Many options to choose from
The sandwich generation is caught between the past and the present and their responsibilities towards them. They have numerous options of life insurance plans to choose from. These plans may be broadly grouped into the following categories.
1. Endowment Insurance Plans
Endowment insurance plans are the earliest form of life insurance plans that we had in India. The majority of the policyholders under this category of insurance plans are salaried and receive the benefits of endowment insurance plans through their employers. Simply put, it is both an insurance plan and a long-term savings plan. A part of the premium paid is reserved as savings, whereas the other part is used to cover in the case of emergencies (insurance). If the policyholder outlives the plan, they are entitled to the savings amount (maturity benefit) that has accrued in the lifetime of the policy.
2. Unit Linked Insurance Plans (ULIPs)
Unit linked plans are another type of combination insurance plan. Here, a portion of the premium goes towards risk coverage, and the remaining is invested in funds. It is hence, a part investment part insurance plan. The money can be shifted between the investment and the risk cover according to the policy holder’s wish. This flexibility makes it a popular investment in India.
3. Term Insurance Plans
Term insurance plans are those that only cover risks. The entire premium paid is dedicated to covering expenses incurred in the case of emergencies. This makes it a very simple affair, and is perfect for the adults of this generation, who are looking to be insured. Enjoy extensive risk coverage at affordable premiums and claim tax deductions on the premium paid. This article will lay out the features of the best term insurance plans in India that the sandwich generation should watch out for.
What is a term insurance plan?
Term insurance plans are simply insurance plans that cover the insured for a fixed period (term). The entirety of the premiums paid during the subsistence of the policy goes towards coverage of the insured for risks in life. This is one of the most commonly availed life insurance plans in India because it affords greater protection at affordable rates. For someone who is responsible for both the younger and the older generation in the family, term insurance plans are the best way to secure the future.
Term plans cover the 3D
Term insurance plans cover the three major risks that life throws at one – death, disease, and disability. In addition to death benefits, term insurance plans cover expenses incurred in the treatment of disabilities and critical or terminal illnesses.
How is the premium calculated?
The premium is the amount that is periodically paid to the insurance service provider so that the policyholder is adequately covered. As mentioned above, the premiums in term insurance plans go completely towards risk coverage and are therefore more affordable than that of the other types of insurance plans. The premium is calculated on the basis of several factors. These factors include the age of the insured, the gender of the insured, the policy terms and the insurance coverage being availed, the medical history of the insured, the lifestyle led by the insured, and the occupation of the insured.
The advantages of term plans
There are numerous benefits to purchasing a term insurance plan. Some of the major advantages of term plans are listed below.
- Receive extensive risk coverage for affordable premiums
- Receive coverage for illnesses – both critical and terminal
- The insurance cover can be adjusted according to changing circumstances
- Receive additional security through riders
- Enjoy the benefits of multiple options for payout
- Enjoy tax deductions
Choose the best term insurance plan
Now that you know what a term insurance plan is and what its advantages are, here are a few steps that will help you choose the best term insurance plan for you.
1. Determine cover amount
The first step to cross in the quest to arrive at the best term insurance plans is to determine what the cover amount of the policy should be. While determining this amount, consider factors like age of the insured, the medical history of the insured, potential inflation, existing liabilities or debts, etc.
A simple way to arrive at this amount is to keep this general formula in mind – the ideal term insurance cover for a policyholder between 20 to 30 years of age should be about twenty times their annual income. Remember, the younger the insured, the greater the policy coverage.
2. The insurance provider should be reliable
The quest to arrive at the best term insurance plans is to ensure that the future is secure for your loved ones. This security can be truly enjoyed only if the insurance service provider you opt for is reliable.
Claim Settlement Ratio(CSR) is a factor that will help determine reliability. It is a metric that represents the ratio of the total claims raised in a year to that settled in the same year by the insurance provider. Similarly, the solvency ratio of the insurance provider should have been constantly over the minimum mandate. And lastly, the market reputation and financial background of the insurance provider can serve as important factors to determine reliability.
3. Choose the policy duration
The next step in choosing the best term insurance plan is to choose a policy duration that is right for you. The term of the policy determines the benefits received from it, premium amount, etc. It should be chosen to keep in mind the age of the policyholder. Experts in the insurance industry advise that if the insured is in their 20s, one should go for term insurance policies that last for a term of at least 40 years.
4. Make sure payments are feasible
The final step in arriving at and purchasing the best term insurance plans is to make sure that the terms of payment and the options related to it are feasible. This includes not only the premium amount but also the mode of payment of premiums and the frequency with which premiums may be paid. Look into your bank statements and choose the payment option that is most feasible for you.
Buy a term plan easily
People of the sandwich generation can often feel left out in this fast-paced world. From growing up in a world where paper and books were a luxury to living in a soon-to-be paperless world, the shifts and changes have been revolutionary, to say the least. But there is no need to be worried. The process of purchasing the best term insurance plans is simple and quick and can be done in the comfort of one’s own home. The steps to be carried out are given below :
- Visit the insurance service provider’s website.
- Choose the desired term insurance plan.
- Fill out the details required by the insurance provider
- Check the premium amount, mode, and frequency of payment
- Make the payment online
Once you follow these simple steps, you will receive the policy details in the email address you have registered with the insurance provider.
A checklist to choose term plans
In summation, here is a checklist of the factors that are characteristic of the best term insurance plan.
- Reliable insurance provider (high CSR)
- Extensive coverage options
- Provides a wide variety of riders
- Premiums are affordable
- Numerous payment options that are flexible
- Positive feedback on the plan from customers
This checklist will help you weed out the sub-par and choose only the best term insurance plan so you can bite into that scrumptious sandwich knowing fully well that your future and the future of the younger and older generations in your family is also secured.