Term Insurance plans are the pure life insurance plans providing basic protection to safeguard your family financially against the untimely death of yours. The Term Life Insurance plan is a form of a life insurance cover, it provides coverage for a specific period of time, and if the insured dies during the term of the policy, then the nominee receives a comprehensive lump sum amount, called as the sum assured, in the event of unfortunate death of the life insured. Term insurance plans offer an opportunity to get the financial protection for your family at an exceptionally affordable cost.
Term Life Insurance Plans are cheaper as compared to other life insurance plans because such plans only intend to provide a death benefit and are pure insurance plans. Online term plan or online term insurance plans allow additional discount on premium by the insurer. The insurance companies charge only mortality cost apart from the nominal administrative charges. There is no element of saving or investment present in this plan which makes the premium cost low.
Secure Your Family Financially
It is imperative to buy a term plan if you are the chief wage earner in your family. No matter how much you have saved or invested over the years, sudden eventualities, such as death or critical illness, always tend to affect your family financially apart from the huge emotional loss.
Affordable Buy
Term Plans provide life cover at the minimum cost. The premiums are so affordable which makes the term plan a must buy to secure your family's financial interest in your absence.
Pay Off Your Debts
Term plan proceeds help your family to repay any debts like car loan, housing loan, etc. in the event of your untimely death and reduces the burden of financial trauma when there is an emotional loss to bear.
Provide Regular Income
Some term plans in the industry offer an option to distribute the policy proceeds partially as a lump sum pay out and the remaining in the form of monthly income to the family in your absence. This will help the family to meet their regular expenses and enable them financial independence.
Meet Financial Objectives
In the event of your untimely death, term insurance benefits allow your family to accomplish and continue financial goals like child basic education, higher education, child' marriage, financial aid for your spouse and dependent parents.
Choose the right Term Insurance Plan and provide your family a financial backup from any unforeseen or unfortunate events like death. Term Insurance plans are of following kinds to fit your specific needs.
1. Pure Term Plan
Pure Term Life Insurance Plans offer fixed life cover to you at a fixed cost or premium amount which is leveled throughout the policy term. In the event of untimely death, the nominee/nominee's are financially indemnified by the sum assured opted for and the policy ceases there after. Pure Term Plans do not offer maturity benefits.
2. TROP Plan
Term Plans with "Return of Premium" (TROP) offers the benefit of paying back all the paid premiums in the event of you surviving the policy term. TROP plans to address the concerns of those buyers who want some benefit at the maturity as well apart from the death benefit. TROP pays the death claim amount to the nominees in the event of an unfortunate death of the insured. So, TROP plans offer both maturity benefit and death benefit (whichever occurs first).
3. Term Plan with Income Benefits
Such term life insurance plans offer income benefits to take care of the regular expenses of your family in your absence. These plans offer sum part of the sum assured to be taken at the time of death as lumpsum benefits and the remaining as monthly income benefits for a specified period of time to the nominees as per the plan specifications.
4. Increasing / Decreasing Term Plan
Such term plans offer income benefits to take care of the regular expenses of your family in your absence. These plans offer sum part of the sum assured to be taken at the time of death as lumpsum benefits and the remaining as monthly income benefits for a specified period of time to the nominees as per the plan specifications.
The Decreasing Term Plan is taken generally with the mortgage products. The sum assured under this term plan decreases every year in collaboration with the decreasing debt amount at the specified rate over the policy term. Such plans enable your family members to repay the remaining debt amount in case of your untimely death during the policy tenure.
5. Renewable & Convertible Term Plan
This kind of term plans can be converted to any other savings plan. This combines the benefits of a term plan with a savings plan. Here, initially you buy a term plan which is renewable as per the policy terms to cover your insurance needs during the initial years of work and when you are single without any dependents. Later such plan can be converted into a saving-cum-insurance plan to take care of your latest insurance needs. Your premium will alter at the time of conversion. Such plans are renewed after a specific time period to offer the continuous coverage.
Death Benefit
Term Insurance provides financial protection for your family in your absence by indemnifying the nominee with a lump sum amount or Sum Assured.Maturity Benefit
Term Life Insurance Plans do not offer maturity benefits. Only Term Plans with "Return of Premium" (TROP) offers the maturity benefit which is the return of all paid premiums at the maturity in case the insured survives the policy term.Rider Benefit
With your Term Life Insurance Plan you may opt for additional coverage or riders like Accidental Death Benefit, Disability rider, Income benefit Rider, Critical Illness rider, etc. to give you added protection along with your base policy. The eligibility and grant of riders may vary from insurer to insurer.Tax Benefit
Premium paid towards the Term Insurance Policy avail tax benefits under section 80 C and the proceeds of the insurance policy is tax free as per section 10 (10) D of the Income Tax Act, 1961 ,subject to the terms & conditions laid in the Act.
Riders are additional benefits attached to your base policy which will offer you boosted benefits apart from your base policy. Various insurer's provide multiple riders which can be taken with the main policy as per the policy conditions. Additional benefits come with the extra costs.
1. Accidental Death Benefit Rider
Accidental death benefit rider gives extra financial benefits to your nominees in case you die an accidental death. There is an accidental death Sum Assured which is paid to your nominee apart from the base Sum Assured of the policy.2. Term Rider
An additional death benefit is paid to your nominee apart from the base policy payout. The appointed beneficiary/ nominee can receive term rider sum assured if you have taken this rider to your base policy.3. Critical Illness Rider
There are severe illnesses which disable an individual temporarily or permanently resulting in loss of earnings. The treatment cost of such illnesses is massive due to medical cost inflation. To take care of the medical cost involved in such illnesses like Heart Attack, Cancer, Paralysis, Coronary artery bypass surgery, Major organ transplant and much more, a critical illness rider can be opted.4. Waiver of Premium Rider
As the name suggests the future premiums are waived off in the events like death or disability of the insured or policyholder as per the policy contract. The policy continues to survive till the end with the waiver of future premiums.5. Income Benefit Rider
Life Insurance benefits are usually given to the nominees as a one-time lump sum, income benefit rider allows you the choice of distributing policy benefits in installments as a family income to the nominees. This rider allows you to regulate the dispersal plan of policy proceeds that suits best for your family in your absence.6. Disability Rider
Disability rider replaces your income for the specified tenure in the event of permanent or temporary total or partial disability due to an accident. The payout varies with the kind of disability occurred and also basis the insurers rider conditions. Usually the total disability, payout is full sum assured where as in the case of partial disability, the payout is the partial sum assured.
(Note:The rider benefit, conditions and eligibility criteria may vary from insurer to insurer.)
Your Term Insurance Plan may not pay for the following:
Suicide clause: Insurance companies are not liable to pay the policy proceeds, if the insured commits suicide within the first year of the commencement of the policy. The suicide clause is lengthened up to two years also by some insurers.
Aviation Clause: This clause states that the policy benefits are paid out only in the event where the life insured is killed in a commercial plane crash while travelling. But if the life insured dies as a passenger in a private plane insurance company will not entertain the claim.
Dangerous Adventure Sports: This exclusion says that in the event the death of the life insured happens due to the involvement in certain dangerous adventure activities like auto racing, rock climbing, hang-gliding, etc., the payment of the policy proceeds will not be paid. Some insurer's cover death arising out of such activities at a very high premium rates.
Act of war exclusion: This exclusion provides that the insurer will not pay, if the cause of death is a result of war.
(Exclusions may differ from one insurer to another and plan to plan.)
Read the do's and dont's related to your Term Plan.