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.
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.
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.
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.
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.
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.
|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|
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.
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).
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.
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?
Term Insurance or Term Life Insurance is a pure form of life insurance. This type of insurance is purely for risk protection and not for investment. This is the best option for providing income to the family of the insured, in the event of sudden death within the "term" period for which the insurance is done.
The insurance company would pay up in the event of death of the person insured. It's similar to auto insurance, where the insurance company satisfies claims in event of an accident (in this case death of the person insured). However if the policy holder discontinues the policy in between, the insurance company will not refund the premium. Also if the insured survives the policy term, he/she person gets no amount in return.
The most attractive part of a term insurance is that the premium amount is relatively less for the kind of coverage it provides.
Tax benefits: Term Insurance qualifies for tax benefits under Section 80C
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Term insurance provides a low cost way to get maximum insurance protection for a temporary period of time. Term insurance builds no cash value. It pays a benefit only if you die during the term of the policy coverage. If death occurs, the beneficiary collects the face amount (death benefit) of the policy income tax free.
Many insurance companies offer level premium term for a period of 5, 10, 15, and 20 and now even 30 years. Premium rates increase at the end of the guaranteed policy period. These policies have become very popular because of their low cost and the availability of a relatively long term of coverage. It is important to understand the terms of any insurance policy that you are considering before making a purchase.
The premiums of term life insurance are lower than other available life insurance options thus allowing you to buy higher levels of coverage that might be useful when the need is greatest. It is good for covering specific needs that will automatically disappear in time, such as mortgages or family income needs for children. Term insurance is an effective way to get the most coverage at the low cost for up to 30 years.
Once the guarantee period expires, premiums increase as you grow older. Coverage may terminate at the end of the policy term or may become too expensive to continue. Generally, the policy doesn't offer cash value or paid-up insurance.
Age - Insurance is primarily age rated. Therefore, if you are very young, your rates will be very low. If you are older, 50 years and up, you can expect to pay more.
Sex - Males will need to pay more than females.
Smoker Status - If you are a smoker or use chewing tobacco, you can expect to pay more. People who are in their 50's and who smoke cigarettes pay significantly more than non smokers. All insurance companies test for nicotine in your blood, so lying about your status will not work. Depending on the insurer, you will be considered a non-smoker if you have not smoked, or chewed, in the last 12 months. Medical conditions - All insurers try to limit major risks or claims. Therefore, you can expect your insurer to request your medical records from your doctor. As part of the insurance exam, they will also test for AIDS and do blood and urine analysis. If you suffer from a condition like depression or have high cholesterol, some firms may rate you up; charge more, for the added risk. So when you apply for insurance, realize that you may not get the rate that is offered on the quote.
Dangerous hobbies - In some cases insurers will either decline to insure you, or charge you more, if you engage in activities that are dangerous. If you fly ultra light planes, parachute, drive racecars or motorcycles, you may be declined or rated.
Medical examination is necessary for all term insurance plans.
To take a term life insurance, you need to undergo a medical examination called the pre-medical. A basic pre-medical exam includes the following: 1) Height/weight measurements 2) Blood pressure readings 3) Heart rate readings 4) Urine sample 5) Blood sample 6) Medical history questionnaire After receiving your completed application form, the insurance company representative contacts you to arrange your exam at a time and location most convenient to you.
Yes, you can take more than one term insurance plan. It needs to be declared to the insurance companies regarding the same.
In this type of policy the insured has the option of changing the policy amount. The insured can either choose to increase the amount or to decrease it. However the premium amount will change and then remain consistent throughout the term.
If the insured does not die during the term for which the insurance is taken he has the alternative to renew it after that period. It needs to be understood that he will be required to pay a higher amount of premium for such renewals. Even after the renewals the insurance amount will be paid to the dependents of the insured after his death.
In this kind of policies the insured has the option of converting the term insurance into other policies. This will help the insured make use of the time advantages and thereby get free of the limitations of a term plan , by converting it into a suitable and preferred policy. This is advised for those who require permanent protection after a point of time.
The term group insurance is not only applicable to term insurance but to other forms also. Group insurance is usually taken by an employer. The premiums are collected from the monthly salary of the employee and deposited in the insurance company. However unlike in other insurance group term insurance is taken only for specific period; the premiums will still be lower.
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