Want to buy term insurance on a tight budget? It is possible if you can follow certain steps. Term insurance policies do not have an investment component and are pure insurance policies. They are offered with low premiums and provide only a death cover. For people who have just begun their career, term insurance policies are an optimal risk cover.If you can pay a monthly premium of around Rs.600, you get a cover of approximately Rs.1 crore. The sum assured is paid only after the death of a policyholder within the policy period.
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Buy term insurance when you are young to enjoy lower premiums. Illnesses begin surrounding you as you get older. For the same sum assured, the annual premium for a 25-year-old guy is different from a 35-year-old person. The younger you are, the healthier you are. Both male and female smokers have to pay higher premiums across all ages. When you attain the age of 50 years, a term policy premium will be 50-70% more than what a 40-year-old person pays.
This is a common strategy many people use to get term insurance on a tight budget. There has been a stiff competition among public and private sector insurance companies such as LIC, Bajaj Allianz, Max Life Insurance, etc. Because of the competition, insurers use pricing strategies to grab the attention of potential buyers. You may end up paying a higher premium when you do not compare various plans. It is easy with online portals. While comparing various term insurance policies offered by public and private sector insurers, you will definitely find a difference in premiums.
Term are different types of term plans such as increasing term plans, decreasing term plans, term policies with riders, convertible term policies, return of premium plans (TROP) and level term plans. All these plans have their features and benefits. When you choose a term insurance policy that offers only death benefits, the premium shall be lower. When you choose a policy that offers death and maturity benefits, the premium will be higher. Experts suggest people to buy simple term insurance policies with no investment component.
Insurance companies offer certain riders along with term insurance plans like accidental death benefit rider, accelerated death benefit rider, accident disability benefit rider, critical illness benefit rider, income benefit rider and waiver of premium benefits. All these riders provide additional benefits to customers. When you are healthy and your family has no history of critical diseases, why do you need a critical illness benefit?Understand the types of riders and their respective usages.Choose the riders wisely if required to avoid paying extra money.
Everything is moving online in today’s digital age. Term insurance is no different.Offline term plans are approximately 50-60% costlier than online plans with the same benefits and features.When you buy through an agent, the commission is passed on to you. As term insurance is offered online, you have multiple sources of information to understand the benefits and features of various types of term plans to make informed decisions. The online system is safe, convenient and user-friendly, while you save on premiums.
See Also: Top 10 Reasons for Buying Term Insurance
If you are expecting to get term insurance on a tight budget, consider the term tenure meticulously. Insurers offer terms up to 35-40 years. The longer the tenure, the higher is the premium and vice versa. If you have debt obligations such as home loans, personal loans, property loans, etc., then you require a higher sum assured. If you have no debts, you need a lower sum assured. If you are a retiree with no debt obligations, why do you need a long-term insurance plan?
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