How to buy the best term insurance plan in India, click to know more about it
Term insurance is not an expense, but the wisest investment you can make for your family's future. It is a silent promise you make to your family that "whether I am here or not, your dreams will not stop". So, don't put it off. Assess your needs today, compare different plans, and gift your family a secure future.
"Nothing will happen to me." - This is a line we all say to ourselves, especially when it comes to insurance. But life is full of uncertainties, and what will happen to our family in our absence? Will they be able to run their household? Will the children be able to complete their education? Will they be burdened with any debt?
There is a simple and affordable answer to all these difficult questions - Term Insurance.
It is not just a policy, but your biggest love and responsibility towards your family. If you think it is expensive or understanding it is rocket science, then you are wrong. Today we will give you A to Z information about term insurance - what is it, why is it necessary, how much cover should be taken, and what mistakes should be avoided while buying it. After this there will be no confusion in your mind.
What is term insurance?
Term insurance is the purest and easiest form of life insurance.
How does it work?
You pay a fixed premium (instalment) for a fixed period (such as 30 or 40 years). If you unfortunately die during this period, your nominee (family) gets a lump sum amount (called sum insured).
Why is it cheap?
There is no maturity benefit or investment frills in this. You just pay the premium to cover the risk to your life. That is why it is very cheap. A 30-year-old healthy person can easily take a cover of ₹1 crore at a premium of just ₹500 to ₹800 per month.
Term insurance: How much cover should be taken?
This is the most important question. There is no benefit in taking less cover and taking too much cover will make the premium expensive. Experts tell a simple formula for this.
At least 15 to 20 times your annual income.
Understand with an example
If your annual income is ₹10 lakh, then you should take a term insurance of at least ₹1.5 crore (10 lakh x 15).
Not just income, keep these things in mind too
Loans and liabilities
How much home loan, car loan or any other loan do you have? Add that to the cover amount as well.
Children's education
How much will the higher education of children cost in the future.
Lifestyle
Your family should be able to maintain their current lifestyle even after you are gone.
When to buy - 'The sooner the better'
The best time to buy term insurance is
'today'. As soon as you start earning, you should buy your term plan. It has two major benefits:
Cheap premium
The risk of diseases is less at a young age, so insurance companies offer policies at very low premiums.
Premium lock-in
Once your premium is fixed, it will remain the same for the entire policy period (30-40 years), no matter how old you become.
Understand the magic of 'riders', not just death benefit
You can make your base term plan even more powerful by adding some additional covers (called riders). Some important riders are:
Accidental Death Benefit Rider
If death occurs in an accident, the nominee gets an additional amount along with the base cover.
Critical Illness Rider
If you suffer from any critical illness (such as cancer, heart attack) listed in the policy, you get a lump sum amount for treatment.
Waiver of Premium Rider
If you become unable to pay premiums due to a critical illness or disability, all your future premiums are waived, but your cover continues.
How to choose the best term plan: 3 golden rules
There are dozens of companies in the market. To choose the best plan, definitely look at these 3 things:
1. Claim Settlement Ratio (CSR)
It tells how many percent of the total claims a company has passed. Always prefer a company with a CSR of 98% or more. IRDAI releases this data every year.
2. Solvency ratio
This shows the financial strength of the company. As per IRDAI rules, every company has to maintain a solvency ratio of 1.5. A company with a higher ratio is considered better.
3. Buy online or offline
Online plans are often cheaper because the agent's commission is saved. You can compare plans of different companies yourself and choose the best plan according to your needs.
Don't be afraid of medical tests, it is in your favor
Many people buy a policy without examination to avoid medical tests. This is a big mistake. By getting a medical test done, the insurance company gets to know your health condition correctly. This almost eliminates the possibility of claim rejection later.
Conclusion: Gift of a secure future to the family
Term insurance is not an expense, but the wisest investment made for your family's future. It is a silent promise that you make to your family that "whether I live or not, your dreams will not stop". So, do not postpone it. Assess your need today, compare different plans and gift your family a secure future.
Frequently Asked Questions (FAQs)
Q1. What is the right age to buy term insurance?
A:
As soon as you start earning, that is the best age to buy term insurance, as the premium is the lowest.
Q2. Why is the premium higher for smokers?
A:
Since smokers have a higher health risk, companies charge them higher premiums.
Q3. Will I get my money back if nothing happens to me till the end of the policy term?
A:
There is no money back in traditional term plans, but some companies offer 'Return of Premium' (TROP) plans, which have very high premiums.
Q4. Can NRIs also buy term insurance in India?
A:
Yes, most companies offer term insurance policies to NRIs with some conditions.
Q5. What is Claim Settlement Ratio (CSR)?
A:
It tells how much percentage of the total claims the company has paid in a year, a CSR of more than 98% is considered good.
