An insurance policy is essential in today’s world, given its unpredictability. Lack of an insurance policy could have a huge impact on the lives of everyone surrounding us and a 5 year term life insurance policy acts as a great saviour during unforeseen circumstances. A 5 year policy offers short term benefits and is ideal in this fast moving world.
Features and Benefits
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Some of the salient features and benefits of a 5 year term life insurance policy are mentioned below.
Death benefit In the event of unfortunate demise of policyholder during this term period, his/her nominee will receive a death benefit which is generally higher than the death benefit offered by traditional plans.
Income Tax benefit Individuals can avail income tax benefits under Section 80C of the Income Tax Act, saving tax and reducing the financial burden on a taxpayer.
Surrender benefit Policyholders are entitled to surrender benefits if they choose to surrender their policies before maturity.
Additional riders Policyholders can choose to avail extra cover by adding additional riders to their plan, enhancing protection to meet their individual requirements.
Low premiums 5 year policies can come with low premiums, depending on the age of policyholder. Flexible payment modes and discounts make these premiums light on the pocket.
Loans It is possible to avail loans against these policies.
Planning Opting for this scheme helps one plan for the immediate future, knowing where to invest money and offering peace of mind for this period.
Note These features and benefits might vary depending on the service provider and it is recommended to check with the provider first.
Who is this plan suited for
A 5 year term life insurance policy is suited for individuals who have immediate financial concerns which could aggravate post their demise. It is apt for those who feel their demise could push their family towards hard time in the near future. Individuals approaching a ripe age can opt for this policy, provided they are healthy and fit to be offered protection. It is also suited for individuals who have to look after their family, with educational or marriage responsibilities on them. Individuals with limited means can choose this policy as the premium is generally lower compared to traditional life insurance policies.
How this plan works
The working of a 5 year term life insurance policy is simple to understand, with a straightforward working methodology. Under the plan, an individual is expected to pay premiums for the duration of this policy and he/she is entitled to protection during this term. In the event of his/her unfortunate demise during this term, his/her nominee will receive a death benefit which depends on the premium. There is no maturity benefit under this scheme and an individual is not entitled to any monetary return on maturity of the policy. Also, no benefit will be paid if an individual passes away after the policy has expired or lapsed.
Best 5 year term life insurance plan in India
Some of the best 5 year term life insurance plans in India are mentioned below.
LIC Amulya Jeevan I – This plan offers great claim settlement numbers and premiums designed to meet individual requirements
SBI Life e-Shield his non linked non participating plan offers customization with cover ranging from Rs 20 lakh onwards
Aegon Life iTerm Plan This plan comes with flexible options with a cover ranging from Rs 10 lakh onwards
Q. How long does it take to settle a claim?
A. The claim settlement depends on the organisation and documentation. An insurance provider is expected to settle a claim within 30 days of receipt of information.
Q. What documents would be needed to request a claim?
A. A nominee will have to furnish adequate proof to an insurer, including original policy documents, death certificate, FIR/hospital report (in certain cases) and valid ID card. Other additional documents might be required in certain cases.
Q. Are rebates provided on large sum assured?
A. Yes, certain insurance providers offer rebates ranging from 0.50% to 1% in cases where the sum assured exceeds a certain limit.
Q. What is the maximum age at entry for such policies?
A. Generally the maximum age at entry is restricted to 60 or 65 years, with different policies in place in different organisations.
GST of 18% is applicable on life insurance effective from the 1st of July, 2017