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1 Crore Term Insurance

Life has suddenly become a pool of uncertainty since the COVID-19 pandemic has hit the world. We all need little boosts of assurance in such times to help keep our minds at ease. An important aspect of everyone's life is their finances and knowing that you and your family are financially secure can take a huge load off your shoulders.

Term Insurance is one of the simplest, accessible and affordable ways of ensuring that your loved ones have ample financial back up, in case of an emergency.

 

Understand the basics of term insurance in 5 points:

  • Term insurance policies are life insurance policy plans where you receive coverage for a fixed 'term' of your life in exchange for a fixed, reasonable premium. Term insurance policies offer a high cover (For eg-1Cr term insurance) for a very low premium (For e.g. - ₹422/month under India First Term Plan)
  • In case death of the policyholder takes place within this term of policy, your beneficiaries/nominees receive a 'death benefit' amount of the assured sum in the term plan.
  • When your term period is over, there is no maturity benefit and if your policy expires, you don't receive any returns on premiums paid either, unless you have a Term Insurance Plan with Return of Premium (TROP). There is no other savings component.
  • Your premium is fixed and does not change (increase or decrease) throughout the term of your policy. You receive cover till the time you pay regular premiums. If you stop your premium payment, the policy is automatically cancelled after some time and you receive no benefit. You can renew your policy during the renewal period against an adjusted/new premium
  • There are additional rider benefits available in term plans for managing expenses in case of critical illness, accidental death, disability, premium waiver etc. This can make your term plan more comprehensive and minimize the burden on your family in case of an emergency.

Term Insurance is as easy as ABC!

The primary objective of a term insurance policy is to ensure protection to your family in case of an unprecedented or untimely death. In case the policyholder is the sole breadwinner in the family and expires suddenly, his/her family undergoes major emotional and financial distress. Hence, the payout of a term insurance policy can help the departed's family remain financially stable and manage regular expenses.

 

What is 1 Crore Term Plan?

Term insurance plans have multiple benefits and are also kept aside for a family's future milestones like a child's higher education or marriage, to pay off loans and debt in case of emergency and even enjoy tax exemptions.

Term insurance policies are increasingly getting quite popular and a common term associated with term insurance is 1 Crore term insurance. A 1cr Term Plan is a term policy with a sum assured of ₹ 1 Crore which is paid as death benefit to the family/beneficiary in case of death of policyholder.

Basically, having an 8-figure amount set aside for contingencies can put your mind at ease and take care of many of your insurance and expenditures. The premium for maintaining this 1 crore term plans are substantially low making this a great deal. Even the best term insurance plans offering 1 Cr sum assured have a premium of less than ₹1000/month.

All of us have different insurance needs. 1 crore is not the 'golden number' which is right for everyone. Moreover, our family expenses differ and it varies when there is more than one income in the household. One must calculate their cover amount after taking into consideration various factors ranging from your family's basic needs to financial liabilities like loans, debts and other payoffs. Your investment portfolio, savings etc. also need to be factored in before deciding your cover amount.

Besides these factors, one must keep in mind inflations and hikes along with a retirement amount for your spouse in case of early demise etc. in order to make a more accurate guess on the amount a family needs to survive.

A simple calculation exercise can help you arrive at the right cover amount which will help you understand the current status and future financial needs of your family. There are online human life calculators available today to help you determine the right term insurance cover for you.

 

Who should opt for a 1 Crore Term Plan?

  • Term Insurance should be bought at the beginning of your career when you're sufficiently young, healthy and unencumbered. Working professionals can invest in a 1 crore term insurance plan in their late twenties or early thirties (25-35 years old) to enjoy low premium rates which are fixed throughout the term of the policy.
  • Persons who are the sole earners in the family must invest in at least one 1 cr term plan to ensure that their family is sufficiently secure in case of their absence. They should also explore whether a cover of 1 crore term is the best option or whether they need extra cover.
  • Individuals with home loans or education loans must have a term insurance policy as a safety in case of emergencies. The sum assured can be used to pay off an individual's loans and the family can be debt free, in case of a contingency.

Let's explore a few examples to understand whether a 1 crore term insurance is the right cover amount for us.

Amit is a healthy 30 year old with two children and a home loan. He is thinking of investing in a 1 Crore term insurance plan. Let's see whether this cover amount is sufficient for his family's financial needs.

Amit’s Age 30 years
Retirement Age 60 years
Current Family’s Expenses ( per year) Rs. 3 lakhs
Family’s Expenses for the Next 30 Years ( with 8% yearly inflation) Rs. 3 Crores
Home Loan Rs. 50 lakhs
Child Future Education Rs. 50 lakhs
Total Expenses Rs. 4 Crores (Rs. 3 Crores + Rs. 50 lakhs + Rs. 50 lakhs)
Personal Savings PF+ Mutual funds Rs. 50 lakhs
Required Life Insurance Cover Rs. 4 Crores – Rs. 50 lakhs = Rs. 3.5 Crores

So, a 1 Crore term insurance plan can fall short of up to ₹2.5 Crores for Amit's family in case of an emergency and he would need to look for a term insurance plan with a bigger sum assured.

Now, let's take the case of Tanmay- a young, healthy, single 25 year old man who invests in a 1cr Term Plan.

Tanmay's Finances:

Tanmay’s Age 25 years
Annual Income Rs. 6 lakhs
Home Loan Nil
Dependent Members None
Personal Expenses Rs. 4 lakhs
Child Education Expenses Nil
Current Term Insurance Cover Rs. 1 Crore
Required Cover Nil ( at present)
Personal Savings + Mutual funds Rs. 2 lakhs

Although he doesn't need a term insurance plan according to the calculations, Tanmay is wise to invest in a term plan early on to enjoy a low premium and high cover , to prepare in case of an emergency. As he moves ahead in life, he can review his policy and expand the plan to include wife and children.

As you can see, although 1cr sounds like a sufficient number for contingencies, it is subjective whether the cover amount would be sufficient for all. However, for young people, this is a secure investment to reap the best benefits at a later time.

Disclaimer:

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

Consult with your financial advisor before making any decisions on insurance purchase.

*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time’

Suggested Plans

Bharti AXA Life Flexi Term Plan

  • Covers Critical illness at the age of 75.
  • Option to select between Comprehensive cover or Major illness cover
  • Flexible benefit payout option. Payout options based on your financial requirements– a) Lump sum or b) Increasing Monthly Income or c) Lump sum plus Increasing Monthly Income.
  • Tax benefits on the Premiums paid and payout benefits received.

Bharti AXA Life Flexi Term Pro

  • Get insurance on your own terms with Bharti AXA Life Flexi Term Pro. #DoTheSmartThing

Bharti AXA Life Premier Protect Plan

  • Flexibility in Policy Term
  • Flexibility in Premium Payment Terms ( Single , Limited, and RegularPay Options)
  • Multiple Death Benefit Payout Option
  • Increase the Sum Assured on important milestones
  • Tax benefits

1 Crore Term Insurance FAQs

How much does 1Crore Term Insurance Cost?

Term insurance policies are popular because these are pure protection policies which offer a high coverage at the lowest premium cost. For a 1 Cr term plan, the premium for an individual can be as low as ₹422 per month and the premium rates rarely go beyond ₹1000 per month.

It is important to compare the Claim Settlement Ratio and rates of premium offered by various insurance providers online before investing in a 1 crore term plan.

What is the eligibility for term insurance?

Term insurance can be bought by anybody over 18 years of age and the upper limit for buying term insurance lies between 65-69 years, depending on the insurance provider.

Why should I buy a Term Insurance Plan?

There are various benefits attached to a term insurance plan and they are as follows:

  • Financial Protection for Family:

    Emergency can strike anyone and being unprepared can add a major burden, both financial and emotional on a family. Having a term insurance policy ensures that your family and loved ones are sufficiently provided for in case of an unprecedented event.
  • Simple to Understand:

    Term insurance plans are the least complex insurance policies you will see! The cover of a term insurance lasts for a fixed period of time or 'term' in lieu of a low premium rate. There is a single death benefit received by beneficiaries in case of death of the policyholder within the term of the policy. No other saving component or return on maturity is available in term insurance. If you stop paying the premium, the policy is automatically cancelled. These are pure protection plans and are meant only to secure the future of your loved ones in case you are not around.
  • High Cover at the Lowest Premium charges:

    Term insurance plans are the cheapest life insurance policies because there is only a single death benefit and no other savings component. Many people outlive the term of their policy which reduces the burden of claim on insurers. Hence, even a 1 crore term insurance plan can be afforded for as less as ₹422 per month!
  • Critical Illness rider and other rider benefits:

    Many term insurance policies offer a critical illness rider wherein in case the policyholder suffers from a critical illness or disability leading to loss of income, the insurer provides a lump sum amount when illness is first detected, subject to certain conditions. Other riders like an accidental death or disability rider ensure that your family has a source of income in case the policyholder encounters an unfortunate event.
  • Attractive Tax Benefits:

    The premiums paid towards a term life insurance policy and the death benefit received by beneficiaries are both exempted from tax under the Income Tax Act under certain conditions. You can claim deductions of up to ₹1.5 Lakh under Section 80C and the returns are tax free under Section 10 (10D).
  • Safety For Loans and Assets :

    Having a term insurance plan makes it easier to get a loan as in case of an emergency, the payout from a term plan can help repay the loan and keep your family free from the burden of debt, in case you're not around.
  • Term insurance for entrepreneurs and people in business:

    The low cost of premium in term plans can be used to one's advantage. If you're starting a new business, it is wise to invest in a term life insurance policy instead of an endowment or whole life policy. This is to ensure that you can use the money you save on premium for your capital investments while also enjoying a life insurance cover to save in case of emergencies.

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