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Cracking the Term Insurance Code Research Team | Posted On Wednesday, August 14,2019, 05:09 PM

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Cracking the Term Insurance Code



Cracking the Term Insurance Code

Rishabh who is 31 years old intends to safeguard his entire family on an untimely demise. He avails a term insurance policy with a sum assured of Rs 50 Lakh, paying a yearly premium of Rs 4,000. If he dies within the tenure of the plan, his nominees get the death benefit of Rs 50 Lakh. The term life plan offers no survival benefits.

Defining term insurance

Term insurance is a type of life insurance plan offered at affordable premiums. If the insured dies within the term of the plan, the insurer pays out the death benefits. This is complete risk protection. In other words, the insurance company does not pay out the sum assured if the policyholder survives the term of the plan.

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See Also: Death, Term Insurance and Taxes

Cracking the term insurance code

Purpose of term insurance

  • The sole purpose of term life insurance is to offer the much-needed financial protection to your loved ones.
  • When you add the critical illness rider, you get cover from critical illnesses.
  • With the permanent disability rider, the policyholder gets financial assistance; if he or she is physically disabled in an accident.
  • When you add the income benefit rider, the policyholder’s nominees gets an extra income in addition to the regular benefits.
  • If you choose the right term life plan, your family members or dependents would be able to pay off any loans or meet unforeseen medical emergencies.

Factors impacting term insurance premiums

  • Age
  • Medical history
  • Present health condition
  • Smoking habits
  • Occupation
  • Weight
  • Gender
  • Annual income
  • Number of dependents
  • The policy you choose

Commonly asked questions on term insurance

1. What should be my term insurance cover?

Well, it differs across people. The quantum of term insurance cover you require; depends on the number of dependents, type of lifestyle, how much you require for children’s education, marriage and so on.        

2. Why online term insurance plans are cheaper than offline term insurance plans?

Insurers offer term life insurance policies online, at low premiums. For example, when term insurance is sold offline, the agent’s commission is passed on to the final consumer. So, offline term life insurance plans are expensive vis-à-vis online plans.

3. Will I face any problems at the time of claim if I purchase term insurance online?

You will not face any difficulties as each insurance company has customer service representatives to attend and address concerns. They will guide you with claim settlement.

4. What is the claim settlement ratio?

Claim settlement ratio is the ratio of claims filed to the claims settled. A high claim settlement ratio ensures hassle-free claim settlement.

See Also: Term Insurance is the Key to Secure Your Family’s Future

Top 5 term insurance policies in India in 2019-2020

Term insurance plans

Minimum entry age

Maximum entry age

Policy tenure

Max Life Term Insurance Plan Plus




10-50 years

LIC e-Term Insurance Plan




10-35 years

ICICI iProtect Smart Term Insurance Plan




10-40 years

HDFC click 2 Protect Plus Term Insurance Plan




10-40 years

SBI Life eShield Term Insurance Plan




5-30 years

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