI prudential Life, and SBI Life, HDFC Standard Life will become the third life insurance provider to be listed on the exchange. Their Rs.8,695-crore initial public offer (IPO) which was held between 7 Nov to 9 Nov was subscribed 4.90 times. During the public offer, there was 16.60 times subscription in the qualified institutional buyers (QIBs) category, 2.29 times subscription in the non-institutional investor category, and 94% subscription in the retail investor category.
HDFC Standard’s public issue consisted of 19,12,46,050 equity shares by HDFC, and up to 10,85,81,768 shares by Standard Life Mauritius. Currently, HDFC is the owner of 51.69% stake in the HDFC Standard Life joint venture, while the Mauritius based Stand Life owns nearly 29.35% stake. For the public offer, the global coordinators and book running lead managers were Morgan Stanley India Company, HDFC Bank, Credit Suisse Securities (India), CLSA India and Nomura Financial Advisory and Securities (India).
17th November 2017
How Aviva’s Heart Care App Helped The Insurer Gain New Business
With incidents of heart diseases on the rise, India has been rightly crowned as the ‘heart disease capital of the world’. As of 2015-16, only 30% of the country’s population has opted for health insurance. However, given the current stats, there is ample opportunity for insurers to gain market share. And Aviva Life Insurance has recently done so with great success, thanks to their digital endeavours.
Aviva recently adopted a new business model which lays focus putting digital first. Aviva recently launched a new heart care product to expand their customer base. This product was launched across multiple digital channels such as social media, on the insurer’s online policy selling website Instalife, it’s mobile app, and the customer portal. Moreover, the insurer also launched a heart age calculator micro site to attract more customers.
The entire process is fully automated from end-to-end and there is no human intervention. This product has enabled Aviva to carve a niche market segment that focuses on digitally savvy customers. The success of the product is quite evident as it helped the insurer increase their business volume by 10%, within the first six months. Aviva also recorded an uptick in their operational efficiency, thanks to the adoption of AI-based underwriting process.
16th November 2017
Life Insurance Corporation of India launches cancer cover policy
LIC (Life Insurance Corporation of India), one of India’s oldest and most trusted life insurance provider has recently launched a new cancer cover health insurance policy. The sum assured under this policy ranges from Rs.10 lakh to Rs.50 lakh. This is a non-linked under which the premiums can be paid not only in a yearly but also in half-yearly mode.
The new plan was launched today by Mr. R. Thamodharan, Zonal Manager for LIC South Zone. In addition to being available offline, this plan can also be purchased online, as the insurer informed in a press release. All individuals in the age group between 20 years to 65 years are eligible to take this plan. The release for the launch also mentioned that this plan has been introduced especially considering the ever-increasing incidents of cancer being diagnosed and the extremely prohibitive costs of treatment that accompany. This plan will work to protect individuals from being adversely affected financially if they are diagnosed with cancer.
Under this plan, 25% of the lump sum benefit payable will be paid if the policyholder is diagnosed with an early stage of cancer. In addition to this, the premiums payable towards the policy will also be waived for the coming 3 years. In case the policyholder is diagnosed with a major stage of cancer, 100% of the Sum Assured or Increased Sum Assured under Option II of the plan will be payable. From this amount, any claims paid towards an earlier stage of cancer will be deducted.
Under Major Stage cancer income benefit, 1% of Sum Assured will paid per month to the policyholder for a period of 10 years, whether or not the life assured survives the next 10 years or not. Also, in case of major stage cancer diagnosis, all future premiums payable towards the policy will be waived.
15th November 2017
Post-GST, Term Insurance Still A Preferred Tax-Saving Instrument
Term insurance plans have always been and will continue to be popular, come what may. This is solely because of the benefits which these plans provide, which are financial security to your loved ones with a high sum assured at a low cost. Besides this, the other important benefit provided by term plans is tax savings.
The Goods and Services Tax (GST) which was implemented in July 2017 has affected the demand and sale of innumerable commodities, some of which suddenly became more expensive, while a few became marginally cheaper. However, despite the changes, the demand for term insurance continues to remain, more or less, the same. Why? Here are some reasons:
• Since GST has been rolled out, insurance experts have been of the view that one should look at the long term benefits provided by a life insurance policy, instead of delaying their purchase based on the 3% increase in premiums. This is because the policyholder is likely to get a higher sum assured at the same premium, not to forget the tax benefits on premium paid.
• Term plans provide high sum assured at a low premium, which means that you can ensure greater protection of your loved ones at affordable costs. For instance, someone earning Rs.10 lakh per year can easily get a life cover worth Rs.1 crore.
• Under Section 80C of the Income Tax Act, 1961, you can get tax exemption from your taxable income if you pay premiums for a term plan that you have taken either for yourself, your spouse, or your children. Tax benefits are provided for term plan premiums worth up to Rs.1.5 lakh.
• Newer term plans which come with critical illness cover offer added tax benefits on premiums up to the amount of Rs.25,000 under Section 80D of the Income Tax Act, 1961. Also, benefits received by the beneficiaries are also exempt from tax under Section 10 (10D) of the Income Tax Act, 1961.
16th November 2017
Top Term Insurance Plans For Working Women
Working professionals, especially if they are the sole income earners in their household, have much to gain from a life insurance plan. Be it a man or a women, life insurance can provide financial security to their loved ones and families in the time of misfortune. Among the plethora of plans available out there, a term insurance plan is often the best option, not only in terms of the coverage it provides, but also economically. Those who are the sole breadwinners of their household must not ignore or delay getting a term insurance plan as it may come in necessary when you least expect it.
For working women, especially single working mothers, purchasing a term insurance plan is absolutely necessary. Here, we bring you some quick points to remember when you are looking to get a term plan.
· Choose only as per your needs – term plans are simple and easy to understand, and there are plenty of them available online. Get a plan only after you have assessed your needs.
· Longer coverage period – When you invest in a term plan at a young age, it is wise to take a plan with a longer coverage term. For most term plans, the minimum entry age is 18 years, and the maximum is usually fixed at 65. Do remember, as your age increases, the premium of the term plan will also increase assuming greater risk involved.
· Single mothers – For working women who are also single mothers, it is absolutely necessary to purchase a life insurance plan. Given that your child is dependent on you for everything, it is important you secure your child’s future in case you are no longer there to provide for them. In case of single parents with children, the coverage amount will be determined based on the parent’s income. If you have a loan, and a young child, your risk factor will automatically go up.
14th November 2017
What is the Right Way To Determine The Amount Of Your Insurance
If you have any experience dealing with the insurance brokers or agents, they would tell you to take insurance for the value equal to seven times of your annual salary. In a real life scenario, that cannot be the ideal way to determine the value of your life insurance.
The basic idea of life insurance is to replace income when the insurer is not available to take care of the expenses of the family. Thus, the correct way to determine the amount of life insurance would be to see if it covers the expenses it should cover in the prevailing times minus the value of already existing assets that can be used.
Therefore, never try to buy a life insurance policy by multiplying 7 or any other number with your annual salary. The right value can be obtained by determining the expenses and seeing what part of it can be covered by your current financial assets and social security schemes.
10th November 2017
GST of 18% is applicable on life insurance effective from the 1st of July, 2017