Why Your Term Life Cover Might Not Be Sufficient?

What is the Right Cover?

The term insurance cover must be 15-20 times annual income and sufficient to provide for your family on an early demise. For example, a 30 year old professional having annual income of Rs 10 lakhs, may need life cover of Rs 1 Crore.

The insurance cover can be increased as income rises. Although people in India are aware and are purchasing term insurance plans, the figure is still comparatively lower than countries like the US, UK, Singapore and so on.

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Why Your Term Life Cover Might Not Be Sufficient?

Why Term Insurance?

A term insurance plan is the most cost-effective and convenient way to shield your dependents financially, in your absence. Some term insurance plans come with an affordable insurance premium of Rs 500-600 a month, for life cover of Rs 1 Crore.

However, the premium depends on several factors like entry age, sum assured and so on. You can upgrade the policy by availing additional riders like critical illness rider and personal accidental rider by paying a nominal amount along with the base premium.

The add-on riders are offered by some of the insurance companies, so while buying a term insurance plan, you must evaluate requirements and then buy the term life policy.

You can customize your term life policy as per changing circumstances like increasing the life cover, availing income replacement rider or other riders like critical illness or accidental cover.

See Also: Term Insurance For Indians

The key to getting high cover at a nominal premium is availing the policy at an early age. You can choose the policy period, the payment mode and the frequency of premium payment. While buying the term life policy, you must also consider factors like inflation, loans and your family’s lifestyle to determine the right cover.

Benefits of Term Insurance Plan:

• Term insurance is the most effective and cost-efficient insurance plan to protect the financial interests of your family. It easily fits your budget and offers a sizable sum assured as death benefit.
• Term insurance also offers flexibility. You can choose the life cover (sum assured), policy tenure and the frequency of premium payment (monthly, quarterly or yearly). You can also increase your life cover at a later stage and customize the policy by adding riders to the basic term life plan.
• Term insurance offers benefits like special premium rates for non-smokers and females. There are special offers for people who quit smoking/drinking either before the purchase of the term life policy or during the tenure.
• Term life insurance is the best way to take care of financial liabilities after death. If you have a home loan, the death benefit/sum assured is used by family members to pays off the dues.
• The term insurance plan is also an efficient tax-saving instrument. You enjoy tax benefits up to Rs 1.5 Lakhs a year under Section 80C on premiums paid for term life plan. Death benefit is tax free under Section 10(10D).

See Also: Best Term Insurance Plans In India

How to Choose the Right Term Insurance?

Before availing a term life insurance plan, go online and compare the best term plans available in the market. Read customer reviews on the life insurer before making a decision.

Check important factors like claim settlement ratio, frequency of premium payment, solvency ratio of the Life Insurance Company, additional riders and maximum coverage offered to choose the best term life insurance plans. Avail a term life plan which matches financial goals and is sufficient to cover financial liabilities and offer financial support to your family in case of untimely demise.

See Also: The Ultimate Guide to Term Insurance

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