Term insurance is a type of insurance available for a specific set term (number of years). Term life insurance is less expensive because it does not possess any maturity benefits; the policy is only useful if the policyholder dies while the term insurance policy is still in effect. The age of entry in the term insurance plan starts from the age of 18 years and the cover can last for the maximum age of 95 years. Let us know more about term insurance plans and it is a crucial investment option for all.
Why should one buy Term Life Insurance?
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Higher Claim Settlement Ratio:
Term Policies have one of the highest claim settlement ratios; the cover can opt at one of the lowest costs. High cover, low cost, and high claim settlement ratio make this policy one of the most lucrative life insurance products.
Though this policy comes at a lower premium, the coverage amount remains on the higher side only. Term policy is an affordable policy, and the same can be opted by people from all walks of life irrespective of their financial standing. Such a protection will give the dependents a certain type of freedom from financial woes in case of any unfortunate event.
Term insurance policies have a low premium in comparison with any other life insurance product. Below-mentioned is the list of few life insurance policies:
As compared to any other form of Life Insurance product, term plans offer the highest rate of return over the premium paid. It is a highly effective instrument to secure the family’s financial future in case of the early demise of the policyholder.
Though a typical term plan does not offer any maturity benefits, with the increasing number of players in the market and the high growth rate of the insurance industry, Insurers are coming up with innovative insurance policies. Following the same trend, few insurance companies provide maturity benefits like Aviva Life Shield Advantage.
As the commission, an insurance agent receives a portion of the premium paid by the insured, usually a percentage. In Group Term Life Insurance, the commission automatically becomes lower because of the lower premium associated.
Accidental death benefit, disability benefit, return on premium benefit, child support benefit, etc.; these are some examples of the add-on riders that can be opted in term life insurance to enhance the protection. Add-on riders attract incremental premiums.
a) Section 80C: Cumulative premium paid in term plan in a financial year, are deductible up to a limit of Rs 150000.
b) Section 10D: All Term life insurance payouts are tax-exempt under Section 10(10D) of the Income Tax Act of 1961. These payouts are either the death benefit paid to the policyholder’s family in the event of the policyholder’s untimely death or the maturity benefit paid to the policyholder for surviving the policy’s term.
c) Critical Illness rider: Any premium paid towards the add-on of critical illness rider is also a claimable deduction.
A term plan can be purchased online and offline; when you have narrowed it down to few lucrative options, you can use comparative analysis tools available on various websites, and the policy can be purchased. Flexibility is also in terms of tenure, protection, etc.
Having discussed the benefits of opting for term insurance, you must be keen to look at the different options available. If you are still thinking about buying term insurance, Let us discuss how to use Term Insurance Calculator:
Enter your Annual Income: Enter your annual income inclusive of all sources. This will help the algorithms calculate how much cover will be required to sustain the same lifestyle for your dependents to meet the goals set forth.
Enter the approximate year you want to work: This simply means the age you wish to retire at or the age you will have to retire as per your job criteria. The number of years from retirement will help the automated tools to approximate your expected earnings during this period and plan for the policy coverage.
Enter personal Expenses: Here, you will have to input the amount left with you for your expenses, after all your budgeting requirements. Generally, a slider on this tab enables you to drag the cursor to an approximate percentage of your income that you spend on your requirements.
Approximate annual income increment: This field requires you to enter your approximate annual increment. As per your field of work and industry standard, your income is expected to grow annually by a certain percentage, where you input the same.
Based on the above inputs, the algorithms will calculate the amount of coverage you will need with your term insurance plan. After you have zeroed down to a plan and coverage that best suits your requirement, you will be prompted to make the premium payment.
As the calculator lets you choose and compare the available policies online, there are multiple payment options available, from which you can choose the best-suited one.
- Internet banking
- Insurance Portal
- Credit/Debit Cards
You can also choose the offline option of cheques.
Generally, the payment terms of term insurance are reflected in monthly payable intervals, but depending upon your suitability, the same can be converted quarterly, semi-annually, and annually.
Once you pay your premium, your policy becomes active, as generally, term insurance does not have any waiting period except in the case of any critical illness.
Isn’t it true that you should probably conduct extensive research on the options available to you before making any purchases? Similarly, it makes sense to research your options before purchasing term insurance thoroughly. With the same purpose in mind, the term insurance calculator is a handy and vital tool.
If you don’t already own a term insurance policy or are still waiting to decide on it, you should go ahead with the same. Term Insurance plans are the purest form of life insurance with the highest possible return on premium in an unfortunate event. A good insurance understanding can provide the much-needed protection for your loved ones.