What is Term Insurance?
Term insurance is a kind of life insurance policy that provides coverage for a limited duration, or a particular ‘term’ period. If the policy holder dies during the active years of the policy, then the family of the deceased is entitled to receive a death benefit from the insurance provider. It is less expensive compared to a permanent life insurance policy when taken at an early age. Also, a term insurance plan generally has no surrender or maturity value for the policyholder or the insured, unlike the permanent life insurance that pays the surviving policy holder.
What are the criteria that matter while buying a term insurance?
Every insurance plan operates on a premium, and term insurance plans, like most life insurance plans charge premiums by evaluating criteria like the policy holder’s age, gender, profession, health conditions, policy term, sum assured and mode of purchase.
Entry Age: The age of the policyholder at the time of buying the policy determines the premium amount to be paid towards the term insurance. The younger the policy holder, the lesser will be the premium paid. For most term insurance plans like Future Generali Flexi Online Term Plan, the minimum entry age of the policy holder starts at 18 years.
Gender: Insurance companies exclusively tailor their term policy premiums for women. Few term insurance policies offer the benefit of comparatively lower premium rates to women policyholders than those offered to men. This can be attributed to the simple fact that women largely outlive men, as demonstrated by the life expectancy data.
Profession: Like most insurance, term insurance policies cover the unexpected risks, and higher the risks, the heavier are the premiums. So, if your profession falls into sectors like mining, fishing, manufacturing, construction that entail physical and health risks, be prepared to pay heavier premiums for your term insurance plan.
Policy term: The policy term you choose also determines the premium of your term insurance policy. The longer the policy term, the lower the policy premium. So, term insurance plan with a longer duration is cheaper than a shorter duration term insurance.
Sum Assured: The sum assured in the event of the policy holder’s death, i.e., the policy’s coverage amount is another parameter that weighs upon the premium of a term insurance plan. The higher the policy coverage, the bigger will be its premium. So, it is advisable to select the coverage amount keeping in view of your family’s future needs and inflation costs.
Mode of purchase: Buying a term insurance policy online is a better idea since it is convenient, and also relieves you of any intermediaries. It also facilitates lower premiums upon each renewal.
Above all these factors, buying a term insurance plan varies according to the stage of your life. Each stage of your life throws up a new set of responsibilities and needs, in the form of family and kids’ future. The risk-taking abilities in your 20s and 50s differ. As you age, the count of your dependents rises, and your risk-taking abilities wither away since you look for security. Taking these into consideration, insurance companies are now devising a variety of term insurance plans tailored for every age group to meet their futuristic needs. For instance, Future Generali Express Term Life Plan is a pure life term plan that offers comprehensive long term protection at affordable rates, and also flexibility to choose your policy and premiums, with in-built terminal illness and accidental total and permanent disability benefit. Term insurance providers also account for circumstances of family ending up in debt or loans, in the absence of the policy holder. Future Generali Care Plus Term Insurance plan provides an excellent option to protect your family against your loans and liabilities, when you are not around. It ensures financial security to your family by offering a high cover upto Rs. 25, 00, 000 at a low premium.
What are the additional benefits or riders attached to a term insurance plan?
Traditional term insurance policies have no surrender value, and the premiums paid by the policy holder go waste if he/she outlives the policy term. This has the potential to deter people from buying a term insurance cover given rise in life expectancy rates. In order to deal with such scenarios, insurance providers are currently offering term insurance plans with an exclusive benefit that assures return of premium if you survive beyond the policy’ term. Depending on the chosen protection cover – lumpsum or monthly income, Future Generali Term Plan with Return of Premium returns 100 percent or 115 percent of your paid premiums, if you survive beyond the policy term. Also, the premiums paid by you towards your term insurance plan are eligible for tax benefits under Section 80c of the Indian Income Tax Act, 1961.
Merely having a basic life cover may not be sufficient. A policy holder may become disabled due to an accident or otherwise, thus impacting his/her earning capacity. An add-on insurance plan like Future Generali Non-Linked Accidental Death Rider, attached to your basic term insurance policy, at an additional nominal premium can further strengthen your family’s financial security, in case of accidental death resulting from an unfortunate accident.
Choosing a term insurance plan to cover your family’s financial needs in your absence can be tedious. It would be a wise move to carefully analyse your family’s futuristic financial needs before opting for a term insurance plan. You might be in a haste to buy a term insurance cover, but it is better late than never!