Life is quite unpredictable and as a sole earner, taking care of your family’s financial needs becomes a top-most priority. While we deal with unforeseen life events emotionally, it is important to be financially prepared for them. Securing the financial future of your loved ones, even in your absence, is crucial. A term insurance plan lets you do just that!
A term insurance plan is an insurance policy that offers coverage for a specified period or term. It is one of the purest forms of life insurance available in the market. Ideally, the primary purpose of term insurance is to safeguard the financial future of your family in your absence.
Your nominees receive a death benefit in case of your unfortunate death during the policy term. In simple terms, a term insurance plan offers financial security to your loved ones after your death, so that they can continue living their lives without any financial hurdles.
To help you understand what is term insurance and its nuances, here are some of the most common expressions used in term insurance plans, which will help you make a better choice for your future.
A policy term or tenure is the duration for which the policy provides coverage to the insured. Usually, the minimum policy term 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 years 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. Failing to make a payment even after the grace period, will 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 or covered term at regular intervals, that is monthly, quarterly, half-yearly, or annually.
Limited Premium Payment - Choose to pay premiums for a limited time. You can pay for a pre-fixed number of years such as 10 years, 15 years, 20 years, and so on.
Term insurance providers rider benefits that enhance the coverage of the policy. Some common term insurance riders such as –
Critical Illness Cover
Waiver of Premium
Accidental Death Benefit Rider
Accidental Total and Permanent Disability Rider
In case you are unable to pay the premiums on the stipulated time, the insurer grants you a grace period. It is the timeframe to make the payments or the insurer will terminate the policy. Usually, the grace period is 15 days for regular monthly premium payments and 30 days for annual premium payments.
A life assured is the insured individual. The insurer covers the financial risk in case the insured individual’s death. Primarily, the policy should be bought for the sole earner of the family who becomes the life assured. That way, in case of its untimely death, the dependents will be financially covered.
Sum assured is the amount your insurer pays as death benefits to the beneficiaries of the policy. For instance, let's assume that you bought term insurance with a sum assured amount of INR 1 crore. Now, in case of your sudden demise, your beneficiaries will receive INR 1 crore as a death benefit.
As explained earlier, the death benefit is the amount your beneficiaries receive in case of your unfortunate death. 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 a duration within 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 the term and conditions of the purchased plan. The free look duration varies from insurer to insurer. Generally, the freelook period is a period of 15 days after the policy bond receipt.
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 financial security of your loved ones. So, in case of your untimely death, a term insurance will act as an income replacement for at least a specific period.
For those having a personal loan or home loan overburden can buy term insurance to ensure that your family is able to pay off these liabilities easily, even in your absence.
Whether you are buying 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 amount.
Some of the prominent term insurance benefits are explained with the help of the following illustrations.
Ms. Jyoti has to take care of her child’s needs and manage the monthly household expenses while doing a full-time job. In case anything would happen to her, everyone dependent on her would face a financial turmoil.
In such a situation, term insurance works as a reliable financial back-up for the family. Moreover, she does not have to shell out a fortune to buy a term policy that covers the financial future of her loved ones.
Life-threatening diseases can surely put stress on the one’s diagnosed as well as the family members. Mr. 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 tags along with the treatment of the disease. Fortunately, Amit had bought a term insurance plan with critical illness cover well in advance. This helped his family manage the treatment expenses better.
You can buy term insurance with riders to enhance the coverage of the policy, that too at minimal extra charges. The critical illness cover pays a lump sum amount when diagnosed with diseases that are covered under the policy.
Ms. Neha has just started a new job at a managerial position and is looking for ways to save money on tax. Now, even though she does not have any financial liability at the moment, she can still buy term insurance to save money on taxes.
The investments made towards term plans are tax-deductible under Section 80C of the Income Tax Act, 1961. You can claim up to a total of INR 1.5 lakh annually on all the investments made. Also, the death benefits received by the beneficiaries in case of your death are also tax-free.
While term insurance can be one of the crucial financial security backups for your loved ones in your absence, it can also be purchased to avail tax benefits. The following are the term insurance tax benefits under specific Section of the Income Tax Act.
Deductions Under Section 80C – Premiums paid towards term insurance can be claimed for tax deductions under Section 80C. You can claim a total tax deduction of up to INR 1.5 lakhs on all the investments.
Benefit Under Section 10(10D) – In case you opt for the Return of Premium feature in term insurance, the premiums received as a maturity benefit are tax-exempted under Section 10(10D). Also, the death benefits received by the beneficiaries are tax-free.
Section 80D - If you have opted for Critical Illness cover to enhance the coverage of your term insurance plan, then you can also claim deduction under Section 80D of the Income Tax Act, 1961.
It is vital to start early in order to gain the benefit of affordable premium rates as it helps you level your premiums evenly across the policy term. With the growing life expectancy rate in India, it is becoming more and more crucial to take a long-term life cover through a term plan.
As a term insurance plan acts as a financial backbone to help your family cope up with regular expenses and future financial needs even in your absence, longer tenure is ideal for your term plan.
Determining the tenure of your term plan is as essential as calculating the premiums you 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 stay covered in times when your loved ones need financial security.
Now that you have a brief overview about term insurance in general, let us look at different term insurance plans available on Finserv MARKETS.
There are two types of term insurance plans available on Finserv MARKETS.
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 customizable plan offered as per individual requirements.
Generally, a type of a plan offered to a community.
Age at the time of policy maturity should be 85 years.
For those opting for whole life insurance coverage have a maturity age of maximum 99 years.
The policy is issued for a period of one year. However, it can be renewed on an annual basis.
Critical Illness Benefit
Covers up to 55 major and minor ailments.
Covers up to 11 critical illness conditions.
Ideally, not required.
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
With an extensive life insurance cover, you can ensure complete financial security for your family even in your absence.
Affordable premiums with high sum assured amounts to keep you prepared for more to achieve your life goals.
Customized term insurance plans that suit all needs of policyholders.
With a customer base of 100+ million across the country, Finserv MARKETS is the right choice for you. It’s time you choose us as your financial partner.
With a high claim settlement ratio, Bajaj Allianz promises to settle your claim instantly and hence, is a trusted insurance partner.
The steps to buy term insurance plans are as follows -
Note: You need to get a medical examination done when buying Bajaj Allianz Smart Protect Goal Term Insurance at Finserv MARKETS.
To make a claim on your term insurance plan, following the steps given below:
As a decline in the world economy is causing stress in the businesses worldwide, the insurance industry is suffering through the same. The term insurance prices were based on the LIC mortality data as no other data was otherwise available.
Now, as the latest data depicts a higher mortality rate, the prices of term insurance plans are most likely to increase in the coming months. There could be a 20-30 per cent hike in the prices of the insurance premiums. Hence, if you are looking to secure your family’s financial future, now is the time to do so.
It is important to evaluate the term insurance features and benefits and ensure that they are well aligned with your financial objective.
From a financial planning perspective, it is crucial to first focus on your requirements instead of the premiums. If you feel that you and your family do not have adequate financial coverage, a term plan becomes all the more essential.
The add-on covers or riders available to the customer while buying the policy are: • Accidental Death Benefit – With this rider, an additional sum assured amount is paid to your nominee, if the happen to die untimely during the policy tenure. • Accidental Total Permanent Disability Benefit – With this ad-on cover, a sum assured amount over and above the basic sum assured amount, is paid if the policyholder happens to be rendered permanently disabled due to an accident. • Critical Illness Benefit – If chosen, an additional rider sum assured amount is paid if you are diagnosed with a listed critical illness for the first time. • Waiver of Premium Benefit – With this add-on, all future premiums that are payable are waived off if you are rendered disabled or are diagnosed with a critical illness.
The available premium payment types in this plan that the customer can choose from include: • Regular pay option: Allows you to pay for entire policy term on regular basis • Limited Pay option: Lets you pay for shorter term • Single Pay option: Gives you the option of making a one-time payment
No, these options are not available together. Policyholder can opt for either of the two options.
If the policy holder has chosen Accidental Death Benefit , an additional sum assured amount chosen as ADB will be paid to the customer along with the Life Cover amount in the unfortunate event of death due to accident.
If the customer has opted for Accidental Total Permanent Disability Benefit, a sum assured amount chosen under this benefit will be paid in case of total disability due to an accident. This cover will discontinue if 100% of the benefit is paid already.
No, these options cannot be taken together as Critical Illness Benefit add-on cover includes Accidental Total Permanent Disability Benefit.
Following 19 diseases are covered under the term plan as minor conditions: 1. Percutaneous Heart Valve Repair 2. Angioplasty 3. Minimally Invasive Surgery of Aorta 4. Infective Endocarditis 5. Carotid Artery Surgery 6. Early Cancer (including Carcinoma in-situ) 7. Guillain Barre Syndrome 8. Nephrectomy 9. Chronic Primary Sclerosing Cholangitis 10. Secondary Pulmonary Hypertension 11. Ulcerative Colitis 12. Pericardectomy 13. Implantable Cardioverter Defibrillator 14. Acute Necrohemorrhagic Pancreatitis 15. Endovascular treatment for Cerebral Aneurysm 16. Insertion of cerebral shunt 17. Less Severe Lung Disease 18. Small Bowel Transplant 19. Cirrhosis of the Liver
Following 36 diseases are covered under this plan: 1. Cancer of specified severity 2. Myocardial Infarction - First Heart Attack of Specific Severity 3. Stroke Resulting in Permanent Symptoms 4. Open Heart Replacement or Repair of Heart Valves 5. Open Chest CABG 6. Coma of specified severity 7. End stage Lung Failure 8. End stage Liver Failure 9. Kidney Failure requiring regular dialysis 10. Primary (Idiopathic) Pulmonary Hypertension 11. Major Head Trauma 12. Permanent paralysis of limbs 13. Loss of Limbs 14. Motor Neurone Disease with permanent symptoms 15. Multiple Sclerosis with persisting symptoms 16. Major organ / bone marrow transplant 17. Third Degree Burns 18. Deafness 19. Blindness 20. Loss of Speech 21. Benign Brain Tumour 22. Alzheimer's Disease 23. Aplastic Anaemia 24. Medullary Cystic Disease 25. Parkinson’s Disease 26. Systemic Lupus Erythematosus (SLE) with Lupus Nephritis 27. Apallic Syndrome 28. Major Surgery of the Aorta 29. Brain Surgery 30. Fulminant Viral Hepatitis 31. Cardiomyopathy 32. Muscular dystrophy 33. Poliomyelitis 34. Pneumonectomy 35. Creutzfeldt – Jacob Disease 36. Chronic Relapsing Pancreatitis
The premiums for Waiver of Premium Benefit are guaranteed for a period of 5 years and can be reviewed for subsequent cover periods.
Yes, the premium rate applicable for female life is calculated based on the premiums of a male who is 3 year younger in age.
Yes, the customer can opt to change the Premium Payment Frequency with options like Yearly, Half yearly, Quarterly and monthly on any policy anniversary during the policy term.
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.
Posted on 20 Jan 20
Getting term insurance through Finserv MARKETS was very easy with a smooth journey and effective on-call support.
Posted on 27 Jan 20
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!
Posted on 22 Feb 20
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.
Posted on 26 Mar 20