Life is unpredictable, and a single event can change its course overnight. If such events bring along a financial crunch, do you think your life savings will be enough to cover the crisis at hand without affecting your future plans? To put things in perspective, what if you are no longer around to take care of your family’s financial needs? None of these scenarios play well in your head, do they? However, there’s a solution - term insurance.
A term insurance plan is a policy that covers you for a specific period or term. Its primary purpose is to safeguard the financial future of your family in your absence. It is the purest form of life insurance available in the market.
To simply, with term insurance, your loved ones receive a death benefit in case of your unfortunate demise during the policy term. In other words, a term insurance plan offers financial security to your family members after your death so that they live and accomplish their future goals without any financial hurdles.
A term insurance plan can be purchased for the following reasons:
Whether you are buying an individual or a group term plan, the primary focus is to ensure the financial security of your loved ones. So, in case of your untimely death, the term insurance policy will act as an income replacement to meet their financial requirement.
Those having a personal loan or home loan overburden can buy term insurance to ensure that your family can repay these liabilities easily, even in your absence.
Whether you buy an individual term plan or a group term life insurance plan, know that the premiums are quite affordable and easy on the pocket. Thus, you can secure the financial future of your loved ones for a nominal price.
Along with taking care of your family’s financial future in your absence, term insurance provides a wide range of benefits. These include:
In the event of your unfortunate demise during the policy term, your family members will receive a death benefit. Depending on the type of term insurance purchased, the death benefit amount may be the same (Pure Term Plans), decrease (Decreasing Term Plan), or increase (Increasing Term Plan).
Additionally, the insurer provides several payout options for term insurance in India. We will read more on term insurance payout further in this article.
A standard or pure term insurance plan does not provide any maturity or survival benefit. However, if you buy term insurance with the ‘Return of Premium’ rider or the ‘Term Return of Premium’ variant, the insurer is liable to repay the premiums paid towards the policy. This will happen only when you outlive/survive the term insurance duration. The amount received is known as maturity/survival benefit.
Along with being a worthy financial tool, term insurance is known for its tax benefits as well. The premiums paid towards term insurance can be claimed for tax deductions under Section 80C of the Income Tax Act, 1961, under the old taxation regime. Moreover, the death or survival benefits received are also tax-free under Section 10(10D) of the Income Tax Act, 1961.
That’s not all! You can enhance the scope of your term insurance plan with several rider benefits. For instance, you can receive a percentage of the total sum assured when first diagnosed with a critical health condition just by opting for a ‘Critical Illness’ rider with your basic term plan.
Similarly, you can opt for riders such as ‘Accidental Death Benefit’, ‘Return of Premium’, ‘Waiver of Premium’, ‘Income Benefit’, and so on. However, note that each add-on rider you opt for comes for a nominal price over and above your basic term insurance premium.
Along with attractive term insurance benefits, the policy offers the following salient features.
Term insurance is the most affordable life insurance product available in the market. The policy offers optimum coverage at a nominal price. Also, buying a basic term plan or term insurance with various rider benefits is light on your pocket. It is one of the best financial solutions to protect your family’s future.
Term insurance is easily available online. You can simply visit the official website of your chosen insurer to buy a policy. Since the process is entirely online, it eliminates the need for tedious paperwork and health check-ups along with you having to visit the insurer in-person. You can buy term insurance online at any time and anywhere.
Buying the right term insurance plan with a longer policy duration ensures that your family stays secure from any financial liability. Typically, you can buy a term life insurance cover for up to 50 years.
Now, let us understand who can buy term insurance and how the policy can come in handy with the help of some examples.
Jyoti does a full-time job to take care of her child’s needs and manage her monthly household expenses. If anything were to happen to her suddenly, her child and anyone dependent on her would face a great loss (emotional, mental, and financial). In such a situation, term insurance works as a reliable financial backup for the family. Moreover, Jyoti does not even have to shell out a fortune to buy the policy.
Life-threatening diseases can surely strain family dynamics and put stress on the one suffering. Amit’s family faced a similar situation when he was first diagnosed with cancer. While the entire family was worried about his health, Amit was concerned about the financial burden that tagged along with the disease. Fortunately, he had bought a term insurance plan with a ‘Critical Illness’ cover well in advance. This not only helped his family manage the treatment expenses better, but also addressed the financial crunch felt due to Amit’s missed incomes.
As you can see, term insurance allows you to enhance the scope of the policy with various rider benefits. These rider benefits can come in handy during several situations. In Amit’s case, the Critical Illness benefit on term insurance paid a lump-sum amount when he was first diagnosed with the disease. Similarly, there are other rider benefits that you can opt for on your term insurance plan – all at a nominal price charged over and above your basic premium.
Young Professionals/Taxpayers/Working Women: Neha is looking for ways to save money on tax
Neha recently landed a well-paying job at a well-established Indian firm and is looking for ways to reduce her income tax liability. Now, even though she does not have any financial overheads or isn’t suffering from any critical health conditions, she can still buy the policy to avail several term insurance tax benefits.
The premiums paid towards term insurance are tax deductible under Section 80C of the old income tax regime. You can claim a total of ₹1.5 lakh annually on all your investments. Also, the death benefit received by the beneficiaries after your death is tax-free under Section 10(10D) of the Income Tax Act.
We, at Finserv MARKETS, offer the following term insurance plans.
If you are looking for individual term insurance, look no further. Bajaj Allianz Smart Protect Goal Term Plan is a policy offered on an individual basis. You can enhance the scope of this term insurance plan with various rider benefits.
Bajaj Allianz Group Term Plan is ideally preferred by communities and companies to cover their members/employees. The policy is issued for a single year. To continue availing its benefits, the primary/master policyholder must renew the term insurance plan annually.
Now, let us understand these term insurance plans in detail so that you can make an informed financial decision.
The following table gives a brief overview of both the term plans. Take a look!
Bajaj Allianz Smart Protect Goal Term Insurance
Bajaj Allianz Group Term Life Insurance
It is a customisable term plan offered as per individual requirements.
It is a type of term plan that is offered to a community or /organisation.
The plan offers a flexible policy period where policy maturity can be for age up to 85 years.
Those opting for whole life insurance coverage can stay covered till age 99 years too.
This policy comes with a yearly renewal. The premium changes every year based on your age.
Critical Illness Benefit
Covers up to 55 major and minor ailments.
Covers up to 11 critical illness.
The individual should belong to the community/group to become eligible for group term insurance.
Ideally, it is best to buy a term insurance plan as early in life as possible. Buying the policy early allows you to obtain desired coverage at a nominal price, i.e. the term insurance premiums will be significantly lower.
Whether you are single, newly married, starting a family, or approaching retirement, a term insurance policy allows you to secure your dependents’ financial future in your absence. Do not neglect it any further and proceed to buy term insurance online, today!
The steps to buy term insurance plans are as follows -
Determining the tenure of your term plan is as essential as calculating the premiums you’ll pay. You can check our term insurance calculator to compute your premium amount. It is ideal to choose a longer tenure when it comes to keeping up with the financial needs of the future and ensuring your loved ones’ financial security.
As stated earlier, buying term insurance online is easy and convenient. However, that’s not all. There are several benefits of buying the policy online.
When you buy term insurance online directly from the insurer, you eliminate the need of purchasing the policy through an agent. Because of this, the paperwork and processing fees decrease, reducing your overall term insurance premium amount. Moreover, many times, insurers offer rewards and discounts on buying term insurance online, something that is not available on offline policies.
Another perk of buying term insurance online is the convenience of comparing different policies online. You can compare different term insurance plans available in the market based on their coverage, premium amount, benefit, and features, and more. Depending on your affordability and need, you can then proceed to buy the right term plan to secure your family’s future.
Buying term insurance online is reliable. Insurers provide absolute transparency throughout the process. You can know the different benefits and features, terms and conditions, details about the rider benefits, and so on by visiting the insurer’s website. Besides, you can also check customer reviews on the platform to make an informed decision about the term insurance plan.
As you know, rider benefits on term insurance allow you to enhance the scope of your basic policy. In India, we have the following term insurance riders available.
Having a term insurance plan with the critical illness rider allows you to receive a lump-sum amount when diagnosed with a critical health condition. Term insurance plans at Finserv MARKETS cover up to 55 (major and minor) such conditions. In the case of minor critical illness, 25% of the benefit amount will be paid to the policyholder, whereas, for major critical illnesses, 100% of the chosen benefit amount will be paid.
In case you are diagnosed with a critical illness, the future premium payments towards the policy are waived off. Critical illness under this cover also includes accidental total permanent disability.
If you were to die in an accident, the sum assured amount would be paid to your nominees.
In case you were to face permanent disability due to an accident, the sum assured chosen by you would be paid under this cover.
As we all know, term insurance only provides death benefits. However, with the return of premium cover, you can receive the premiums paid towards the policy as maturity benefit in case you survive the policy tenure.
The sum amount assured under a term insurance plan is paid based on the payout option you choose at the time of policy purchase. Following are the different payout options available with a term insurance plan.
The insurer pays the entire sum assured to the beneficiaries of the policy. For instance, if you choose a sum assured of ₹1 crore, your nominees will receive the said amount as a lump-sum payment.
In this payment option, half of the sum assured amount is paid as a lump sum to the beneficiaries, while the remaining amount is paid out as monthly income. For instance, if your term insurance coverage is ₹1 crore, your nominees will receive ₹50 lakh as a lump-sum payment and the remaining amount (₹50,000) as a monthly death benefit.
Here, a fixed percentage of the sum assured is paid monthly to the beneficiaries of the policy as income replacement.
To make a claim on your term insurance plan, following the steps given below:
Just like any other insurance plan, term insurance has certain exclusions as well. Some of these exclusions include:
Death due to self-inflicting injuries
Death due to sexually transmitted diseases such as HIV/AIDS
Death due to any pre-existing health conditions
Death due to involvement in illegal activities
Accidental death due to the influence of intoxicants such as alcohol and drugs
Death due to participating in racing events such as bike racing and car racing
Death due to participating in adventure activities such as bungee jumping, trekking, hiking, water sports, etc.
Death due to pregnancy and childbirth
These exclusions vary from insurer to insurer. Please refer to the policy terms before purchasing a plan.
The PMJJBY scheme is government-backed life insurance in India available at a nominal premium rate of ₹330 per year. The policy focuses on the growth of the poor and economically backward families in the society and is available for people between the age of 18 and 50 years. PMJJBY provides annual coverage of ₹2 lakh to the beneficiaries in the event of the insured’s untimely death.
The PMSBY scheme is one of the three social security schemes in India. The policy is an accidental insurance plan that offers accidental death/disability coverage for a year with an annual renewal facility. For a nominal premium rate of ₹12 per year, PMSBY benefits the poor and economically backward sections of society. The policy offers coverage of ₹2 lakh (in case of accidental death) and ₹1 lakh (in case of disablement).
AABY is a social security scheme that offers monetary benefits to poor families in India. It covers accidental death, disability, and natural death of individuals falling under certain occupational groups. The premium for AABY is ₹320 per year, which is divided between the policyholder and the Government of India.
To understand what is term insurance and its nuances, here are some of the most common expressions used in insurance parlance. These will help you make a better and more informed choice.
The policy term or policy tenure is the duration for which the plan provides coverage to the insured. Usually, the minimum policy tenure for term insurance is 5 years while the maximum is 25 years for equated monthly premiums. For single premium plans, the policy term can vary between 5 and 40 years.
This is the amount you pay to keep the policy active/running to enjoy its benefits. In case you are unable to make the premium payment within the due date, the insurer grants you a grace period, typically 30 days. Failing to make a payment even with this grace period can lead to the termination of the policy.
Premium payments can be done as per your financial convenience. You can choose from:
Single-Premium Payment: Choose to pay the premium amount for the entire policy duration as a lump sum in one go.
Regular Premium Payment: Select an option to pay premiums for an entire policy period at regular intervals that is monthly, quarterly, half-yearly, or annually.
Limited Premium Payment: Choose to pay premiums for a limited time to finish your liability quickly. You can opt for a limited pay term of 5, 10, or 12 years, etc., depending on the insurer’s offerings and your convenience.
Term insurance provides rider benefits that enhance the coverage of the policy. Some common term insurance riders are:
Critical Illness Cover
Return/Waiver of Premium
Accidental Death Benefit
Accidental Total and Permanent Disability Rider
In case you are unable to pay the premium on the stipulated time, the insurer grants you a grace period to make the payment. Usually, the grace period is 15 days for regular monthly premium payments and 30 days for annual premium payments. Failing to pay the premium within this grace period can lead to policy termination.
Life assured refers to the insured individual. The insurer covers the policyholder in case of the latter’s untimely death during the policy period. Primarily, the policy should be bought for the sole earner of the family, who becomes the life assured. That way, in case of their untimely death, the dependents will be financially covered.
The sum assured is the amount your insurer pays as death benefit to the beneficiaries of the policy. For instance, let's assume that you bought term insurance with a sum assured amount of ₹1 crore. Now, in case of your sudden demise, your beneficiaries will receive a lump sum amount of ₹1 crore as a death benefit.
As explained earlier, the death benefit is the amount your beneficiaries receive in case of your unfortunate demise during the policy term. Usually, the death benefit is the same as the sum assured amount or, in some cases, more.
Term insurance plans do not provide maturity benefits if the insured outlives the policy. However, if you buy the ‘Return of Premium’ term plan, then you will receive the premiums paid throughout the policy term as maturity benefits.
Every insurance policy has a free-look period. This period is nothing but the timeframe during which you can terminate the policy without having to pay any penalty charges. In other words, you can cancel the policy if you do not agree with its terms and conditions. The free-look duration varies from insurer to insurer. Generally, it is a period of 15 to 30 days after the insured receives the policy documents.
Finserv MARKETS offers the following modes of payments so that you can pay your term insurance premiums securely –
● Credit/Debit card
● Net banking
● Cash/Cheque Payments
As a matter of fact, one must take care of the following thing when buying term insurance in India –
● Check the reliability of the insurer and their existence in the market
● Claim settlement ratio
● Policy exclusions
● Premium comparison
Based on the above aspects, term plans available on Finserv MARKETS are quite reasonable and help secure your financial future.
You can get in touch with an executive at Finserv MARKETS to check the policy status. Moreover, you can check the same on the Finserv MARKETS app as well.
With low premium rates, the Bajaj Allianz Term Insurance was a go to option for me when I wanted to get a term plan. Smart Protect is a great product offering extensive coverage at affordable rates.
Getting term insurance through Finserv MARKETS was very easy with a smooth journey and effective on-call support.
I recently met with an accident and was bed ridden for days, which affected my entire family as I am the only earning member. This rang a bell in my mind and I immediately purchased a term life insurance plan. I can now rest assured!
When I bought the term life insurance plan, I selected the return of premium benefit due to which I will get my premiums back in case I survive the policy term. What a nice plan! Thanks, Finserv MARKETS.