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Term Insurance Plan - Features and Benefits

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Introduction

Life is unpredictable, and one event can change your life overnight and exhaust all your savings. Also, the ever-rising inflation, changing lifestyles and rising cases of critical illnesses, your plans and financial goals necessitate protection from all such twists & turns of life. The recent Covid-19 pandemic has further stressed the need for insurance that acts as a financial backup in emergencies. To be rather forthright, if you are no longer around to take care of your family's financial needs, a term plan can safeguard your family's financial future in your absence.

 

A term insurance plan is a policy that is a pure and straightforward risk cover form of life insurance. It provides financial protection against a fixed premium paid for a defined/specified term. A large amount of life cover or sum assured is affordable, and relatively low premiums are available with term insurance. You can get back all premiums paid, on survival till maturity with the Return of Premium option. Most notably, in case of your unfortunate death during the policy term, your family/nominee receives the death benefits and can live a comfortable and dignified life without any financial hurdles.

How Does it Work?

  • The Purchase -

    When purchasing a term insurance policy, the insurance company decides the premiums based on the face value of the policy - the payout amount, your age, gender, and health. Some insurance companies might also inquire if you are on any prescribed medications, smoking/ drinking status, occupation, hobbies, driving record, and family history. Some insurance companies require your medical examination as well.

  • The Renewal -

    You can renew a term policy before it expires; however, at the time of renewal, the premium will be calculated taking your current age into consideration.

  • The Payouts -

    In case of your unfortunate death during the policy term, the insurance company pays the policy face value to your family/ nominee. But if the policy term expires before you die, there will be no payouts for your family. 

Reasons to Buy this Plan

Reasons to buy a term insurance plan are:

  • Affordability -

    Term insurance is an affordable form of life insurance with low premiums. Thus, it is relatively cheap and easy on the pocket. You can, therefore, secure the financial future of your loved ones at a nominal price.

  • Financial Security -

    The payout (money) from a term insurance plan can act as an income substitute and help your family lead a dignified life in case of your untimely death. The term plans are significant when it comes to long-term financial planning.

  • Repayment of Liabilities -

    If you have a personal loan or home loan, you can buy term insurance to ensure that your family can repay these liabilities quickly, even in your absence.

  • Additional benefits -

    The scope of your term insurance plan can be enhanced with several riders. Benefits such as the critical illness benefit cover you against expensive and life-threatening ailments; the accidental death benefit offers your family a sum of money in case of death due to an accident. Further, the premium waiver in permanent disability benefit waives off all future premiums if you have a permanent disability.

Key Features

The features of a term insurance policy are:

  • Cost Effectiveness-

    It is the most affordable life insurance product and offers optimum coverage. Term insurance with various rider benefits is also relatively inexpensive and considered one of the best financial solutions to protect your family’s future.

  • Long-term Security -

    The best term insurance plan with a longer policy duration ensures that your family stays secure from any financial liability. You can buy a term life insurance cover for up to 50 years.

  • Online process-

    You can buy term insurance online at any time and anywhere by visiting the website of your chosen insurer. 

Benefits

A term policy provides several benefits such as-

  • Death Benefits -

    In case of your tragic death during the policy term, your family members will obtain a death benefit. 

  • Survival or Maturity Benefit -

    A typical/standard term insurance plan does not provide any maturity or survival benefit. But with a term policy with the ‘Return of Premium’ rider, the insurer repays the premiums paid if you outlive/survive the term insurance duration as a maturity/survival benefit.

  • Tax Benefits -

    Under the old taxation regime, the premiums paid towards the policy can be claimed for tax deductions under Section 80C –IT Act, 1961. Also, the death/survival benefits are also tax-free.

  • Rider Benefits -

    You can opt for several rider benefits in your term insurance plan at a nominal price over and above your basic term insurance premium. You can choose Critical Illness Rider, Accidental Death Benefit, Return of Premium, Waiver of Premium with your basic term plan. 

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Inclusions

A term insurance includes-

  • Death due to a medical condition/natural death -

    The term insurance plan covers health-related death or natural death due to diseases or a medical condition that ultimately results in the policy's death and the nominee will be paid the sum assured of the term plan/policy.

  • Death due to accident -

    Accidental deaths are covered in a term insurance plan. Also, some term insurance plans have added riders, which offer an additional sum assured on death due to an accident. 

Exclusions

Term insurance has specific exclusions which vary from insurer to insurer, such as death due to -

 

  • Suicide or self-inflicting injuries

  • Sexually transmitted diseases such as HIV/AIDS

  • Any pre-existing health conditions

  • Involvement in illegal activities

  • Influence of intoxicants -alcohol & drugs

  • Participation in bike /car racing, bungee jumping, trekking, hiking, water sports, etc.

  • Pregnancy and childbirth

Term Insurance Claim Process

To claim term insurance benefits online, the few easy steps to be followed are- 

  • 1

    First, register your claim online

  • 2

    Upload all the supporting documents

  • 3

    The insurer will then assess your claim application

  • 4

    You can check your claim status online

Conclusion

Purchasing a term life insurance policy as early in life as possible is always advisable, as you can get the desired cover at a nominal price. Whether you are single or married, planning to start a family or approaching retirement - a term insurance policy enables you to secure your family's financial future in your absence. It's never too late, so proceed to buy the best term insurance plan for you, today!

Latest Term Insurance News

Chennai: Government facilities see rise in demand for dialysis 

The number of people turning towards government hospitals for haemodialysis has gone up significantly in Chennai, especially during the pandemic. Thanks to the expansion of existing facilities in the government sector and coverage under the Chief Minister’s Comprehensive Health Insurance Scheme (CMCHIS), dialysis services have become more accessible. During the COVID-19 pandemic, dialysis services continued uninterrupted at a number of government hospitals and centres managed by NGOs and the Greater Chennai Corporation. During the peak of COVID-19 cases, private institutions started referring government hospitals to patients requiring dialysis. Government hospitals didn’t decline any COVID-19 patient even if they weren’t a CMCHIS beneficiary.

- March 10, 2022

Survey: 90% of women respondents think life insurance is crucial 

According to a survey carried out in around 40 cities across India, 91% of women felt that life insurance is a necessity, however, only 70% were willing to buy a policy. 44% of women felt that life insurance is an investment that requires commitment. The survey also showed that the importance of life insurance is largely the same for all age groups in both males and females. It also pointed out that 96% of people were aware of life insurance but only 63% and 39% of people are aware of mutual funds and equity shares, respectively. Moreover, people in the south of India expressed less interest in life insurance as compared to other parts of the country.

- March 10, 2022

Survey: 57% of people feel their term/life insurance cover is insufficient 

As per the latest IPQ 2022 survey information, 57% of people who own term/life insurance feel that their coverage is insufficient. This information was revealed under the ‘Security level’ section of the IPQ survey where 57% of people voted that they do not feel their coverage is enough. More importantly, this percentage has increased by 6%, as 51% of people stated about their insufficient coverage in the IPQ survey of 2021, compared to 57% in 2022. The number of people purchasing term insurance has also gone up from 39% in 2021 to 43% in 2022.

- February 28, 2022

Term insurance ownership surged to 43% in 2 years 

According to the Indian Protection Quotient (IPQ) survey 4, term insurance ownership in India went up to 43% from 39% in 2021. Two years ago, the term insurance ownership percentage stood at 36%. However, life insurance ownership remains unchanged at 78%. This signifies that consumers are diversifying their insurance holdings to build a holistic and robust portfolio. You must note that the term insurance ownership has been seeing a rise even though premium rates have gone up significantly.

- February 24, 2022

Life insurance companies demand 3-month mandatory waiting period for COVID-infected people

Many life insurance companies are insisting on a waiting period of three months for individuals infected with COVID-19 who want to purchase term insurance. Furthermore, insurance providers are also asking for additional medical tests depending on the severity of the infection. People who want to purchase term insurance must fill out a COVID-19 declaration form mandatorily. But different insurers have varying parameters to provide term insurance to COVID-19 infected individuals.

- January 13, 2022

Term insurance premiums surged by 4.18% in Q4 of 2021

As per a new report by a financial news outlet, the cost of term insurance premiums increased by around 4.18%. The average cost of term insurance premiums rose to ₹30,720 from ₹29,440 in the fourth quarter, for a term plan of 1 crore. Overall, there was a 9.75% increase in the term insurance index value between the first and last quarters of 2021. This repeated increase in the price of term insurance premiums over the past year has been a result of the increased number of claims due to COVID-19, which has put pressure on the insurance companies.

- January 04, 2022

Term insurance policy rates to go up for the second time in FY2022

As per a new report, private insurance companies are planning to raise term insurance rates during the fourth quarter of the financial year. The report says that insurance companies are revising their rates based on the high number of COVID-19 cases throughout the year as well as the imminent danger of the Omicron variant. This is the second time during this financial year that insurance companies have chosen to raise term insurance rates. The report also mentioned that insurance rates have remained low in India in comparison to rates in more developed countries. However, inflation and COVID-19 have forced private insurers to reconsider.

- December 23, 2021

FAQs

  • ✔️What is the eligibility criteria for buying a term insurance plan?

    Any individual within the age limit of 18 - 65 years can buy a term insurance plan.

  • ✔️Can I buy more than one term insurance plan?

    Yes, you can buy two or more term insurance plans for yourself as currently there is no law against buying multiple insurance policies.

  • ✔️What is a term insurance rider?

    Add-on benefits are the term insurance riders that can be attached to your basic term insurance plan by purchasing them at a nominal rate. The policyholder can thus customize the plan according to their needs. 

  • ✔️If the policyholder dies outside India, does term insurance cover such a death?

    Yes, in term insurance plans, deaths outside India are covered, but in such a case, the insurance company must be informed well in time, and all details must be provided.

  • ✔️Does my term insurance premium increase every year?

    No, the premiums on your term insurance will not increase every year with a regular term insurance plan. 

  • ✔️What happens if I surrender my term policy?

    A basic term insurance plan has no surrender value payable or maturity benefits. If you stop payments and surrender the plan, your family will no longer receive term insurance coverage after your death. 

Term Insurance Reviews

Term Insurance Reviews

3.9out of 5

4 reviews

Most Affordable Term Plan

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.

Very easy process to get the term plan

Getting term insurance through Bajaj MARKETS was very easy with a smooth journey and effective on-call support.

With a term plan in place, I could rest assured!

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!

With this term plan, I’ll get my premiums back!

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.