How to Evaluate Your Term Plan Quote

How to Evaluate Your Term Plan Quote

Are you looking to invest in a term plan? Are you confused because of the large number of plans available? Don’t fret because a term plan quote is an answer to all your questions. A good source that provides the exact term plan quote will help you make necessary arrangements for funds. It will also help you reduce the amount you pay as premiums while increasing the returns to the maximum possible amount. But there are some points to evaluate and choose a good term plan. Here you will know about all those points to evaluate a term plan and its quote.

Features of a Term Plan

A term plan is a type of insurance that provides life cover to the insured person for a pre- determined period provided the insured person pays the premium on time. Term plan insurances are extremely beneficial if a family has only one earning member. In case of the sad demise of this sole earning member, the family will receive money as an insured sum. It will help in the family’s sustenance for a sufficient duration till the family finds new sources of income. Listed below are some of the attractive benefits of a term plan.

Affordable

One of the biggest reasons several people choose term plans is that it is surprisingly cheap. Constant government collaborations and subsidies made this possible. Some nationalized banks even give term plans up to a few lakhs for free of cost to customers for a very nominal rate of 300 or 400 rupees per year. Banking and financial companies all have basic term plans. You can also find comprehensive term plans which provide extra benefits in this same affordable range.

Flexible

Term plans are also flexible. These days insurance providers give the option to choose your own term plan by customizing add-ons and extra covers. You can add or remove covers to make a suitable and affordable plan. Flexibility also spans through the plan conditions like policy duration, term duration, maturity payout, and extra benefits.

Return on Investment Term Plans

As mentioned earlier, some insurance providers give insurance plans with investment integrations. ULIP insurance schemes come under this category. ULIP schemes are actually insurance schemes that invest your premium payments into stocks and/ or nationalized bonds. You can enjoy the benefit of a term plan till the insurance maturity, and at maturity, you will also receive the volatile benefits of ULIP investment.

Lumpsum Maturity Pay-out

This benefit is only applicable for return of premium variant. Some term plan insurance schemes give a lumpsum return of premium to the insured person. As the returns are, in fact, repayments of your payment, the returns don’t attract any taxes, and you will receive the full amount without any deductions. As the insurance provider gives the option to receive the full money as lumpsum, several people use such schemes to fulfil the financial requirements of growing children. They use this money for their children’s educational, marriage, or business requirements.

Staggered Maturity Pay-out

Term plan maturity returns are also receivable as staggered payments. Generally, people select such a pay-out method if they are looking for an insurance scheme that can provide them with monthly income for the remaining duration of their retired life.

Some good insurance schemes even give a combination of both the lump sum and staggering pay-out. The insured person gets a portion of the returns at maturity as a lump sum, and the remaining amount will be received as staggered payments.

Multiple Options in Premium Payments

Premium payment options of term plan insurance are also flexible. People can choose any duration of policy, premium payment term, and premium interval. It will give them relaxation in gathering premium money at their own pace.

What is a Nominee?

Tax Relaxations

Like most insurance schemes, term plan premiums also have tax relaxations from the Income Tax Department of India. You can claim these deductions in your income tax returns filing. Tax benefits are as per provisions of Income Tax Act, 1962, and are subject to change from time to time.

6 Points to Consider for Evaluating Your Term Plan Quote

You can generate a term plan quote from various sources. You can either take the help of a term plan calculator or take advice from insurance agents or advisors. Both these sources will provide you term plan quote. But there are some things you must use to evaluate your term plan quote. Given below are some decisive points to remember to evaluate your term plan quote.

Entry and Renewal Age

Entry and renewal ages are of great importance if you are looking for a term plan with a long-term investment. The government of India caps the entry age and renewal age at 65 and 85 years, respectively. But the actual limit is at the discretion of the insurance provider. So, they even provide higher entry age and even lifetime renewal of term plans.

Premium Amount

The premium amount must be the major factor to evaluate the quality of your selected term plan. If the premium amount is too high, it will eventually increase financial burdens on your savings. Then you will have to make cutbacks and changes in your current lifestyle. So always ensure that the premium amount is affordable.

Riders

Adding Riders to the same term plan will always have lesser charges in comparison to having different policies. So, having a rider option is a recommended if you want to enhance the coverage spectrum of your basic insurance plan.

Policy Duration

Policy duration is also a point that you must focus on in a term plan. Always ensure that your term plan has the maximum possible policy duration. Longer policy durations will provide you with a life cover for a long duration with short-term premium payments.

Extra Covers

You must ensure that your term plan provides extra covers. People usually have different life and health insurance policies. But if both those covers are obtainable from a single policy, it will be inexpensive in comparison. Apart from health covers, look for extra covers like accident covers, disability covers, critical illness cover, etc., in a term plan.

Quote Comparison

You must see to it that your insurance provider gives you enough quotes to make comparisons. Having comparisons will show the different benefits of each term plan and help select the best policy among all.

Conclusion

Knowing these points will help you evaluate the perfect term plan quote that suits your pocket while providing maximum benefits. Consider these points as most good insurance providers provide these features even in their basic plans. So, if the insurance provider you selected doesn’t have enough of these evaluation points, it can mean that the plan is mediocre in comparison to basic schemes.

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.

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