Best Term Insurance Plans

 How Much Rs 2 Crore Term Insurance Plan Will Cost You

buy a high cover of Rs 1 crore, Rs 2 crore or even Rs 5 crore by paying a fraction of the coverage amount as premium.

A term insurance plan is different from all other types of life insurance policies. While in all other plans, a portion of the premium goes into savings, in a term insurance plan, the premium is entirely towards the risk coverage.

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If you want to only buy protection, then a term insurance plan is the plan to buy from life insurance companies. The working is as simple as it may get-One pays a premium based on age, term and sum assured (life cover) and gets nothing on surviving the term. On death during the term, the nominee gets the sum assured.

The best part of term insurance is that the premium in them is low and even by paying a lower premium, you can get a high coverage. For example, someone age 35 can buy a term insurance plan of Rs 2 crore by paying approximately Rs 22,000 annually for 25 years. The actual premium will vary among insurers.

 © Provided by The Financial Express

Effectively, one can buy a high cover of Rs 1 crore, Rs 2 crore or even Rs 5 crore by paying a fraction of the coverage amount as premium. Term insurance plans are low-cost, high-cover plans to provide life protection to family members.

In addition to providing life cover in purest form, there are several other add-ons and variants of term insurance plans. Depending on the need, one may add them to the basic cover and customize the policy.

According to Aatur Thakkar, Co- Founder and Director at Alliance Insurance Brokers, here are some of them:

Terminal Illness Cover: The full sum insured is paid to the life insured when s/he is diagnosed with an illness wherein s/he would not normally survive beyond the next 6 months

Waiver of Premium: In case the life insured to suffer a permanent total disability, all future premiums are waived, but the policy continues as per the original terms of the contract

Rider facilities: The product should be able to address the needs of essential riders that must be made available. For example, Accident Benefit plus Critical Illness Benefit plus Disability Benefit

And, when it comes to choice of the insurer, in addition to the low premium that the plan offers, also consider looking at other indicators. "For a comprehensive Term Life Insurance, one must look out for the backdrop of the underwriter-Solvency Margins, Claim Settlement Ratio, AUM and customer base, persistency ratings & rankings on the IRDA Dashboard," informs Thakkar.

How Limited Premium Payment Term Insurance Plan Works

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The spread of the Covid-19 pandemic and its devastating impact on the lives of people is making many of them take stock of their finances much more seriously than before. The untimely death of the bread earner may leave a family financially stranded. One's life goals such as children's education, marriage, and home buying may also get derailed. The value of protecting loved ones has certainly increased in these times.

While matters of life and death may still be a morbid topic to discuss, the conversations around life insurance should not be brushed under the carpet anymore. Adequate life insurance coverage through a term insurance plan is the need of the hour.

How term plan works

Term insurance plans are low-cost, high cover plans i.E. By paying a few thousand rupees as premium, one can get a coverage of several lakhs, or even crores of rupees. Depending on one's age, period of insurance and the amount of coverage, the premium is usually required to be paid until the end of the chosen term.

For someone who is in their late 20s or 30s, financial responsibilities such as marriage, home buying, children’s education or any other life goals keep arising at different life stages. By age 60, most of these financial liabilities are expected to be met. But what needs to be ensured is that all these goals are safely and adequately met as and when they arise in one's life.

And, a term insurance plan with adequate coverage precisely does this – provides protection to family’s goals in the case of untimely demise of the bread earner. The life cover (sum assured) is paid to the nominee/beneficiary on the death of the policyholder anytime during the term of the policy. Now a days, Term Plans also provide for Return of Premium option i.E. One can get their premiums back at the end of the policy term if they survive.

Premium Payments

A Term insurance calculator can be a very handy tool to understand the estimated amount premium you need to pay for your term insurance plan. In order to ensure that the life insurance coverage continues, it is important that the premium is paid regularly and the policy is kept in force till the end of the policy term, which could be for the next 25-30 years or even more. Some term insurance plans provide coverage till the age of 85 or even 100 years.

While the importance of adequate life insurance has come to the forefront, Covid-19 induced job losses, pay cuts are making many individuals face a cash crunch.

Yes, it is possible through limited premium payment (LPP) term insurance plans. For those who may not be comfortable paying a premium for a longer duration, there are options available to pay for a limited period only.

What are limited premium payment term insurance plans

Paying premium in a term insurance plan for a limited period is a feature and does not come as a separate plan basis terms and conditions specified therein. As the name suggests, in a limited premium payment (LPP) option, the premium need not be paid until the end of the term. However, the benefits of the life cover will be available to the policyholder until the end of the policy term.

In a limited premium payment term insurance policy, the premium payment term is always lower than the policy term. For example, if you are 28 and wish to buy a term insurance plan till age 65, you can keep the premium payment term (PPT) as 5, 7, 10, or any other term lesser than the policy term as per options available under the product. Even if you pay for the selected PPT, the life cover will continue till age 65.

How is it beneficial?

The limited premium payment term plans come with their own share of benefits. Here are some of them:

Peace of mind– The future is highly uncertain, and the flow of income can be somewhat visualized over the next few years but not so over a longer period. By paying premium over the initial few years of the policy (using the LPP option) and meeting your commitment early on gives you freedom from worrying about premium payments as you age.

Helps plan other goals– Once you have paid the premium towards the term insurance plan (using the LPP option), you will get more space to commit future income towards other life goals.

Job loss or pay cuts concerns taken care of– As can be seen in the current Coronavirus pandemic, job losses, pay cuts and lockdown restrictions are putting pressure on managing household finances for both salaried and self-employed individuals. Any similar event or any other unfortunate situation in one's life may put your back against the wall. Using the LPP option, your commitment towards paying premium ends early on and any future exigency will not impact your life cover.

Works with riders– The life cover amount in a term plan is paid to the nominee in case of death of the policyholder. But one may acquire a critical illness like paralysis, cancer, heart attack, etc. Which may reduce the earning potential of the individual. Even in such a case, the premium towards the term plan needs to be paid regularly to keep the policy in an active state. Therefore, choosing the LPP feature and opting for health riders such as critical illness benefit provides exhaustive coverage to the policyholder.

Who should opt for a limited premium plan?

LPP plans may suit most buyers of term insurance plans and in particular will appeal to the following groups:

Self-employed: Unlike salaried individuals, the self-employed may not have a fixed and regular income to bank upon. By opting for LPP plans, they can be assured of a fixed life cover till the desired age and yet pay a premium for a limited period.

Those with irregular income: For many individuals, especially freelancers, artists, sportsmen and athletes, the source of income is erratic. At times, there will be a huge cash inflow while at other times, the inflow may be the bare minimum. LPP plans suit them the most given the irregular flow of income.

Anyone who wishes to avoid long commitment: In fact, anyone who wishes to avoid commitment to pay premium for a longer duration should opt for LPP plans. There may be several premium payment terms to choose in a term plan depending on product terms and conditions and one may decide based on one's financial situation.

Conclusion

LPP term insurance plans are buyer-friendly and come with several benefits to keep your financial position intact. If you haven't yet purchased a term insurance cover, the Bajaj Allianz Life Smart Protect Goal- A Non Linked, Non Participating, Pure Life Term Insurance Plan could be the go-to, comprehensive term insurance plan which comes with several premium payment options such as single premium, LPP, regular premium payment, and features such as return of premium [4], and more, including the option for additional riders. [1] Bajaj Allianz Life Smart Protect Goal – A Non Linked, Non-participating, Pure Life Term Insurance Plan offers you a 3 percent discount on online purchase. [2] The premium is as low as Rs 21 per day for Rs 1 Crore term cover [3] and offers protection against 55 critical illnesses [4]. It also comes with a child education cover. [4]

Buying a term insurance for adequate coverage will be your best gesture towards your loved ones. It will ensure that your family's life goals remain on track. It's time to shed off procrastination and buy a term insurance plan today, right from the comfort of your home!

 

References-

[1] Get multiple add-ons covers

[2] Discount is available for regular premium and limited premium payment frequency under all variants of this product.

[3] Above illustration is considering Male aged 25 years | Non-Smoker | Life Cover Variant | Policy term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | Medical rates | Annual Premium Payment Mode | Premium shown above is exclusive of Goods & Service Tax/any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only.

[4] Product feature/benefit mentioned above are dependent on variant

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Term Insurance: Ensure Sum Assured Covers Loans And Future Expenses

 © Ira Puranik Term insurance: Ensure sum assured covers loans and future expenses

Over the last year and a half, the realization about the importance of life insurance has grown rapidly. This is natural given the scale of the COVID-19 pandemic. The fear of being infected, and not being able to do enough for your family in case of an unfortunate incident, has become even more real during the second wave. At a daily average of over four lakh cases during the first week of May, the second wave saw the daily number of cases rise to four times the peak of the first wave.

In this backdrop, one aspect of life has become amply clear: the future belongs to only those who stay prepared for it. This is where a term life insurance policy comes in. While no one can disagree that life is priceless and a lost soul cannot be replaced, a term life insurance policy can make sure that your family can go on to live a decent life even in your absence. All you need to do is choose your nominee, pay a small premium amount to the insurer for a specific number of years and, in return, the insurer promises to pay a large cover amount to your family in case you die during that tenure. While there are various types of insurance products available in the market, term insurance offers comparatively much higher life coverage for the lowest premium amount. That is why it is among the most preferred and reliable life insurance options advised by most experts.

How to determine the right cover for you

While there is no standard rule for how much insurance coverage you should take, it is recommended that you have a coverage of 10-15 times your annual income. However, not every individual and family have the same requirements, nor do they live in similar circumstances. Hence, determining the term insurance cover that is suitable for your family is not a one-size-fits-all process. Your liabilities, current and future expenses, are the main factors that you must take into account while calculating the cover amount.

Current expenses and lifestyle

When buying term insurance, the prime purpose is to ensure that your family does not have to struggle financially in your absence. It is natural that you would want them to have the same standard of living, even in case of your absence. Apart from day-to-day expenses and utility bills, there are some other regular expenses as well that you need to consider such as the school or college fee of your kids, medical expenses of your parents, retirement planning of the spouse, and a lot more. To arrive at a rough estimate of the cover amount, you must take into account the current monthly expenses that you incur, as well as the number of years that your dependents would need a monthly income. At the same time, you must also consider the relentless march of inflation and incorporate it into your estimate.

Future anticipated expenses

No doubt, term insurance is a fool-proof backup plan that can help your family avoid a lot of financial hardship. Another powerful tool that can ensure a bright future for your children is quality education. Now, education is one aspect you would not want your children to compromise on in your absence as it can ensure that they lead decent lives and become financially independent. What you can do is estimate the number of years of formal education that your child would need and the cost of the same. This should form a major chunk of your life insurance coverage. You can also review it every few years as the number of years left for their formal education would decline. Besides education, there are also a few other future expenses that you must keep in mind, such as the marriage of your children, among others. Anticipating these in advance can help you plan better.

Covering liabilities

You would never want your family to be burdened by hefty EMI payments on loans that you may have sought for personal use, for buying an expensive car or gadget, or even to buy a house. Also, you would not want your family to sell your own house to repay the home loan and move to a rented place. So, when you decide on the cover amount for your term insurance plan, you must take into account for outstanding debt and increase the cover amount in the term policy that you wish to buy.

Estimating the exact amount of life insurance cover that you need is not an exact science. However, noting down your expenses, assets, and liabilities can surely help you understand what the future holds. Moreover, once you know that, you can plan for the same and ensure your family’s financial stability. Of course, you cannot predict everything, hence it is advisable to review your insurance needs periodically and make adjustments accordingly.