5 Year Term Life Insurance

Any life-altering event can stress you and your family both emotionally and financially. In such a situation, if anything were to happen to you, your loved ones will be left with nobody to rely on. And, if you are a breadwinner of the family, the financial impact would be hard to manage. Hence, it would be best if you protected them financially at all cost. This is where a term insurance plan comes into picture.

Ideally, a term plan offers financial security to your family members in case of your death. Along with annual renewable term plans, insurers also offer five-year term insurance policy. Let us explore five-year term life plans in detail.

What is 5 Year Term Life Insurance All About?

As the name suggests, five-year term insurance offers coverage to the insured individual for a term of five years. It is one of the shortest term insurance plans available in the market, along with annual renewable term plans. However, five-year term insurance plans offer the option to convert the policy after it expires. But the five-year term plan you have chosen must include the conversion option.

How Does a 5 Year Term Insurance Policy Work?

The functioning of the five-year term insurance plan is quite simple to understand. Once you purchase the policy, you have to pay the premiums. This can be done either as a single term payment or as any other premium payment mode available with your chosen insurer. Later, in case of your untimely death, the death benefit is paid to the beneficiaries of the policy. Note that this plan does not offer maturity benefits if you survive the policy tenure.

Let us look at various features offered by a five year term life insurance plan.

Features and Benefits of a 5 Year Term Life Insurance Policy

Some of the standard five-year term insurance features and benefits are as follows 

  • Death Benefit: Just like any regular term insurance plan, a five-year term plan also offers the death benefit to the beneficiaries of the policy in case of your (the policyholder) death. The amount received as the death benefit is chosen during policy inception by the insured.
  • Tax Benefit: You can enjoy term insurance tax benefits with a 5 year plan. The premiums paid towards your policy can be claimed for tax deductions under Section 80C of the Income Tax Act, 1961.
  • Rider Covers: You can enhance the coverage of the existing policy by opting for additional covers such as critical illness benefit, waiver of premium cover, accidental death cover, and so on.
  • Affordable: One of the best features of five-year term insurance plans is that they are affordable. The premiums are low and mainly depend on the age of the policyholder. Also, many insurers offer the flexibility to select payment modes and premium amounts.
  • Best Suited for Future Financial Planning: A five-year term insurance plan helps tackle future expenses well in advance. That way, your loved ones are financially secure for the future in case anything were to happen to you.
  • Surrender Benefit: Some five-year term insurance plans offer surrender benefits to the insured as well. In other words, if the insured surrenders the policy before it attains maturity, they will be eligible to receive the surrender benefit.

Know that the policy features and benefits may differ depending on the insurer you choose. Hence, it is recommended to check the policy coverage and exclusions carefully before buying one. It is also recommended that you compare term insurance plans before deciding which one you should buy. 

Eligibility For 5 Year Term Insurance

  • The minimum entry age of the policy is 18 years
  • The maximum entry age of the policy is 65 years

Who Should Purchase 5 Year Term Insurance?

A five year term insurance plan is ideal for people who want to provide financial protection to their family. With this plan, one can take care of immediate financial liabilities. So, if the policyholder dies an untimely death, the insurer will pay the sum assured amount to the beneficiaries of the policy. That way, the family members do not have to face any economic burden in the absence of the primary income earner.

Moreover, this plan is also recommended for people who want to take care of their child’s education. Your child can continue their education regardless of whether the insured (the main person funding the education) is there or not in the future.

The Bottom Line

Term insurance plans are mainly bought to provide financial security to your loved ones in case of your death. You can browse different term insurance plans at Finserv MARKETS and pick a plan that best suits your needs. Also, consider the rider benefits offered under the term plan to enhance the coverage of the policy at a nominal rate. 

FAQs on 5 Year Term Policy

  • ✔️Can I make a claim on term insurance plans online?

    The term insurance plans at Finserv MARKETS have a seamless claim process. Just follow these steps – 1. Register your claim online 2. Upload the necessary documents 3. The insurer will assess your claim application 4. Check the claim status online
  • ✔️How long does it take for the claim settlement?

    The claim approval/rejection completely depends on the insurer. However, once the claim is approved, the money will be reimbursed in your bank account instantly.
  • ✔️Do I get discounts on a larger sum assured amount?

    Some insurers do offer discounts on a larger sum assured amount, and it ranges between 0.5-1 per cent on the premium amount.

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