Things to Know Before Buying Term Insurance Plans in India

Things to Know Before Buying Term Insurance Plans in India

Our lives and the events that occur in them are always unpredictable. It is vulnerable to a major setback or a life-threatening disease, both of which can have a significant influence on your financial security. If a household's sole earner passes away unexpectedly, the deceased's family members may face serious financial difficulties.

The dependents' savings may not be sufficient to meet all of their financial needs. Hence, a term or life insurance plan from reliable insurance companies can be advantageous in such situations. A term plan is a type of life insurance that people can buy to protect their own lives. The term insurance plan always specifies a specific length and sum assured. A term insurance policy ensures this financial security and helps family members cope with the financial loss if a family member who works, dies prematurely. This lumpsum payment granted by the insurance company might help the dependants pay off all of the debts left behind by the deceased person and live a happy life.

Is Term Insurance a Good or Bad Investment?

A term plan provides insurance coverage in the form of a mortality benefit to the policy's nominee in the event of the insured individual's untimely death. Purchasing a term life insurance plan is a wise decision that has become necessary in recent years because it ensures a safe and protected financial future for people and the ones they love. Aside from providing financial security to a person and his family, a term insurance policy offers a slew of other benefits, like low premiums, additional rider benefits, and a slew of others. This is why, in difficult times, term plans are a solid investment alternative. The following are some of the benefits of purchasing a term insurance plan :

The Simplest form of Insurance

It guarantees a large sum of money for a low premium. The chance to save money is the most major advantage of purchasing a term plan. When compared to other types of life insurance policies, a term plan is certainly the most cost-effective. Apart from that, people should constantly remember that it is always best to invest money in a long-term strategy when they are young. The main argument for buying a term plan early is that the earlier you start investing in one, the lower your premiums will be and the bigger your coverage amount will be.

Increased Flexibility and Lower Losses

Another benefit of investing in a term plan is that it is extremely flexible. Furthermore, individuals can easily opt out of a term plan rather than an insurance policy based on the capital value. Assume that a person is unable to pay their premium instalment on time. After the grace period, the term plan will automatically terminate, and the insured individual will not need to make any more adjustments. It differs from a capital value policy because of this. The failure to pay premiums will result in a considerable loss because banks and insurance companies will make numerous deductions even after the account has been terminated.

Tax Advantages

A term insurance plan offers tax benefits under two different provisions of the Income Tax Act, 1961. However, tax laws are subject to change from time to time.

Additional Rider Advantages

Purchasing a term plan may entitle you to a number of additional rider benefits. You can easily add a rider to your term plan as an add-on to reinforce it, and at a very low premium increase. You should be aware, however, that these additional rider benefits may differ from one insurer to the next. Hence, it is always a good idea to read all of the terms and restrictions associated with the additional rider advantages specified in the policy before making a decision. Please note that riders are not mandatory and are available at additional cost.

Coverage for Terminal Sickness

People can develop any critical or severe illness at any point throughout their lives. The medical care costs associated with these serious illnesses could swiftly deplete a person's savings. As a result, it is critical to be financially prepared for such events. Assume you've recently been diagnosed with a life-threatening illness or believe you might in the future based to your family's genetic history. In that situation, choosing terminal disease coverage on your term plan is always a good idea. This terminal disease insurance is easily available with a term insurance plan for a small premium increase, and it is always a good idea to include it in a term plan.

Different Aspects to Consider When Choosing a Term Insurance Online

People can always buy a term plan that meets their criteria and requirements thanks to the wide variety of term plans accessible in today's market. A term insurance policy is one of the most trusted ways to make sure that your family and you have adequate protection, financially. You can use an online term insurance calculator to figure out how much of a term plan premium they'll have to pay for the plan they want. However, before you decide to buy a term plan online, there are three factors to consider in order to select the best option :

The Best Time to Buy

An insurance coverage should be purchased as soon as you begin earning money. Another reason to acquire term insurance when you're young is that the premiums are less expensive than life insurance. However, if you missed the best time to acquire term insurance, the second-best moment is right now. The bottom line is that term insurance is a need, not a goal or a choice. If something happens to you and you don't have term insurance, your family may suffer a financial loss. Term insurance will provide you with peace of mind once you have begun to care for their well-being and aspirations.

Growing Term Insurance Coverage

Another feature you should look for in your term insurance policy is the ability to grow with you, especially if you are a first-time customer. Of course, your current salary and lifestyle will not always remain the same. The trajectory of your personal financial progress should be followed by your term insurance. As a result, you'll have to pick one of the following solutions to keep your family sufficiently covered :

  • Every few years or after a significant financial shift in your life, purchase a new term plan.
  • Purchase a term plan that will grow with you as your life progresses.

There are a few disadvantages to purchasing a new term policy every few years. One, you'll have to go through the application procedure again, including the medical exam, and two, the cost of your premiums will go up each time you buy a new life insurance.

Additional Covers You Need

While term insurance is crucial, your insurance should also cover you against other dangers. You can, fortunately, add these extra coverages to your term insurance policies :

  • Terminal Illness Rider : Provides financial assistance to your family in the event that you are diagnosed with a terminal illness like as cancer or renal failure.
  • Accidental Death : If you die in an accident, the cost of performing last rites or paying for hospital bills will be borne by your family. As a result, adding a little more is beneficial.
  • Accidental Disability Insurance : Disabilities can limit your ability to work and earn money. As a result, your term insurance should continue until you get back on your feet. In the event of a severe handicap, this rider allows for a premium waiver.

Term Insurance a Worth Purchase

Term insurance is a low-cost way to cover your family's financial needs in the event of your untimely death. Term insurance provides substantial financial protection over a lengthy period of time, such as 30 to 40 years. You may, however, enquire as to whether you require a more comprehensive and larger term insurance policy. Here's what your family needs from your term insurance policy :

  • A sufficient amount of money (or a long-term steady income) to cover household expenses
  • Funds to meet or pay off long-term obligations
  • A sufficient amount of money to invest in order to satisfy crucial future goals such as a child's higher education, marriage, and so on.

If you're the family's principal financial decision-maker, you'll want to buy a term insurance policy that covers all three. A good policy will cover you for 10-15 times your annual income. In most cases, this amount of life insurance is enough to cover your family's most critical aspirations and demands. You can also invest in other kinds of life insurance plans such as ULIP and savings plans if you have other key life goals for your family. This way, you can assure that the goal is met while also protecting it from your early death.

Disclaimer:

*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.

Suggested Plans

Bharti AXA Life Flexi Term Pro

  • A Non-linked, Individual, Non-participating Pure Risk Premium Life Insurance policy
  • The plan offers two options: Without Return of Premium and With Return of Premium
  • Under the Without Return of Premium variant, you have the option between Single Life cover or Joint Life Cover i.e., cover for your spouse under the same policy.
  • Flexibility in policy and premium payment terms

Bharti AXA Life Super Series

  • A non-linked non-participating individual life insurance savings plan
  • Range of investment duration and returns
  • Guaranteed money back benefits (provided policy is in force and all due premiums have been paid)
  • Income tax benefits (as prevailing tax laws in India that are subject to changes)

Bharti AXA Life Guaranteed Wealth Pro

  • A non-linked, non-participating individual savings life insurance plan
  • Flexibility to choose the payout structure
  • Multiple income options
  • Option to receive tax free income beginning from the second policy year itself
  • Option to get lifelong income along with life cover till 100 years of age

Get Quote