Why Term Plan Necessary?

The most important reason to buy a term insurance plan is to secure your family’s future. You may never know what life has in store, but you can prepare for it with a term insurance plan. It helps you stay worry-free and ensures that your loved ones live a stress-free life even in your absence. Here are some reasons why a term insurance plan is necessary:

• It protects your family when you are not around.
• It provides financial stability and support for your family’s needs.
• The payout from the term insurance policy helps your family maintain their standard of living.
• It allows your family to clear all your existing financial obligations and debts.
• A term insurance plan provides a high life cover at an affordable premium cost.

Benefits of Term Life Insurance

A term insurance plan is easier to understand than other types of insurance policies that combine risk cover with savings. Traditional policies that offer both protection and savings are often complex, making it difficult for people to understand how much of their premium goes toward risk cover and how much toward investment. A term insurance plan focuses purely on protection and offers several benefits to policyholders. Here are some of the key benefits of a term insurance plan:

• Affordable premium – you can get a high-value life cover from a term insurance plan by paying an affordable premium amount. The earlier you buy the term insurance plan, the lower your premium will be throughout the policy term.
  
• Long-term coverage – a term insurance plan offers longer protection. Many term insurance policies now provide coverage up to 99 years of age.
  
• Payout of the sum insured – in case of the unfortunate death of the insured, the family receives the sum assured as a payout. The payout can be chosen as a lump sum amount, a regular monthly or annual income, or a combination of both to help manage financial needs and household expenses.
  
• Critical illness coverage – if critical illness coverage is added to your term insurance plan, you will receive a lump sum amount upon diagnosis of any covered critical illness.
  
• Accidental death benefit – by adding an accidental death benefit rider to your term insurance plan, you can enhance the financial protection for your family in case of an accident.
  
• Coverage for terminal illness – a term insurance policy may also provide a lump sum payout if the insured is diagnosed with a terminal illness, such as a severe, life-threatening condition.

Key Features of Term Insurance

• Life coverage against eventualities – If you are the sole earner in your family, a term insurance policy helps protect your loved ones from financial difficulties in your absence. It ensures that your family’s financial needs are met even when you are not around. With a term insurance plan, you can get a substantial life cover at an affordable premium, providing long-term financial security and peace of mind.
  
• Term insurance riders – You can strengthen your term insurance plan by adding optional riders. These riders increase the overall benefits of your term insurance policy by paying a small additional premium. Riders under a term insurance plan provide extended protection and can be chosen based on your specific requirements and lifestyle.
  
• Cover for critical illness – Even in your 20s or 30s, the risk of critical illnesses such as cancer, heart disease, or kidney failure cannot be ignored. A term insurance plan with a critical illness rider ensures financial protection by offering a lump sum payout upon diagnosis. This allows you to focus on treatment without the burden of financial stress, keeping your savings safe for future goals.
  
• Cover for accidental death or disability – Accidents can occur unexpectedly and may lead to significant medical expenses or loss of income. A term insurance policy with accidental death or disability coverage provides additional financial support to your family in such unfortunate situations. It strengthens your insurance plan and offers a more comprehensive safety net.
  
• Multiple payout options – A term insurance plan offers flexible payout options to make sure your family receives the benefit most conveniently. If your family members are not confident in managing a large lump sum, you can choose to provide the death benefit as a regular income or a mix of lump sum and monthly income, ensuring long-term financial stability.
  
• Pay your premium only till retirement – Several modern term insurance plans now allow you to pay premiums only until your retirement age, usually around 60 years, while keeping your coverage active up to 85 years. This feature makes your term insurance plan cost-effective and ensures long-term protection even after you stop working.
  
• Additional protection – You can enhance your term insurance policy with additional riders that offer coverage against accidents, disabilities, and critical illnesses. These added benefits make your term insurance plan more powerful and help safeguard your family from multiple financial risks.
• Hassle-free online application process – Buying a term insurance plan online has become easier than ever. With a fully digital process, you can purchase a term insurance policy with minimal paperwork, fast approval, and 24x7 customer assistance. This makes your insurance experience smooth, transparent, and convenient.

How to Buy Term Insurance?

Buying a term insurance plan is simpler than it sounds. By following a few easy steps, you can secure financial protection for your loved ones:

• Select your sum assured and policy term – Use a term insurance calculator to estimate the premium for your desired sum assured and term. This helps you find the right balance between affordability and adequate coverage.
  
• Add suitable riders – Enhance your family’s financial security by including riders in your term insurance plan. Riders such as critical illness or accidental coverage offer additional benefits at a small extra cost.
  
• Pay the premium­ – Provide personal details such as income, occupation, and education information. Enter nominee details and your current address, then complete your payment online through the safe and secure options provided by the insurer.
  
• Complete the proposal form – The proposal form captures essential information related to your health, lifestyle, and profession. Accurate details help ensure a smooth claim process under your term insurance policy.
  
• Medical test – In some cases, a medical test is required based on your age, health, and risk profile. It is conducted after the proposal form is submitted along with the necessary documents. Once approved, your term insurance plan becomes active and offers complete protection.

What are the Riders Available in a Term Insurance?

Riders are additional benefits that can be added to your term insurance plan to enhance its overall protection. These riders provide extra financial coverage for different life situations and help customise your term insurance policy based on your specific needs. Here are some of the most common riders available in a term insurance plan:

1. Critical illness rider – A critical illness rider covers several major diseases that are life-threatening in nature. You can opt for this rider if you have a higher risk of developing serious health conditions. Before adding this rider, it is advisable to check the additional cost and the list of covered illnesses.

• It covers more than thirty critical diseases such as cancer, heart attack, and kidney failure.
  
• It provides a lump sum payment that helps in covering hospitalization and treatment expenses.

2. Accidental death rider – This rider provides additional financial protection in case the policyholder dies due to an accident. When this rider is included in the term insurance plan, the insurance company pays the sum assured, along with the rider benefit, to the nominee of the term insurance policy.

• It offers added financial protection to the family.
  
• Some term insurance plans include accidental death cover as an inbuilt benefit.

3. Cashless treatment rider – With this rider, you can avail of complete cashless treatment during medical emergencies or accidents. This helps reduce the financial burden during hospitalization.

• It allows access to a wide network of hospitals for cashless claims.
  
• It provides an additional benefit without requiring a heavy investment.

4. Premium waiver rider – Under this rider, all future premium payments are waived off if the policyholder becomes disabled, critically ill, or passes away. The term insurance policy remains active and continues to offer coverage without any financial burden on the family.

• It ensures no financial stress related to premium payments.
  
• It does not affect the sum assured of the term insurance plan.

Things to Consider Before Buying Term Insurance

Before purchasing a term insurance plan, it is important to review some essential factors to make a well-informed decision. Below are key points to consider before buying a term insurance policy:

• Amount of coverage – Decide how much life coverage your family will need to maintain their standard of living in your absence. Consider inflation, current lifestyle expenses, financial liabilities, and future goals such as children’s education or home loans before choosing the sum assured under your term insurance plan.
  
• Time period­ – The policy term plays an important role in a term insurance plan. Choose a duration that provides adequate coverage throughout your working years. If the term is too short, it may not cover long-term financial responsibilities, and if it is too long, the premium cost may increase. Select a term insurance policy that aligns with your financial goals and age.
  
• Options for riders – Enhance your term insurance plan with suitable riders such as critical illness, accidental death, disability cover, and waiver of premium. These add-ons strengthen your insurance policy by providing additional financial protection against medical and life-related uncertainties.
  
• Claim settlement ratio – Always select an insurance company that has a high claim settlement ratio. A higher ratio indicates that the insurer is more reliable and efficient in settling claims, giving your family assurance that their financial security will be protected in case of any unfortunate event.

Types of Term Life Insurance

• Level term plans ­– A level term insurance plan is one of the most common types of term insurance in India. Under this term insurance policy, the sum assured and the premium amount remain fixed throughout the entire policy tenure. This makes it simple and predictable for the policyholder. In some modern versions of level term insurance, the coverage amount may gradually increase while the premium remains constant, offering higher protection as time progresses. This type of term insurance plan is ideal for those who want consistent coverage at a steady premium cost.
  
• Return of premium term life insurance – A return of premium term life insurance plan provides both life cover and maturity benefits. If the policyholder survives the policy term, the total premium amount paid is returned. This type of term insurance policy ensures that even if no claim arises, the policyholder receives a refund of premiums, making it an attractive choice for those who want protection along with a savings component.
  
• Increasing term plans – In an increasing term insurance plan, the sum assured rises at regular intervals during the policy term, while the premium remains the same. This helps policyholders combat inflation and ensures their family’s financial protection keeps pace with the rising cost of living. This plan is suitable for individuals whose financial responsibilities increase over time.
  
• Decreasing term life insurance – A decreasing term insurance plan works in the opposite way of an increasing plan. In this plan, the sum assured reduces over time, usually in line with a loan repayment or liability. It is ideal for people who have large financial obligations, such as home loans or personal loans. As the outstanding debt decreases, the insurance coverage also reduces accordingly, keeping the policy affordable and practical.
  
• Convertible term insurance – A convertible term insurance plan offers flexibility by allowing the policyholder to convert their existing term insurance policy into another type of plan in the future. For example, you can convert a term insurance plan into an endowment or whole life plan at a later stage. This feature is beneficial for those who want to start with basic life coverage and later shift to a plan that offers both protection and savings.
  
• Term plans with riders – This type of term insurance plan allows you to enhance your protection by adding riders such as critical illness cover, accidental death cover, or disability cover. By paying a small additional premium, you can significantly increase your coverage. If you choose a premium waiver rider, your future premiums are waived in case of disability or critical illness, ensuring continuous protection without financial strain.

What is Not Covered under a Term Insurance Plan?

While a term insurance plan offers extensive coverage, certain causes of death are excluded from the policy. Understanding these exclusions helps you make an informed decision while purchasing a term insurance policy. The following situations are generally not covered under most term insurance plans:

• Death due to the consumption of drugs or intoxicating substances.
  
• Death caused by suicide or self-inflicted injury.
  
• Death arising from pre-existing medical conditions not disclosed at the time of policy purchase.
  
• Death resulting from participation in war or hazardous activities.
  
• Complications related to pregnancy or childbirth.
  
• Death caused during criminal or unlawful acts.
  
• Death due to natural calamities is not included under the policy terms.
  
• Death caused by a terrorist attack.
  
• Death resulting from an undisclosed or pre-diagnosed terminal illness.
  
• Death occurring outside the country unless covered in the policy conditions.
  
• Death due to an accident, unless an accidental death rider is added to the term insurance plan

What to Compare in Term Insurance?

Comparing term insurance plans can help you select the right policy according to your financial capacity and budget. These key factors can help you make an informed decision when selecting a term insurance policy:

• Premium – The premium is one of the most important factors when choosing a term insurance plan. It determines the sum assured and the level of coverage for your family. Your goal should be to get high coverage at an affordable premium. Avoid choosing a very low premium as it may result in inadequate protection and regret in the future.
  
• Rider benefits – Riders are optional add-on covers that enhance your term insurance policy by providing additional benefits. Term insurance companies offer various riders, such as personal accident cover, critical illness rider, and terminal illness rider. These riders pay a specified sum insured in case of events like permanent disability or critical illness. Riders increase the overall protection but require an additional premium.
  
• Features of the term insurance plan – Before finalizing a term insurance policy, go through all the features offered in the plan. Read the policy document carefully to understand terms and conditions, inclusions and exclusions, rules, and regulations. This ensures that you are fully aware of what your term insurance plan offers.
  
• Claim settlement ratio – The claim settlement ratio indicates the reliability of the insurance company in settling claims. A higher claim settlement ratio means a greater likelihood of your claim being approved and settled on time. Always check this ratio when comparing different term insurance policies.
  
• Critical illness benefit – A critical illness benefit provides a lump sum payout if the policyholder is diagnosed with a life-threatening or terminal illness. The payout can be used by the family to meet financial needs, cover medical expenses, or pay off debts.
  
• Term insurance company reliability – Before purchasing a term insurance policy, check the financial stability and credibility of the insurance company. Consider factors such as the company’s financial health, claim settlement record, and overall reputation. Choosing a reliable insurer ensures your term insurance plan delivers the intended protection.

Term Insurance Claim Process

In case of the policyholder’s demise, the nominee must inform the insurance company and submit the required documents. The documentation varies based on the cause of death. Here are the typical scenarios:

1) In case of natural death

• Original term insurance policy document
  
• Claim form issued by the insurance company
  
• Application from the claimant
  
• Any other documents requested by the insurance company

2) In case of accidental death

• Post-mortem report of the accident
  
• FIR report from the police
  
• Original term insurance policy document
  
• Claim form issued by the insurance company
  
• Statement from the attending doctor or medical certificate
  
• Any other documents requested by the insurance company

3) In case of death due to sickness

• Original discharge summary from the hospital
  
• Supporting medical reports
  
• Original term insurance policy document
  
• Claim form issued by the insurance company
  
• Application from the claimant
  
• Any other documents requested by the insurance company

4) If the nominee also dies with the insured – In this case, the legal heirs of the nominee become the beneficiary. The legal heir can claim benefits only after reaching the age of eighteen. A guardian must immediately inform the insurance company. Age criteria may vary based on the insurance company or IRDA regulations.

5) If the nominee dies before the policyholder – When the nominee passes away before the policyholder, it is the responsibility of the policyholder to nominate a new beneficiary. This can be done either online or by contacting the insurance company’s customer care.