Term Insurance

Since 2020, COVID-19 has been spread across the globe in different variants. The impact of the first two waves of COVID-19 was horrific. Many people died, and some lost their sole breadwinners. The facts might scare you, but you should buy term life insurance. Be it the Delta or Omicron variants, both of them could lead to serious mishaps. Term insurance will be the first crucial step that you can take to protect your loved ones during such difficult times. You can compare and select the best term life insurance plan that will act as your personal financial risk management tool.

Death is unfortunate. Term insurance can help you save your family’s financial future by providing financial coverage. Here’s a list of some individuals who should buy term life insurance:

• Parents: Parents are always burdened with the responsibilities of raising their children. As a parent, you would want to secure your child’s future, provide him/her with the best education, accumulate money for their wedding, etc. With term insurance, you can rest assured that your child is financially protected even when you are not around to protect them.
• Young Individuals: While young professionals have fewer responsibilities in terms of family, few professionals are the sole breadwinners of their families. With a term insurance plan, the family can pay off the loans and liabilities of the insured in case the insured dies within the policy tenure. Additionally, the term insurance premium for young individuals is less in comparison to older people.
• Working Women: Many young working women today are supporting their families financially. With a term plan, these women can secure the future of their parents, spouse and children.
• Newly Married Couple: With term insurance, married couples can ensure complete financial support for their spouse in case of an unfortunate event. It is one of the best types of life insurance plan for young couples who want to secure their future.
• Taxpayers: Term insurance offers great tax benefits to its policyholders. Premium paid against a term life insurance is eligible for tax deductions under Section 80C of the Income Tax Act, 1961. Additionally, the death benefit paid to the nominee is tax deductible under Section 10(10D) of the Income Tax Act.
• Retirees: Investing in term insurance during your retirement years will provide financial security for your spouse. He/she can continue to live the same lifestyle without compromising on their needs.

Term insurance plans are the basic type of life insurance policy that is affordable and helps people secure a financially protected future for their loved ones. Below are reasons why you should invest in a term insurance policy:

• Affordable Premiums: According to the nature of the coverage provided under a term insurance policy, the premiums for the policy are quite affordable. An individual can avail of high coverage at nominal premium rates. It is also advised to purchase a term insurance policy at a young age because older people are more prone to diseases and require more coverage, which increases the premium.
• Helps in Tax Savings: A major advantage of purchasing a term insurance plan is that it can help you save taxes. The premium paid for a term insurance policy qualifies for tax benefits under Section 80C of the Income Tax Act for up to Rs. 1.5 lakh. Death/Maturity benefit paid under a term insurance policy is also tax-free according to Section 10(10D) of the Income Tax Act.
• Option to Add Riders: Under a term insurance policy, you can add additional coverages known as riders, which help increase the scope of coverage. The riders can be added to the term insurance policy in exchange for an additional premium. Some commonly opted life insurance riders are Accidental Death Benefit, Accidental Total and Permanent Disability, Critical Illness Rider, Waiver of Premium Rider etc.
• Provides Financial Security: Term insurance is known as a "pure protection plan," which helps in providing financial security to the family of the life assured in case of an unforeseen demise during the coverage period. The death benefit shall be provided to the nominee in case of the untimely demise of the life assured, which can help the family members of the life assured fulfil their financial requirements in case the life assured is not around.

The insurance sector has evolved over the years in India. There are several insurance companies that provide different term plans to cater to the diverse needs of people. Unlike old-school days, now policyholders don't have to undergo a lengthy and tedious process to buy a term insurance plan. You can simply compare different term insurance plans online and buy the best one that suits your needs.

• Hassle-free Comparisons: When you purchase a term insurance plan online, you can compare different plans offered by different companies without any hassle. You can use the term insurance premium calculator tool online to compare the plans and buy the one that best suits your needs.
• Lower Premium Rates: Purchasing term insurance online is a cost-effective option. This is because you don’t have to pay any commission to middlemen or agents. Simply visit the official website of InsuranceDekho, enter your personal details, compare different plans, and make a premium payment online to secure the future of your loved ones.
• Easy and Safe Purchase: Customers can buy a term insurance plan online from the comfort of their homes. You don’t have to visit one insurer's branch office after another in search of good term insurance plans. Additionally, the complete process of purchasing a term insurance plan online is safe and saves a lot of time for you.

There are different types of term insurance plans. You can choose any type of term plan to secure the future needs of your loved ones. Before that, it’s necessary to understand the meaning of each type in detail. Let’s find out!

• Pure Term Insurance: This is the basic term insurance plan in which nominees get a fixed sum assured in case of the demise of the policyholder during the policy tenure. In this type of plan, no maturity benefit is paid to the policyholder.
• Term Plan With Return of Premium: In this type of term insurance, the policyholder receives all premiums paid at the time of maturity. Additionally, the death benefit is paid to the beneficiaries of the policy if the policyholder dies during the policy period.
• Group Term Insurance: This plan provides life coverage for the entire group instead of just one individual. Group term insurance plan is bought by employers to provide coverage for employees.
• Increasing Term Insurance: With this term plan, your term insurance cover increases at a predetermined rate through policy tenure depending upon your increasing needs.
• Decreasing Term Insurance: This is the exact opposite of increasing term insurance. Under this type of term insurance plan, the sum assured continuously decreases on the basis of the decreasing requirements of the policyholder.
• Zero Cost Term Insurance: In this type of plan, the policyholders can choose to exit the plan after the specified tenure and get a return of all premiums paid until that date.

Term insurance provides financial assistance to your family even when you are not around. Besides this, there are many other advantages to investing in a term insurance plan. Some of them are highlighted below:

• Invest in Early Age: You can start planning the future of your loved ones at a young age. Anyone who is above 18 years can buy term insurance plans and secure the future needs of their families. Additionally, you may have to pay a less premium when you buy a term insurance plan at an early age.
• Flexible Premium Payment Options: Depending on their financial situation, the policyholders can choose to pay a premium for their term insurance plan on a monthly, quarterly, half-yearly, or yearly basis.
• Ease of Buying: With digital advancements, purchasing a term insurance plan has become easier. You can customize the policy as per your needs and buy it from the comfort of your home. All you need to do is select the best plan for yourself, pay a premium, and get the policy delivered to your inbox.
• Long-Term Protection: Term insurance policy offers long-term coverage to its policyholders. You can buy a term plan for a lifetime and ensure financial protection for your loved ones.
• Liability Protection: The payout from term insurance enables your loved ones to deal with your liabilities. In simple terms, the plan helps your family members in paying off your existing loans after your unfortunate death.
• Free-Look Up Period: The policyholders have the option to cancel their policy if they are not satisfied with the terms and conditions of their term insurance plan within a free-look period. Generally, the free-look up period is for 15-30 days; however, it may vary depending on the term insurance company.
• Grace Period: If due to any reason, the policyholder fails to pay a premium before a due date, they can renew their policy during a grace period. It is an additional time period provided by an insurance company to the policyholder to pay a premium and renew their term insurance plan. The grace period also ranges from 15 days to 30 days.

The most often asked question while purchasing a term insurance policy is whether you have financial dependents or not. Below mentioned are some people who are most likely to purchase a term insurance policy:

People who start earning a living for themselves and their family which can help them saves taxes and help the life assured to ensure financial security of their family in case anything were to happen to the life assured

It is also advised that a term insurance policy should be purchased at a young age because elder people require more coverage as they are prone to diseases. Premiums rates are low for people who are physically fit.

Many parents consider purchasing a term insurance policy to financially secure their child’s future if anything unforeseen were to happen to them. A term insurance plan can help parents create a financial cushion for their child in case of an unforeseen demise of the parent during the policy tenure.

People who have financial dependents such as their spouses should consider purchasing a term insurance policy which can help them create financial security for their spouse. Many people are fully financially dependent on their spouses in case an untimely demise of the life assured the burden of fulfilling financial requirement may fall on to the living spouse under such circumstances a term insurance policy can be very beneficial.

As a primary breadwinner of the family one should consider purchasing a term insurance policy as they might have a number of financial dependents such as wife/husband, parents and children who depend on one’s income. In case of an unforeseen demise of the life assured financial burden may fall onto the family members of the life assured, under such circumstances a death benefit is provided to the family of the life assured to help them maintain their lifestyle and pursue their dreams in the absence of the life assured.

Here are some ways in which term life insurance plans help secure the future of your family:

• Provides Financial Security: One of the most important reasons for purchasing a term insurance plan is to ensure the financial security of our families. Under term plans, a death benefit is given to the nominee/family of the life assured in case of his or her untimely death. A lump sum amount paid to the beneficiaries of the policy helps them to fulfil their financial requirements and live a decent lifestyle in the absence
• Affordable Premiums: Term insurance premiums are affordable by nature. As a result, you can secure the future of your family without disturbing your existing budget. Additionally, if you start investing in term plans early, you can ensure high-life coverage at a very affordable premium.
• Tax Benefits: Term insurance plans provide dual benefits of providing financial security and tax benefits to customers. According to the Income Tax Act, of 1961, premiums paid against term plans are tax deductible up to Rs. 1.5 lakhs. Additionally, the death or maturity benefit paid by the insurer is also exempted from tax under Section 10D of the Income Tax Act.
• Rider Benefits: Term insurance plans allow the policyholder to customize their plan with different rider benefits. You can add riders to your standard insurance plan to receive additional benefits provided by insurance companies. However, you may have to pay an extra premium to enhance the coverage of your policy.
• Flexibility: Term insurance plans provide flexibility to choose the premium payment term and policy tenure to the policyholders. You can select from three premium payment options- regular, limited, and single premium payments. Furthermore, you can choose the policy tenure as per your specific needs.

When should I purchase a term insurance policy? This is one of the most commonly asked questions before purchasing a term insurance policy. Many people don’t know the advantages of purchasing a term insurance policy at an early age and financial advisors always suggest purchasing a term plan at an early age.

Early 20s of a person is the most suitable age when he/she should purchase a term insurance plan. At this many people start earning a living for themselves and their family. Purchasing a term insurance policy at a young age not only encourages a disciplined savings habit but also helps an individual start saving taxes early. Premiums of a term insurance policy increase as the age of the applicant increases because elderly people require more attention and coverage.

As soon as you start earning a living for yourself, become a parent, get married etc. you should start considering purchasing a term insurance policy. The earlier you choose to invest in a term insurance policy, the lower premium.

The benefits provided under a term insurance policy make it an essential financial tool for anyone who wishes to ensure a financially secured future for their loved ones. Before purchasing a term insurance plan one may have doubts about how much term insurance coverage they require. It is said that the term insurance coverage amount should be enough to help your family members fulfill their financial requirements and pursue their dreams in case of your unfortunate demise.

It is advised that the coverage amount for a term insurance policy should be 10 - 5 times the annual income of the life assured. For example if your annual income is Rs 10 Lakh then you should choose your cover amount for a minimum of Rs 1.5 Crore.

Before choosing a coverage amount for your term insurance policy you should consider certain factors such as your age, working period, current household expenses, number of dependents, expenses of your dependents, liabilities, assets, policy tenure and future expenses. This way you can easily decide a sum assured for your term insurance policy.

• Assess your Requirements: Before you purchase a term insurance policy you must assess your requirements of insurance coverage. You should determine the coverage amount that will be sufficient to help your loved ones fulfil their daily financial requirements, maintain a healthy lifestyle and fulfil their goals in your absence. There are several types of term insurance plans which have different features, understand your coverage requirements and choose a term plan that fulfills your requirements.

• Choose a High Coverage Amount: Term insurance plans are widely known for providing high coverage at affordable premiums as compared to other life insurance plans. Term insurance plans provide basic risk coverage that is a death benefit in case of an untimely demise of the life assured during the policy tenure. Thus, as per the common thumb rule followed by most people , it is advised to choose a coverage amount of 15 - 20 times of your annual income (keeping inflation in mind). Under a term insurance policy you can avail a Rs. 1 Crore of life cover for a minimum premium rate of Rs. 500 per month. Thus, keeping your current lifestyle, expenses and inflation in mind you should choose a term insurance policy with a high coverage amount.

• Compare Several Options: There are several term plans offered by different insurance providers in India. Every term insurance plan provides different benefits. It is very essential to compare several before purchasing a term insurance plan. You should compare features and benefits of several term plans from different insurance companies to analyse which plan best suits your requirements. You can use a premium calculator tool to compare term insurance plans according to your requirements and budget. It is always advised to compare different plans before choosing one.

• Check Claim Settlement Ratio: Before purchasing a term plan you should always do a background check on the insurance provider. Claim settlement ratio is an important factor that you can consider before purchasing a term insurance policy. Claim settlement ratio represents the number of claims approved and settled against the total number of claims received. An insurance provider with a high claim settlement ratio is always reliable because you can trust the insurance provider to settle the claim on time without any hassles. It is always advised to choose an insurance provider with a high claim settlement ratio.

• Know the Riders Available: The best term insurance is the one that provides extensive coverage. One way to ensure extensive coverage under a term insurance plan is ‘Riders.’ Riders are additional coverages which can be purchased along the term insurance plan in exchange of extra premium but help in providing enhanced coverage. Before zeroing on a term plan make sure to check the availability of riders under your preferred term plan. Some common term insurance riders are critical illness, accidental death benefit, accelerated terminal illness, waiver of premium, accidental total and permanent disability rider etc.

• Avoid Very Cheap Premiums: One crucial factor to always keep in mind while purchasing a term insurance policy is to avoid very cheap premium term plans. A term insurance plan with a very cheap premium can be misleading at times, before you purchase a term plan at a very cheap premium rate make sure to go through the terms and conditions of the term insurance policy to know the inclusions/exclusions of the term plans. Sometimes term plans with very cheap premiums may not cover certain things that is why such plans should be avoided.

When you purchase a term insurance you need to make regular premium payments to keep the policy active. At the time of policy issuance you can select the premium payment option according to your budget. Under term insurance policy one choose from different premium payment option which are as mentioned below:

Regular Pay: Under the regular pay option of a term insurance policy the life assured needs to pay regular premiums throughout the policy tenure. The life assured can choose to pay premiums on a yearly, half-yearly, quarterly or a monthly basis.

Limited Pay: Under the limited premium payment option of the term insurance policy, the life assured pay the premium for a pre-fixed period of time. Under this premium payment option the premium payment term is usually less than the policy tenure.

Single Pay: Under this premium payment option the life assured pay the complete premium amount in one go at the time of purchasing the term insurance plan.

Term insurance premium calculator is an online tool which is specially designed to help an individual estimate the amount of premium that he/she will be paying for their term insurance policy. Term insurance premium calculator is quite easy to use. The premium calculator helps an individual to estimate the amount of premium according to the information entered in the calculator such as age, gender, coverage amount/sum assured, policy tenure etc. The term insurance premium calculator helps an individual to compare several term insuranc policies at once according to their budget and requirements. The term insurance premium calculator lets an individual change the sum assured according to their requirements. Below mentioned are some benefits of using an online term insurance premium calculator:

Makes Comparing Plans Easy: The term insurance premium calculator makes comparing several term plans an easy task that fit the requirements and the budget. You can easily compare several term insurance plans that fit your defined budget and requirements in one go.

Time Saving: Term insurance premium calculator saves a lot of time i.e one does not have to submit any documents to obtain term insurance quotes. Using the term insurance premium calculator one can easily figure out a term insurance plan that fits your requirements and budget.

Help You Make An Informed Decision: When you use a term insurance premium calculator you can make an informed decision while choosing a term insurance plan as you can compare benefits and features of different term insurance plans.

Term insurance policy provides life cover for a certain ‘term’ i.e. time period. How long your term insurance coverage should be? Is the most commonly asked question. Coverage period, Term, Policy Period means the duration of your term insurance policy. Deciding the duration of a term insurance policy solely depends on the life assured. You can decide your policy tenure according to your insurance requirements and budget. It is generally advised that one should purchase a term insurance plan for a maximum coverage period.

A term insurance policy period is ‘term length’ which is also the duration of the policy. Once the term insurance policy matures you can no longer avail the life coverage and your nominee shall not be provided a death benefit but some term plans do provide maturity benefit if you survive the entire policy tenure. Most term insurance plans provide 10, 20, 30 and in some cases 40 years of life coverage. It is advised to consider a policy period sufficient enough to cover all of your financial obligations and outstanding debts. For example, if you have a 10-year mortgage then you should consider the 10 year policy tenure of your term insurance policy so that your mortgage payments are protected. In case of your untimely demise during the policy tenure your nominee will receive a death benefit.

The optimal policy duration of your term insurance plan depends on your requirement of the term insurance policy.

There are certain factors which can increase or decrease the amount of premium of a term insurance policy. Below mentioned are some factors which can affect premium for a term insurance policy.

Age: Age plays a very important role while calculating the premium of the term insurance policy. It is advised to purchase a term insurance at a young age because at that age you are physically fit, elderly people require more coverage as they are prone to life threatening diseases which increase the premium rates. It is safe to say that you should consider purchasing a term in your 20s to avail high life cover at nominal premium rate.

Health Condition: A medical examination is required to purchase a term insurance plan to evaluate the risk cover that one may require. If you are physically well your term insurance premium will not exceed, in case you have pre-existing medical conditions premium for your term insurance policy will increase due to the nature of protection required.

Gender: Many insurance providers offer attractive premium rates for women. Statistically it has been said that women have a higher life expectancy rate as compared to men.

Smoking Habits: Insurance providers offer attractive premium rates for non-smokers as there is not high risk involved. A person who smokes is considered with high risk involved as smoking can cause some serious health issues and is quite injurious to health.

Occupation: Your profession can affect the calculation of premium for the term insurance policy. The environment you work in can affect the premium calculation. In case you work on a construction site, the premium for your life insurance will increase as compared to a teacher because of the risk involved in working in such an environment.

Chosen Sum Assured: SUm assured is the coverage amount of the term insurance policy. Your chosen sum assured plays a vital role in determining the premium for a term insurance policy. With the help of sum assured an estimate of the amount of premium to be payable according to the premium payment frequency and term can be determined.

Claim for a term insurance policy can be filed online as well as offline. The nominee/life assured can choose to file a claim for the term insurance policy according to their convenience.

Below mentioned are the steps for an online term insurance claim:

Step 1: Claim Intimation

Visit the chosen insurance provider’s official website and open the claim section on the website. You can log onto the website using your registered mobile number/email address/policy number. Check your policy details and proceed to file a claim for your term insurance policy.

Step 2: Upload Supporting Documents

After you have notified the insurance provider about the claim for your term insurance policy, upload supporting documents such as duly filled and signed claim form, medical records etc. The documents will be assessed and upon the assessment of the documents provided the claim settlement decision will be taken.

Step 3: Claim Settlement

After the required documents are assessed the insurance provider will settle the claim for your term insurance policy within 30 days in case any investigation is required the claim settlement will take time.

Offline Term Insurance Claim Process

One can easily file a claim for the term insurance policy by visiting the insurance company’s branch office. The required documents can be provided at the office, the claims teams.

Following is the list of documents required at the time of application of life insurance policy:

Income Proof

• Salary slips of last 6 months
• Bank statements of last 6 months with entries of 3 months of salary credited continuously
• Income Tax Returns (ITR) of last 2 years
• Certificate issued by CA in case the individual is self employed
• Form 16 (Latest)

Identity Proof

• Aadhaar Card
• Passport
• PAN Card
• Voter ID Card

Age Proof

• Birth Certificate
• Aadhaar Card
• Voter ID Card
• PAN Card
• Passport
• Driving Licence
• Marriage Certificate
• Ration Card

Address Proof

• Passport
• Aadhaar Card
• Voter ID Card
• Ration Card
• Driving License
• Passbook with 6 months of latest entries
• Bank statement of savings account
• Latest 3 months of utility bills

Other Documents

Apart from KYC documents there are few other documents required at the time of application of life insurance policy. Following is the list of other documents required at the time of policy application:

• Application/Proposal Form
• Final Declaration which states that the information provided is true and in case anything is found to be incorrect, the insurance provider can reject the application

Term insurance plans are commonly known as risk cover plans but there are certain things which are not covered under a term insurance policy. Below mentioned are some aspects which are not covered under a term insurance policy:

Suicide/Self Inflicted Injuries:Term insurance plans do not provide coverage for suicide or self-inflicted injuries within the first year of the policy. The exact waiting period for which suicidal death is not covered may vary from insurer to insurer. However, if the policyholder commits suicide during this period, a term insurance company will pay 80% of the premiums paid till the date of demise of the life assured after the deduction of applicable fees and taxes to the nominee.

Participation in Unlawful Activities: Under term insurance policy, a death benefit shall not be provided in case the life assured passes away while he/she was participating in unlawful activities. Unlawful activities include participation in theft/robbery, war, rebellions, civil war, riots etc.

Participation in Hazardous Activities: Participation in hazardous activities such as sky diving, mountain climbing, diving etc. shall not be covered under a term insurance policy. Hazardous activities refers to activities that involve high risk i.e. there are chances that the life assured may pass away while participating in such activities. In case the life assured passes away while participating in such activities, the death benefit shall not be provided.

Pre-existing Medical Condition: Any pre-existing medical condition of the life assured shall not be covered under a term insurance policy. In case the life assured passes away due to a pre-existing medical condition, the death benefit shall not be provided to the nominee. It is advised not to conceal the pre-existing medical existence at the time of application to avoid claim rejection or even worse policy termination.

Death Due to Intoxication: In case the life assured passes away due to intoxication, the death benefit shall not be provided. Death due to intoxication refers to death of the life assured due to over consumption of alcohol, drugs or other intoxicants.

The list of term insurance plans provided by the Indian Government includes:

• Pradhan Mantri Jeevan Jyoti Bima Yojana: The Pradhan Mantri Jeevan Jyoti Bima Yojana is available for people between the ages of 18 to 50 years, who already have a bank account. KYC documents are necessary while applying for this Yojana. A life cover of Rs. 2 Crore is provided for one year (1st June - 31st March) and it can be renewed. In case of an unforeseen demise of the life assured during the policy tenure a death benefits of Rs. 2 Lakh shall be provided. The premium for this policy is Rs 330 per annum which is auto-debited from the life assured’s bank in one installment. Pradhan Mantri Jeevan Jyoti Bima Yojana is offered by LIC and other life insurance companies who are offering this product with the same terms and conditions.

• Pradhan Mantri Suraksha Bima Yojana: Pradhan Mantri Suraksha Bima Yojana Is available for people between the age 18 - 70 years, who have a valid bank account. Aadhar card is necessary while applying for this scheme. The risk coverage amount under this scheme is Rs. 2 Lakh for accidental death and Rs. 1 Lakh for partial disability. The premium of Rs. 12 per annum under this scheme is auto debited from the life assured’s account in installments. This scheme is offered by public and private insurance companies which are willing to provide these products under similar terms and conditions.

• Pradhan Mantri Jan Dhan Yojana: As part of the Pradhan Mantri Jan Dhan Yojana or PMJDY, every family will now have access to bank accounts if they currently do not have one. In addition to the bank account, there is a RuPay Debit Card that comes with an accidental cover of an amount that is approximately around Rs. 1 Lakh, and the prime minister announced that individuals who subscribe to bank accounts using their debit cards will also receive a life insurance policy of Rs. 30,000. Providing security to economically weaker families who cannot afford insurance is the main goal of this scheme. The government of India bears the premium for this scheme.

Whole Life and Term Life Insurance plans are both types of life insurance plans. These are two types of life insurance plans that are most preferred by people. Whole life insurance plans provide life cover to the life assured until the demise of the life assured and on the other hand, term life insurance plans provide life cover to the life assured for a specific duration. Below mentioned is a detailed comparison between whole life and term life insurance plans to help you understand the difference between the two types of life insurance policies;