Term Insurance – The Complete Guide
Posted by Fintra Editor , December 21, 2020
Do you know what is in store for you and the future of your loved ones? In your absence will your family be able to tackle an unexpected financial burden? It's about time you think about these scenarios and secure your family's future. One vital way to do so is to opt for a term insurance policy because it will provide financial security to your loved ones when you're no longer available to take care of their daily expenses.
In this blog, Fintra will highlight the following topics:
- What is Term Insurance?
- Why Term Insurance is important?
- What are the Benefits of Term Insurance?
- Term Insurance Premium Calculator
- What are the Age Limit and Ideal Age for getting Term Insurance?
- How is Term Insurance different from Life Insurance?
- How is Term Insurance different from Health Insurance?
- What are the different conditions for claiming Term insurance?
- What are the Documents required for Term Insurance?
- Which are the various companies that offer Term Insurance Policies?
What is Term Insurance?
Term life insurance is insurance offered by an insurance agency or company, wherein the beneficiary is provided with comprehensive financial coverage against the premiums paid for a certain period of time by the beneficiary for its policy. The coverage provided by the policy under term insurance plans is paid as “Death Benefits” at the time of the demise of the insured individual during the term.
Why Term Insurance is important?
Purchasing term insurance is vital because may whatever stage of life you're at, someone in the family, including yourself, could suffer from critical illnesses. Treatment expenses incurred towards treating the illnesses could erode all your savings. Thus, in today's uncertain world, purchasing term insurance is a wise decision because it provides a financial safety cushion to your family and takes care of every requirement when you are present or not.
What are the Benefits of Term Insurance?
- Critical illness insurance: If the beneficiary is diagnosed with any critical illness, the insurance company is liable to provide coverage for the expenses that occurred upon the treatment of the individual. If the beneficiary has already paid the expenses on its own, the company will reimburse the expenses afterward.
- Affordable premium amounts: One can get very high-value coverage by getting Term Insurance by just paying an affordable premium amount for a specific time period. The earlier you get one of the Term Insurance policies, the lower premium you will be paying. The premium amounts can be paid either monthly, half-yearly, or yearly; hence offering you flexible payment options.
- Tax benefits: In today’s world, everyone wants to save their taxes and put them in more functional uses. Term insurance provides you with such benefits. One can avail of tax benefits upon the premium paid under Section 80C.
- Whole Life Covered: One of the vital benefits of term insurance is that it provides whole life cover, which gives comprehensive security wherein the policyholder is insured up to the age of 99 years and beyond. Moreover, this insurance type enables to reduce the financial burden falling on the family when the breadwinner passes away.
- It’s easy to understand: Before opting for a life cover, we must always analyze and grasp the specified terms, which are being offered within the term insurance policy. Hence, term insurance has policies that are easy to understand, and since it’s a pure life cover, no investment component is within it. Just pay the premiums on time, and the insurance offers a cover for a fixed duration along with various other benefits.
- Additional Rider Benefits: For your knowledge, to strengthen the term insurance policy, you can opt for various additional rider benefits. Do note this may come with an extra nominal premium.
- Payout of Sum Insured: When the policyholder passes away, the family will receive the sum assured as the payout. This can opt as an income or lump sum, which can be received on a yearly or monthly basis.
- Return of Premium Options Available: Although the term insurance policy doesn’t provide maturity benefit, one can avail it within the same only if it has opted for the 'Return of Premium' option. To get this option, you’ll have to pay high premiums which eventually will be returned when the policyholder has survived the entire policy period. Do bear in mind the total amount for the premiums that are to be returned will exclude the taxes, rider premium, any levies, and the modal sum that’s paid upon the premium.
Term Insurance Premium Calculator
The term insurance premium calculator helps one to determine the amount of premium they have to pay to the insurance agent or company to get insured. Because there are so many companies offering Term Insurance Plans, these calculators also give you the option of choosing between different insurers and compare the premiums offered by them.
What are the Age Limit and Ideal Age for getting Term Insurance?
One can get a Term Insurance Policy as soon as they are 18 and up to 65 years of age. It's advisable to get this insurance as soon as you begin earning and are mature enough to opt for the best plan that suits your requirements. The coverage of a normal Term Insurance is up to 99 years of age, and in some of the companies, one can get that expended by paying a certain amount, too.
How is Term Insurance different from Life Insurance?
- Term insurance offers coverage for the premature death of the policyholder within a certain term. And on the flip side, Life Insurance provides the coverage amount when the policy matures.
- The duration of Term Insurance ranges from 10 to 45 years whereas the Life Insurance offers you range from 5 to 30 years.
Term insurance is mainly for a specific term/time-period like 40-50 years and Life insurance offers the benefit of the policy upon the maturity of the policy irrespective of whether the policyholder is alive or dead. In Life insurance, if the policyholder dies, then the policy money is given to the nominee of the policy. The policyholder should decide the nominee and the tenure of the policy at the time of registration. Term insurance companies offer financial help and assistance to the family of the person holding the policy in case he/she dies in the term of the policy known as Pure Protection Plan.
How is Term Insurance different from Health Insurance?
- Health insurance policies mainly serve the purpose of assisting the policyholders in case of any illness or health condition. On the other hand, Term insurance covers the early death of the policyholder in the fixed term.
- The duration of Health insurance is just about 5 to 10 years whereas Term insurance offers you the duration of 10 to 45 years depending on the policy and the insurer.
“Health is Wealth”. Health insurance is more crucial and vital for people of every age group because health is the only key to a good, long life. Moreover, taking care of your health is very important, too. Thus, it's a wise act to obtain good health insurance because the cost of surgeries, general treatment, and medicines are rising high. On the flip-side, term insurance is also very necessary because one has to think of their family and loved ones even after death.
What are the different conditions for claiming Term insurance?
Natural demise and death due to some medical ailment or illness are always covered under the Term Insurance Policy. However, there are many terms and conditions regarding any specific policy, which can differ from company to company.
Some kind of deaths like death by murder or by alcohol consumption is generally not covered under any Term Insurance Policy. Read all the terms and conditions before getting any Term Insurance Policy.
What are the Documents required for Term Insurance?
- ID Proof
- Address Proof
- Age Proof
- Income Proof
- Medical Reports
- Latest Photographs
Which are the various companies that offer Term Insurance Policies?
- SBI Life eShield Plan
- Max Life Online Term Plan Plus
- LIC E=Term Plan
- Bharti AXA Term Plan eProtect
- IDBI Federal iSurence Flexi Term Plan
- ICICI Prudential iProtect Smart
- Canara HSBC iSelect + Term Plan
- Bajaj Allianz eTouchLumpsum
- Aegon Life iTerm Plan and many more.
In today’s time, nothing is certain- not one’s health nor its wealth. An individual must get themselves insured. Not just for yourself, but for your family and your loved ones, insurance offers you financial support and monetary help. There are many different insurance policies available in the market. You should inspect and select the policy that suits you the best. Life insurance and Term insurance also prove to be an important asset for you and your family. Just remember, you have to plan for your future and the future of your family and loved ones.