A Term Insurance Plan is the most comprehensive form of financial protection. It will help your family meet their financial needs from household expenses to rentals in your absence. When you consider buying a term plan, you have to make an educated choice about the life cover you select. There are some important things you need to keep in mind when deciding the term plan and life cover you opt for. The cover should help your family maintain their lifestyle, inflation should be kept in account and lastly, it should take care of your existing liabilities preventing the worries of EMI repayments.
(B) What is Term Insurance Plan?
A term insurance plan is the simplest forms of financial protection that can help your family meet its financial needs in your absence. Term plan offers peace of mind with affordable premiums and a life cover that you can choose depending on your family’s lifestyle and financial needs. Some of these term plans can also be bought online within a few clicks & without any lengthy paperwork.
(C) Useful Features of Term Insurance Plans:
· Term Life Insurance is the most Cost-Effective plan.
· Pay the Policy Premium Only Till Death or in some plans upto a predetermined years of age
· Flexibility to Receive Claims in lumpsome or as Monthly Income
· Choose Riders to Make Your Term Plan more Comprehensive
· You can Enhance/Increase the Insurance Cover at Major Life-Stages
Note: If the Policy holder survives after the Term granted then there will be no claim payable from the Insurance Company
(D) Benefits of Term Insurance:
1. Get Lump Sum amount in case of sudden death with in the twrm period.
2. After your death your family is free from all loans and lioabilities as it could be paid off from the claim amount received by beneficiary on death of the Insured.
3. The family continues to live the normal life with pride and dignity even after the death of the Insured who might be the key person or earning member of the family.
4. Some of the term Plans with add on covers takes care of disability of the Insured or critical illness contracted by the Insured.
5. Additional benefit if the death if Insured is caused by the accident if the Term Plan Policy has an add on cover covering the accidental death.
(E) Feature of Term Life Insurance Plan:
a. Family/dependents of the Life Insured are eligible for a lump sum amount in case of Death of the Insured within the Term of the Policy or Critical illness (If opted as add on) to help your family to have sound financial independence even if you are not around.
b. Tax benefit under section 80-C of the Income Tax Act and if critical illness cover is taken then under section 80-D of the Income Tax Act.
c. Policy ternm is minimum 5 years and generally for 15 to 20 years. Insured has an option to opt for a longer term as well.
d. Plan Choice: Normally the Term Policy is taken for the breadwinner of the family but in some cases even the spouce can be covered and the claim is payable on death of either of the two. It depends on selection of the Plan.
e. Entry Age; Normally the entry age is 18 years with maximum age limit at 65 years. The Term premium increases as the person gets older so best planning be done when the Insured is young.
f. Maturity Age: Majority of the Insurance provider grant insurance for 65 to 70 years but the Insured may opt for higher age and in turn have to pay the higher premium.
g. Survival benefit: In term Insurance there is normally no survival benefit but now a days some insurance companies have started the plan where on the completion of the term the premium paid by the Insured is returned back to the Insured. In this type of option the Insured need to pay little higher premium.
h. Death Benefits: On death of the Insured within the term of the Policy the assignee or the beneficiary of the policy either gets the sum Insured at one go or in some cases some fix amount and some as monthly payment depending upon the option selected by the Insured.
i. Additional Rider facility: Some of the Term plan come with Critical Illness rider or Accidental benefit rider in which case the Insured gets the claim even if he contracts the critical illness or get additional amount if the accident occur due to accident during the term period.
How to choose best term plan?
a. Insurance Company reliability
b. Expenses of the Company. Try to find an insurance company with least expenses so that the premium of the Insured is lowest.
c. Check the solvency ratio of the Insurance company
d. Whether there is scope of enhancement of the cover.
e. Check the rider (like critical illness, accidental death etc)offered and its corresponding premium