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A Beginners Guide on How to Buy Term Insurance

A term insurance plan is a crucial component of your financial planning. Because of the uncertainty of life, you can never rely merely on your savings to provide for your family’s dreams. A term insurance plan acts as a financial back-up for your family in the case of any unfortunate eventuality. It protects the financial future of your family by providing death benefits, as per the terms of the policy. A term insurance claim has to be filed by the beneficiary/nominee of the policy, in the case of policyholder’s death. Once you initiate the claim process, the insurance company proceeds to verify and then settle the claim. Typically, the term insurance claim settlement is completed within 30 days of making the claim.

 

Ideally, term plans are known to pay a lump sum amount to your dependents in case of your untimely death during the tenure. The amount received can be used by your family members to repay any financial liabilities taken by you, sustain their current lifestyle, accomplish life aspirations without financial interruptions, and more. 

Why Should One Buy Term Insurance?

Besides securing your family financially, term insurance has multiple other benefits too. Here’s a walkthrough on the same -

  • As mentioned earlier, term insurance is the most affordable life insurance product. You can avail a high sum assured of up to Rs. 1 Crore at a nominal premium price. 
  • One of the prime features of term insurance is that the policy is relatively easy to understand. You pay the premiums on time, and the insurer will cover you for a fixed duration.
  • You can enhance the scope of your term insurance plan with rider benefits. Know that each rider benefit you choose will influence the premium amount in the end.
  • Much like any other insurance product, term insurance offers tax benefits as well. The premiums paid towards the policy can be claimed for deductions under Section 80C of the old income tax regime. The death benefit received by the beneficiaries is tax-free under Section 10(10D) of the Income Tax Act.

By now, you must have a pretty good understanding of term insurance and how it benefits you. The next thing you need to gain perspective on is how much insurance coverage you need. 

How to Calculate the Term Plan Cover That You Need

A simple rule to follow when calculating your term insurance coverage is that it must be 10 to 20 times more than your current annual income. For instance, your current annual income is Rs. 10 Lakhs, then the term insurance cover that you should ideally opt for is approx. Rs. 1.5 Crore. 

Many people tend to consider the premium amount when deciding on the term insurance coverage. However, it is not the right way to follow. The suggested way to decide on the sum assured amount is to consider your future financial goals. You need to take into account the following factors -

  • What is your current financial situation?
  • What are your current expenses?
  • Do you have any financial liabilities?
  • Future family expenses such as buying a dream house/car, your wedding, your child’s future, etc.
  • What are yours and your family’s future financial objectives?

The term insurance cover you choose should be sufficient enough to manage these factors as when the time comes. Also, it is wise to make a provision for inflation when calculating future expenses. Along with this, you can extend the coverage of your term insurance plan with necessary rider benefit.

Now let us take a look at different term plans available in the market.

Types of Term Plan

In India, insurers offer different variants of term plans that help accomplish specific goals. Some of the popular term insurance variants are as follows - 

  • Level Term Insurance Plan - Level term plans are a pure form of term insurance. It comes with a fixed sum assured that is paid to the beneficiaries in the event of the policyholder’s death. There are no survival benefits if the insured outlives the policy tenure. Hence, level term insurance has affordable premium rates. The premiums of a level term insurance plan depend on the age of the insured, lifestyle habits, policy tenure, premium payment method, and the chosen coverage.
  • Term Insurance with Return of Premium Plan - As we all know, pure term insurance plans do not offer survival benefits. But when term insurance is bought along with the return of premium benefit, the insured will receive the premiums paid towards the policy if they outlive the tenure. The amount received is considered as maturity/survival benefits.
  • Increasing Term Insurance Plan - In increasing term plan, the sum assured amount increases by a specific percentage every year. However, the policy has relatively high premium charges as the benefit amount increases over time.
  • Decreasing Term Insurance Plan - Opposite to increasing term insurance plan, a decreasing term plan is where the sum assured amount decreases by a specific percentage every year. The premium of this policy will reduce over time as the sum assured decreases. Decreasing term insurance can come in handy to repay the financial liabilities with ease. 

Based on your necessity and affordability, you can consider buying any of the term insurance plans mentioned above. Let us now take a look at a few rider benefits offered under term insurance in India.

Add-Ons for Term Insurance

As explained earlier, insurers provide rider benefits on term insurance to enhance the coverage of the policy. Some rider benefits worth considering are as follows -

 

  • Critical Illness Benefit - Life-threatening diseases can be acquired at any point in life. It is better to be prepared to manage the medical expenses arising due to it. Having a term insurance plan with critical illness benefit will ensure that a lump sum amount is paid to the insured when diagnosed with a critical health condition. The amount received can be used for treatment, hospitalisation, and other necessary costs.
  • The Return of Premium Benefit - In order to avail survival benefits on the term insurance plan, the insured needs to opt for the return of premium benefit. With this facility, the insurer will repay the premiums paid towards the term plan if the insured survives the policy tenure.There are some plans that offer Return of premium variants to the plans too.
  • Accidental Death Benefit - With this add-on cover, the beneficiaries of the plan will receive an extra sum, over and above the sum assured amount, in case the insured dies in an accident.
  • Waiver of Premium Benefit - Here, the future premiums of the term plan are waived off in case the insured suffers from a covered condition such as a disability or critical illness. However, the policy stays in force despite the premiums not being paid. Also, the beneficiaries will receive the full sum assured amount if the insured dies during the policy tenure. 

With this, we are sure that you are well-aware of term insurance types, coverage, and benefits in elaborate details. Now, all you need is to find a trustworthy insurer and buy the policy online. Keep reading to know the benefits of buying term insurance online.

Benefits of Buying Term Insurance Plan Online 

  • Buying term insurance online allows you to evaluate several term insurance plans from different insurers. Based on your affordability and convenience, you can proceed to buy a policy that best suits your needs.
  • The premium paying process is safe and secure.
  • Since the entire process is online, it eliminates the need of having an agent to manage your application. Thus, there are no commission fees involved in your premiums.
  • You can use the term insurance calculator to determine the premiums charged on your chosen coverage and make an informed decision.
  • The claim settlement process is quick and hassle-free as well.

Step by Step Guide to Buy Term Insurance

  1. Visit the insurer’s website and go to the term insurance section.
  2. You can first check the premium charged on the needed coverage with the term insurance calculator.
  3. Based on your affordability and necessity, choose the sum assured amount and rider benefits.
  4. Fill in your details.
  5. Review your policy before proceeding to pay the premium amount.
  6. Make the premium payment online.
  7. The insurer will assess your application and issue the policy in no time.

Conclusion

Securing the financial future of your loved ones is a top-most priority. Therefore, it is necessary to invest in a plan that fulfils yours and your family’s needs. And a term insurance plan is just what will help you do so. 

Treat this article as your go-to guide when buying term insurance online. In fact, you can also take a look at the different term insurance plans available on Bajaj Markets. You can benefit from features such as quick claim settlements, affordable premiums, extensive rider benefits, the high sum assured, and more. 

Also, read more about term insurance tax benefits by visiting Bajaj Markets online. 

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