Max Life Insurance and Kantar IMRB have recently surveyed on term insurance among millennials. As per the survey, only 45% of the respondents were aware of term insurance and hardly 17% of the respondents bought term insurance policies. Industry experts expect term insurance to be a common insurance product for people in the age group of 25-35 years. Millennials are more interested in spending on fine dining, expensive garments and gadgets. Many of them do not buy adequate term insurance as they do not have liabilities or financially dependent members.
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For youngsters, term insurance premiums are cheaper. Premiums go up with age. Why? The younger you are, the healthier you are and vice versa. An aged person is at a higher risk of contracting critical diseases such as cancer, diabetes, etc. If you buy term insurance early, you may get a term insurance policy at a lower premium. Here is an example for you to understand how much you have to pay to get a sum assured of Rs.1 crore from Aegon Life Insurance Company Limited.
See Also: Be 100% Sure When You Buy Term Insurance
Your term insurance cover must be adequate to substitute your current income and pay off your current liabilities. It should be at least 15-20 times of your yearly income. If your yearly income is Rs. 5 lakh, then the cover must be Rs. 1 crore (20 X 5 lakh). You should also consider your existing loan obligations. For example, if you have a home loan of Rs.25 lakh and a car loan of 5 lakh, then the total cover should be Rs.1.30 crore.
Take medical tests
Some companies require people to undergo certain medical tests before issuing them a term insurance policy. In some cases, not only youngsters but also aged people can avail the product with no health checkups. If you undergo the required medical tests and the tests prove that your are healthy, then the insurance will offer you a lower premium. Availing term insurance with no medical tests shall be costlier. So, it is advisable to take a test to minimize or avoid chances of non-disclosure.
Choose the right tenure
The tenure of a term insurance policy is as significant as its cover. As per experts, it must neither be too long nor too short. It must be till the age of 60-65 years. At 30, if you buy term insurance for a term of 20 years, the policy gets expired when you are 50. Availing a new plan during your 50s is expensive, but you need term insurance at this stage. Experts strongly recommend availing a cover up to 65-70 years.
Add riders if possible
Riders are an additional benefit that you may add to your normal term insurance. Whether or not to add a rider is your choice. Riders may be added either while buying a new term insurance policy or at the time of renewals. They do not have maturity value. Under Section 80D or Section 80C of the Income Tax Act, 1961, premiums payable for term insurance riders are qualified for tax benefits.
Types of term insurance riders offered by different insurance companies
Aegon Religare iTerm
Bharti Axa eProtect
HDFC Life Click 2 Protect Plus
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