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Term Insurance

You are the only breadwinner in your family. The burden of rising expenses and managing the family savings, falls on your shoulders. Your family needs to maintain the same lifestyle they enjoy even in your absence. How would your family feed itself in your absence? This is when you require term insurance.

What is term insurance?

A term life plan fulfills the primary goal in insurance. Covering risk.
A term life plan gives your family a fixed sum of money if you/policyholder, meet with an untimely end during the term of the policy.

To avail a term life plan you have to pay money called the premium. Depending on the amount you pay (premium), your family gets a sum of money called the sum assured. The term plan is valid only for a fixed time called the tenure of the plan. If you/policyholder die within the term of the plan, your family gets the sum assured. If you survive the tenure of the plan you get nothing.

Why buy term life insurance?
Maintain Living Standards

Maintain Living Standards

Provides money so that your family continues to live with the same living standards, even in your absence. Your family is easily able to meet all their needs and requirements.

Low on Price

Low on Price

The term life plan gives you maximum life insurance for a minimum premium. Online term life plans are even cheaper than those sold by life insurance agents. You can choose from a wide variety of term life plans.

Rider Benefits

Rider Benefits

Term Insurance plans with rider benefits takes care of your family, in case of your disability or critical illness. Term life plan with rider benefits provides supplementary income, in case of loss of income due to accidental disability, or a critical illness.

Tax Benefits

Tax Benefits

The premium you pay for the term life insurance plan is tax deductible up to INR 1.5 Lakhs per year as per Section 80 C of the income tax act. The sum assured your beneficiaries get is tax free under Section 10(10D) of the income tax act.

Eligibility for Term Insurance
General Information (varies from company to company):

Criteria Minimum Maximum
Entry Age 18 years 65 years
Policy Term 5 years 30-55 years
Maturity Age - 75 years to Whole Life
Annual Premium Based on Sum Assured and age of applicant Based on Sum Assured and age of applicant

Key factors to consider for Term Insurance

When should you avail a term life plan?

If you are newly married and have dependents (spouse, children or parents) who depend on your income, you need term insurance. You need to take a term life plan across your working year's .If you are 35 years of age, the term life plan needs to be taken till you retire. If you plan to retire at 60 years, the term life plan needs to be taken for 25 years. (60 years-35 years).

If you avail a term plan when you are most healthy (late twenties/early thirties), the premium on the term life plan would be low. As you grow older the premiums of the term life plan increase.

Opt for a level term life plan

You can take a level term life insurance with a guaranteed renewability clause. What does this mean? You can take a term life plan across a fixed time period, say till you retire. You are covered for your entire working years.

The premiums are slightly higher than if you were to renew the term life plan each year. The level term life plan considers a lesser premium when you are young and a higher premium when you are old. The premiums are averaged over the term of the policy and are then fixed for the time period of the policy. The guaranteed renewability clause means, your life insurer cannot deny you the right to renew your term life policy, within the time period of the plan. This is true even if you suffer from a disease/disability later in life (say at the age of 50 years).

Why take level term life insurance?

You are covered across your working years.
You save on the premiums as you get the benefit of averaging.
The guaranteed renewability means your term life plan will be renewed for the entire term of the plan.

How much should you insure yourself for?

You need the maximum life insurance when you are young (twenties and thirties) .Your savings are less and your family is young (Young spouse with children just going to school).
You need to take a term life insurance plan with a sum assured atleast 15 times your current annual income.
When you are in your late forties and early fifties, your savings will be sufficient to meet most expenses. You can take a term life plan with a sum assured, atleast 10 times your current annual income.
The term life plan gives you maximum life insurance for a minimum premium. So what's your excuse for not taking a term life insurance plan?

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