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A Quick Guide to Term Insurance

Published On Nov 04, 2021

Term insurance is a life insurance type. Valid for a specific period, term insurance policy provides a lump sum benefit to the family members of the policyholder in case of the sudden demise of the latter. In simple words, a term insurance plan financially safeguards the dependents after the unexpected demise of the policyholder. 

In India, buying a pure term insurance plan may come across as a difficult task. However, it is not the case when you know what you want and how much you can pay for it. Before you move ahead with buying a term insurance plan, know that there are a few types of term insurance you may have to choose from. 

Types of Term Insurance

The list of different types of term insurance plans in India includes:

1. Basic Plan/ Level Term Plan: It is a pure life protection plan for a specific period.
Return of Premium Plan (TROP) Plan: It involves maturity benefits, where policy premiums paid are returned if the life assured survives the policy term.

2. Increasing Term Plan: It comes with the option of increasing the life coverage amount after reaching certain life goals. Life coverage can also be increased on an annual basis.

3. Decreasing Term Plan: In this type, the coverage decreases over the policy duration at a predetermined rate. This type of term insurance is an excellent choice for those with financial liabilities since the amount can be used to repay the debt. 

4. Convertible Term Plan: This term policy type can be converted into other plans such as endowment plan or full life plan, at a future date.

5. Term Plan with Riders: This type comes with enhanced coverage, such as accidental permanent disability or critical illness.

How Much Term Insurance Cover Do You Actually Need?

If you are confused about the amount of term insurance you would actually require to make your loved ones financially secure, answer the below mentioned questions to analyze your needs:

  • What is your current financial status?
  • How much are your expenses?
  • Are there any financial liabilities?
  • Do you suffer from any health issues?
  • What is your family health history?
  • Do you possess a health insurance plan?

Remember, on the basis of what you answer, you will be able to decide the term insurance coverage to go with. According to experts, you must have your term insurance cover 10-25 times more than your current annual income.

How to Buy Term Insurance Online?

Buying term insurance online makes the overall experience convenient and hassle-free. Read along the perfect way to buy term insurance online:

1. Analyze The Life Cover Required: Choose a sum assured that you are sure would provide utmost financial protection to your dependents. Inform your insurance company about it.

2. Fill The Application Form: Fill the application form completely and correctly. Make sure you provide all personal details, such as name, mobile number and address in the correct manner.

3. Add Rider, If Needed: If you think you would require additional coverage with riders, go ahead and choose the specific riders that suit your needs. 

4. Provide The Required Personal Details: Make sure you inform your insurance company about the existing health conditions and lifestyle habits. Keep in mind that mentioning your lifestyle diseases as well as habits like tobacco and alcohol consumption in the proposal form would be a must. 

5. Complete The Process Of Undergoing Medical Tests: On the basis of risk factors associated with you, your insurance company will then calculate the premium. You may be asked to undergo a series of medical tests before the term plan takes effect. If asked, you must undergo the tests. 

You may also like to read - Reasons That Make Term Insurance a Smart Investment

How To Select A Term Insurance Plan For Your Protection Needs?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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