Term insurance is a pure risk plan that is specifically designed to financially safeguard your loved ones in your absence or in case of unforeseen situations. As the name suggests, term insurance plans are bought for a specific period. During the tenor of the plan, if you (the policyholder) happen to die, unfortunately, the sum assured amount is paid to your nominee. The sum assured amount is the coverage you choose at the time of buying the policy.
In case the term insurance matures while you are still alive, no maturity benefits are paid. It is solely a financial protection plan that secures your dependents.
There are multiple types of term insurance plans available in the market as per your requirements. Some of the most common types are as follows:
Level Term Plans
Return of Premium Plans
Increasing Term Plans
Decreasing Term Plans
Convertible Term Plans
Term Plans with Riders
Let us understand these in detail.
The level term plans are one of the most basic term insurance types in India. In this plan, the sum assured amount does not change during the policy term. The term insurance benefits are paid to the beneficiaries in case of unfortunate dismissal of the policyholder.
Some common level term plans include:
Annual renewable term
Five-year renewable term
Term to a specific age (generally, 65 years of age)
If the level term insurance plan is renewable, it means that the policy can be continued for an additional term(s), up to a specific age.
Although most term insurance plans do not provide maturity benefits, there are plans created with the ‘return of premium’ feature. Term plans with return of premium provide a maturity benefit to the insured. In simple terms, the premium amount paid by the policyholder will be returned to them in case they survive the plan term.
However, the premium prices of these plans are relatively high and you are required to maintain the policy until the term ends to enjoy the benefits. In case you forfeit the term plan before the tenor ends, you will end up losing the maturity benefit.
Another type of term policy is the increasing insurance plan that secures your family against inflation. In the increasing term plan, you can choose to increase the sum assured amount on an annual basis during the plan tenor. If your financial liabilities are going to increase in the long term due to growing responsibilities, such a term plan is meant for you!
Note that the premium amount here remains the same. However, the premiums charged for increasing term plans will be different from basic term insurance plans.
Decreasing term insurance plans are opposite to that of increasing term plans. In this type of term insurance policy, the sum assured amount keeps on decreasing over the years.
Generally, decreasing term plans are ideal for people who have to pay off loans such as a home loan or personal loan in EMIs (Equated Monthly Installments). This way, the decreasing sum assured amount matches the decreasing insurance needs of the policyholder.
As a matter of fact, the sum assured amount reduces as the EMIs are paid and the total loan amount decreases.
A convertible term plan allows you to buy the policy with an option to convert it into another type of insurance plan of your choice in the future.
For instance, consider that you bought a term plan for twenty-five years. After five years of the plan, you can switch the policy to whole life insurance, endowment plan, or any other insurance plan of your choice. In case your insurance requirements are going to change in the future, a convertible term plan shall be suitable for you.
Certain term plans like the Smart Protect Goal Term plan available on Bajaj Markets offer rider options such as critical illness cover, accidental death cover, and disability cover. You can avail the rider for an additional premium amount over your existing term insurance plan. Thus, in the event of an unforeseen incident, the rider benefit shall payout a lump sum or a regular payout to secure your finances.
Here are a few things that you need to keep in mind when buying term insurance plans in India:
The insurer you choose to purchase the term plan with should be reliable and trustworthy. You can use the claim settlement ratio to determine the reliability of the insurer. Other factors to consider when shortlisting the insurer can be the solvency ratio, corporate governance record, asset under management, and any instances of violations.
As you know, insurers allow you to enhance the scope of the policy with rider benefits. It is not mandatory to opt for all the rider benefits provided by the insurer. It is recommended to select only those that you think may come in handy in the future.
Sum Assured Amount
Since term insurance primarily protects your family financially in your absence, it is important to choose sufficient coverage. Ideally, the sum assured should be 10-15 times your current annual income.
The term insurance plan you buy should have a longer duration. As the policy is meant to financially protect your loved ones in your absence, it is best to choose an extended term period.
Even though term insurance plans are one of the basic insurance plans, they are affordable and tend to financially protect your family members during the time of need. Hence, buying term insurance plans is crucial.
Browse through the lucrative term insurance plans available on Bajaj Markets online. The premiums charged are easy-on-the-pocket and the plans can be customised as per your needs with a coverage of up to ₹1 crore.
So, don’t wait! Ensure yourself and your family with an affordable term plan at Bajaj Markets, today.
Yes. You can buy term insurance plans at Bajaj Markets. All you have to do is visit the website, choose the type of coverage, select rider benefits (if needed), make the premium payment, and you are done. Furthermore, you can buy/renew your term insurance plans using the Bajaj Markets App.
There are two types of term insurance plans at Bajaj Markets
Smart Protect Goal Term Insurance
You can add the following riders to your term insurance policy to maximise your coverage:
Accidental death rider
Critical illness cover
Waiver of premium cover
Permanent disability rider
The insurance provider reimburses all the premiums paid throughout the tenor if you outlive the term insurance policy period. Therefore, on the maturity of your term plan, you shall receive your premiums back.
Yes. You can claim the premiums paid towards your term plan under Section 80C of the Income Tax Act, 1961. A maximum amount of ₹1.5 lakh can be claimed per financial year. Moreover, the death benefit can be claimed as tax-free under Section 10(10D) of the Income Tax Act, 1961.