We often split our investments up into an assortment of avenues in an attempt to maximise returns whilst also minimising risk. While some investments are made in order to make our money work for us and multiply our wealth to offer us sustenance in the future, others are made and kept to ensure we have funds available for a rainy day or to put out any unforeseen situations or emergencies. Term life insurance plans are one such investment.
We all want to get the best term insurance plan with lowest premium. However, the case is not as simple as it seems. “Best” and “lowest” are not arbitrary terms and are relative degrees. Relative to what?
These are relative to how many members you have in your family, how many earning members, what your financial condition is and the stage of life you are at. Needless to say, there is no one size fits all approach that will work here, and the goal is to pick a policy that offers lowest premium term insurance but does not compromise on the coverage you might require. For instance, it would make little sense to opt for the lowest premium term insurance plan, if the cover is not sufficient to take care of your and your family’s needs. Alternatively, availing of an unnecessarily large cover would also be counterproductive, as you would pay much higher premiums that would hurt in the short run itself.Then, how do you pick the best term insurance plan with lowest premium? Let’s find out.
While we might want to prioritise getting the lowest premium term insurance, all our premium payments will be null and void if when the time comes, the term insurance is not fulfilled by the insurance provider. The claim to settlement ratio is an indicator of how likely the provider is to settle a claim when the time comes. Prioritise companies only with high ratios, as they have a good reputation for fulfilling claims.
Term insurance plans are effectively a bet of sorts, wherein the insurance provider is counting on you not having to claim the insurance, and you are. In this game, therefore, probability plays an important role. Factors such as your age affect this probability. If you are younger, it is less likely that you are going to have to use your policy, and therefore premiums are lower. It is better to buy a longer policy at a younger age, as renewing a policy at an older age can result in higher premiums.
Similar to your age, your medical condition also contributes to your premium. If you are relatively fit and have little to no illnesses, your premiums are likely to be lower. It is worth noting that it is not worth lying about your health to get the lowest premium term plan, as it could be grounds for rejection in the future.
Continuing on the aforementioned game of probability, lifestyle habits such as the consumption of alcohol and tobacco increase the probability of having to claim the policy, creasing the insurer’s liability as well, resulting in higher premiums. Once again, honesty is the best policy here.
As mentioned in the beginning of this article, there is no one size fits all approach to getting the best term insurance plan with lowest premium. The goal is to outline your needs and then pick a policy accordingly.
One of the first things you would do is to outline who is dependent on you, and what resources will they be in need of in the event of your death. Additionally, the payout options are also important for similar reasons.
It is best to compare various term insurance plans offered by different companies to pick one that ticks most of your boxes. For instance, if you require additional riders, you might pick an insurance plan that does not offer the lowest premium term insurance, but provides ample riders to suit your needs.
As mentioned above, even the lowest premium term insurance is likely to go up exponentially if you have lifestyle habits that go against the policy term. If you smoke or drink, for instance, your premiums go up exponentially. Therefore, if you lie about your lifestyle to get a lower premium, insurance companies can use this to not grant your claim.
If the death of an individual is caused by a sexually transmitted disease, insurance companies usually do not provide coverage against the same. Therefore, in the event that this is in the case, it could be grounds for rejection of the claim
Even the best term insurance plan with lowest premium is probably not going to provide you with coverage if your death was caused during engagement in any activity that is considered criminal under the IPC.
There usually exists a waiting period for various critical illnesses before the policy can account for them. Generally, this period ranges from 3 months to 4 years.
If you have decided to purchase term insurance and are looking for the lowest premium term plan possible keeping your needs in mind, then you are likely to be faced with a wide catalogue of offerings from various companies. All these can be browsed on the Finserv MARKETS website. Additionally, you can also use the various filters to pick a health insurance policy that best suits your needs and keeping your budget in mind.
Insurance companies offer a number of policies with the lowest premium term insurance plan possible. The premium tends to be low as a claim can only be made in the event of one’s death. Else, the term simply lapses and you do not receive any payout. Therefore, it might be beneficial to pick a term insurance policy that is the lowest premium term plan possible, whilst ensuring you are providing enough for your loved ones. The premium payment, however, should not take up a majority of your resources, as it is important to note that even the best term insurance plan with lowest premium is an insurance plan, and should not be mistaken as an investment.
Your premium tends to stay the same once the policy has been signed. However, it is technically subject to change if you disclose more information about habits such as smoking etc.
Life insurance has maturity benefits. If a death does not occur during the term, you receive the premium payments you made back as a payout.
Tax benefits can b e claimed for a term insurance plan under Section 80C of the IT act, upto the sum of 1.5 lakhs per annum.
This is due to the fact that they offer no maturity benefits, therefore there is no payout to be made if the term lapses.