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Term Insurance Meaning and Benefits

If you are planning to purchase a life insurance plan, then it becomes imperative to know what are term insurance plans?Term insurance plans are a type of life insurance plan, which are valid for a specified period or term. In the case of any unfortunate eventuality during the policy’s term, the insurance company provides the sum assured to the family-members of the policyholder. In a nutshell, a term insurance plan will provide financial protection to your dependents even when you are not around.

 

What is Term Insurance?

Term insurance is a kind of life insurance that is valid for a specific period. The policy will provide a lump sum benefit to your loved ones in case of your sudden demise. In simple words, a term insurance plan offers financial security to the dependents after the death of the policyholder.

Buying a pure term insurance plan in India does not require having market expertise. All you have to do is pick a term, make premium payments, and you are done. The insurer will assess your application and issue the policy in no time. However, insurers provide variants of term insurance that allows you (the policyholder) to enhance the scope of the policy.

We have enlisted the types of term insurance plans below for your quick understanding.

What is Term Insurance: Term Insurance Meaning Explained

 

Types of Term Insurance

Now that you know the term insurance plan meaning, let’s move on to understanding its various types. The myriad of term insurance variants available in the market makes it even more tedious to choose the right policy for you. Here’s a list of different types of term plans available in India:

 

1. Basic Plan/ Level Term Plan:

This is a pure life protection plan for a specified tenure as discussed above.

2. Return of Premium Plan (TROP) Plan:

This plan entails maturity benefits, where premiums paid for availing the policy are returned if the policyholder survives the policy’s term.

3. Increasing Term Plan:

 Here, you have the option of increasing the amount of your life coverage after reaching certain life goals. You also have the option of increasing the life coverage on an annual basis.

4. Decreasing Term Plan:

In a decreasing term plan, the coverage decreases over the policy tenure at a predetermined rate. This type of term insurance is ideal for people with financial liabilities as the amount can be used to repay the debt.

5. Convertible Term Plan:

You can convert this term policy into other plans, like endowment plan or full life plan, at a future date.

6. Term Plan with Riders:

These plans have enhanced coverage, like accidental permanent disability or critical illness.

Features of Term Insurance

Some of the salient features of term insurance plans in India are as follows –

 

  • The policy offers extensive coverage at an affordable premium rate. You can get a term insurance cover of up to Rs. 1 Cr for 30 years by paying a nominal premium amount.
  • Insurers allow you to enhance the scope of the policy with rider benefits. Some of the term insurance rider benefits that you can consider opting for include critical illness benefit, the return of premium benefit, waiver of premium benefit, etc. Note that each rider benefit opted will increase the overall term insurance premium. Hence, choose wisely.
  • Use the term insurance calculator to determine the premiums charged on the desired coverage and rider benefits. Based on the results, you will be able to make an informed financial decision.

Reasons to Buy a Term Insurance Plan

While understanding the term policy meaning can help you figure out if you need one, exploring the benefits of buying a term insurance plan in India will help you make an informed decision. Hence, here are the key benefits of term insurance policy –

 

  • Affordable Premiums:

Among all life insurance plans, term insurance policies stand out due to their affordability. If you opt for other plans, like traditional life insurance policies or endowment plans, then you have to pay higher premiums. Because of inexpensive premiums, you can select an optimum sum assured to secure the financial future of your family.

  • Tax Benefits:

Term insurance provides attractive tax benefits. The premiums paid towards the policy can be claimed for tax deductions under Section 80C of the old income tax act. The death benefit received by your dependents is tax-free under Section 10(10D) of the Income Tax Act, 1961. Besides, if you buy term insurance with critical illness cover, you are eligible for additional claim deduction under Section 80D.

  • Riders:

What is term insurance with riders? Well, riders are simply add-ons to the existing life coverage, which broadens the policy’s cover. You can avail different riders, like critical illness, accidental death or accidental permanent disability rider to get an exhaustive coverage while enjoying term insurance benefits.

  • Increasing Coverage:

 You can opt for a term insurance plan, which has the facility of enhanced coverage when you reach certain life goals.

  • Additional Benefits:

 Insurance companies now provide a slew of features with the term policy. Along with discounts, you can avail a policy online, through minimal paperwork, within minutes.

Best Term Insurance Plans at Bajaj Markets

We have enlisted the term insurance plans available on Bajaj Markets along with their features and benefits.

Term Insurance at Bajaj Markets

Features and Benefits

Bajaj Allianz Smart Protect Goal Term Insurance

●     This term insurance plan is available for individuals.

●     It provides death benefits to the dependents in case the policyholder dies.

●     The policy offers critical illness benefit that covers up to 55 major and minor health issues.

●     The applicant needs to take a medical examination before buying the policy.

●     The premiums of this individual term plan are high in comparison to group term insurance.

Bajaj Allianz Group Term Life Insurance

●     This term insurance is provided to a group or community.

●     Only the eligible members of the community can reap the benefits of group term insurance.

●     Typically, the policy is issued for a year and can be renewed annually.

●     The policy offers critical illness benefit that covers up to 11 critical health conditions.

●     The eligible members of the group term plan do not require a medical examination before buying the policy.

●     The premiums of this group term insurance plan are lower in comparison to individual term insurance.

How Much Term Insurance Cover Do You Need?

It is simple to determine the term insurance coverage you would need after answering the following questions.

  • What is your current financial status?
  • What are your expenses?
  • Do you have any financial liabilities?
  • Do you have any health issues?
  • What is your family health history?
  • Do you have a health insurance plan?

Based on your answers, you will be able to decide the term insurance coverage to select. A basic rule to follow is that your term insurance cover needs to be 10-25 times more than your current annual income.

How to Buy Term Insurance Online?

In the present digital age, buying a term insurance policy online is convenient and hassle-free.

1. Estimate The Life Cover Required:

Zero in on a sum assured which will provide financial protection to your dependents, and provide it to the insurer.

2. Fill The Application Form:

Provide personal details, like name, mobile number and address.

3. Add Rider Benefits, If Required:

You need to select the relevant riders for getting enhanced coverage.

4. Provide The Requisite Personal Details:

You have to provide the insurer with the details of your existing health conditions and lifestyle habits. Remember to mention existing lifestyle diseases, like diabetes or hypertension along with habits like tobacco and alcohol consumption in the proposal form. You must also have to provide the details pertaining to your profession – whether you are in a regular job or employed in high-risk professions, like the police, fire services or armed forces.

5. Complete The Process Of Undergoing Medical Tests:

Based on the risk factors, the insurer will then calculate the premium. You can be required to undergo certain medical tests before the term plan takes effect.

Things to Consider Before Buying a Term Plan

Once you’ve understood what is a term insurance policy and have decided to avail its benefits, ensure that you ponder on the following.

 

  • Foremost, you should tackle the question: How much life insurance do you need? For this, you have to consider your present annual income, age, the number of dependents in your family, and how much would they require for meeting their regular financial expenses/obligations? You must also consider the fact that inflation would affect the sum assured. When comparing term insurance plans, you should always choose a term plan which has a higher coverage, at least over 10-20 times, of your present annual income.
  • You must also remember to inform your nominee about the term plan, and educate your family about managing their expenses through the sum assured.

Term Insurance Covers and Requirements

Read More About Term Insurance

Government Life Insurance Schemes

FAQs

✔️ I am 50-years-old with diabetes. Can I get term life insurance worth Rs 1 crore?

You can apply online for a term insurance policy, following which you will be required to undergo medical tests. Based on your health risks, the policy can be issued. You can be asked to either to reduce the life cover, or pay higher premiums.

✔️How to select the best term insurance policy?

After knowing what are term insurance plans and understanding term insurance meaning, it becomes imperative to select the best term plan. You can zero in on the term insurance plans, available on Finserv MARKETS, which provides unbeatable features. Along with an affordable, high-value life cover, you can select additional customised covers like, child education cover, joint life cover and increasing life cover. The critical illness rider in this policy covers 55 illnesses. What’s more you can select between different premium payment options along with a flexible policy term, tax benefits and advantages for non-smokers.

✔️Who should buy term insurance?

Anyone who has started earning should consider buying a term insurance plan. Remember, you can avail a term plan with cheaper premiums at a younger age. Life coverage through a term plan becomes even more essential if you have financial dependents, like spouse, children and elderly parents.

✔️What factors affect the term insurance premium?

The term insurance premium amount is dependent on several factors such as your age, gender, income, personal and family medical history, area of residency, BMI value, lifestyle habits, etc. You can use the term insurance calculator to determine the premiums charged on your desired coverage and make an informed decision.    

✔️Will the term plan cover for deaths outside India?

Yes. Most term insurance plans cover for deaths outside India. However, the nominees need to inform the insurer in time and provide the necessary documents when raising the claim. It is advisable to talk to the insurer regarding this before buying the policy.