Term Insurance: Build your net worth with protection.
Term insurance is a type of life insurance policy that provides coverage for a certain period of time or a specified "term" of years. If the insured dies during the time period specified in the policy and the policy are active, or in force, a death benefit will be paid. Term insurance is initially much less expensive when compared to permanent life insurance. Unlike most types of permanent insurance, term insurance has no cash value. In other words, the only value is the guaranteed death benefit from the policy.
A term plan helps you prepare for such
uncertainties. ... The term insurance should be able to provide the family with adequate income in case of an unfortunate death. The tenure of the term
plan should cover the span that an individual intends to work. If you die
during the term, a death benefit is paid out. If you don't die during the term, the policy terminates at the end of the term. ... A major benefit of this
type of policy is that the premium money returned to you is completely
tax-free, as it is not considered income but simply a refund of premiums.
Type of Term Plans : Broadly speaking, there are some 4–5 variants of term plan insurance that are offered by insurance companies in India.
Level sum Assured Term Plan :
This is the simplest plan wherein if the Life Assured dies during the term of the policy, his nominee is paid the Sum Assured and the Sum Assured stays the same throughout the term of the policy. If the Life Assured survives the policy term, he gets nothing.
Increasing Sum Assured Term Plan:
Under an increasing sum assured term plan, the Sum Assured increases every year without any increase in the premium amount. The premium under an increasing sum assured term plan would typically be higher.
Decreasing Sum Assured Term Plan:
Under a decreasing sum assured term plan, the Sum Assured decreases every year while the premium stays constant. The premium under this option is generally lower than the other two Sum Assured options.
ROP (Return of Premium) Term Plan:
This plan is built extensively for people who typically think that if the calamity doesn’t occur during the policy term, then the coverage amount that they paid in the form of insurance premium amount would be lost. Hence, this plan is meant for such people. As the name suggests, if the Life Assured survives the policy term, he gets his premiums back. However, if the Life Assured dies during the term of the policy, the nominee gets the Sum Assured
Regular Payouts Term Plans:
These plans do not offer lump sum amount incase of death but it offers the entire sum assured amount payable to the nominee in Monthly, quarterly, half yearly or annually intervals.
Limited Premium Payment:
This Plan has limited period of premium payment and life cover goes beyond the premium payment for period one opts for. In unfortunate event, during the premium paying period or after premium paying period is over, but before the maturity of the Policy, the nominee gets the Sum Assured opted by the Insured.
Riders with Term Insurance
• You can also get critical illnesses cover - Besides protecting your family in your absence, new-age term insurance plans can also provide cover against critical illnesses. By paying additional premium, you can get a lump sum pay-out on first diagnosis of a critical illness like heart attack, cancer, kidney failure, etc.
• You can also get accidental death cover - You can get additional protection by attaching accidental death benefit to your term plan. With this benefit, your family will get a larger payout in case of your unfortunate demise due to an accident.
• Support In Case Of Disability - In term life insurance plans the insurance company waives your future premiums in case of permanent disability due to an accident. This ensures that the life cover continues, even if you are unable to pay the premiums.
Factors That Can Affect Life Insurance Premiums
3. Health History
4. Family Health History
25 times of your annual income
20 times of your annual income
15 times of your annual income
10 times of your annual income
Simple, quick and clear answer to this question is by calculating the Human Life Value .HLV is an easy-to-use numeric method of calculating the amount of Life Cover that you may need. The basic thumb rule that can be used to find out your HLV is as follows:
NRIs can buy term insurance policies during their visit to India, provided all formalities are completed during their stay in the country. For the purpose of allowing insurance, they would be treated at par with Indian lives.
Smoking has a tremendous effect on term insurance. It is believed that your expenses go beyond that of a pack of cigarettes. It goes on adding up in the form of medical expenses as well as insurance premiums. While applying for a term insurance policy, you will be inquired about the use of tobacco products in the last 12 months. The premiums may be considered marginally higher for smokers than non smokers.
The insurance company considers a lot of factors before deciding your premium. The main ones are - age, gender, personal and family’s medical history, geographical location, occupation, BMI index, and lifestyle.
Yes, deaths outside India are covered in term insurance plans, provided the insurance company is informed about the accident well in time, along with the required details. However, the company may reject the claim if the death occurs due to travelling to unsafe countries. Talk to Insurance Broker for finer details.
The duration of life cover cannot be changed once the policy is issued
Terminal Illness benefit pays out a lump sum amount to the policyholder if they are diagnosed with an end-stage illness and are expected to die within 12 months. This additional benefit provides cover for an unforeseen disease which is not curable.
Your plan will continue even after you become an NRI. Note that your term insurance won’t be valid for the first two years, if your status change is not intimated to your insurer. You need to update your KYC status as Non-Residential in all your existing policies. If you fail to do that, you won’t be able to renew your policy that you had once purchased when you were a resident. Claims will be settled in the account from where the premiums were being received. They can be denominated in both Indian and foreign currency.
There are two factors you must take into consideration while picking an insurance company – Affordable pricing and reputation in the market. While pricing is apparent, reputation depends on brand image, claim settlement ratios and quality of service a company provides. If you don’t have any preferences, we can help you pick one
There are numerous underwriting factors that play a vital role in determining increase in premium. Some of them are aspects such as severity of health condition, changing family history, chosen term and life cover have an impact on your premium
High Life Insurance Amount:
Term insurance plans provide a high life insurance amount at an affordable premium.
No accumulating Cash:
This is a policy where there is no payouts, accumulation or survival benefits which could accrue to the Policy Holder. The family gets a guaranteed SA incase of the unfortunate death of the Insured.
A guarantee on the premium for a defined amount of years which means the premium fixed at the time of buying the Policy it doesn’t change with the growing age.
- Tax Benefits: Term Insurance plans offer tax benefits on premiums paid under Section 80C. New-age Term plans with critical illness cover also offer additional tax benefits on premiums paid under Section 80D. You also get tax benefits under Section 10(10D) on the money that your family receives in case of an unfortunate event
• Life Insurance Claim Process:
The main purpose of taking an insurance policy is that it should come in use in times of crisis.
Death claim settlement process
Step One : Intimation to the insurance company about the claim.
The nominee should inform the insurance company as soon as possible to enable the insurance company to start with the claim process. The details required for intimation are policy number, name of the insured, date of death, cause of death, place of death, name of the nominee, etc. The claim intimation form can be obtained from us or even by downloading it from the insurance company website.
Step Two : Documents required
1. The nominee will be asked to furnish the following documents:
2. Death certificate
3. Age of the life insured (if not already given)
4. Original Policy document
5. Any other document as per the requirement of the particular insurer or case-related.
6. For early death claims i.e. the claim that has arisen within three years of the policy is in force the company will do an extra investigation to ensure it is a genuine claim. They might do the following:
>> Check with the hospital if the deceased was admitted to the hospital.
>> In case of an air crash confirmation from the airline, authorities check if the policyholder was a passenger on the plane.
>> In case of death from medical causes, the insurance company will ask the hospital to provide doctor's certificate, treatment records etc If the policyholder dies due to murder, suicide, accident then police FIR report, post mortem report etc shall be required.
Step Three: Submission of required Documents for Claim Processing
For quicker claim processing, the nominee must submit complete documentation as early as possible and any other documents that the company needs to pass the claim.
Step Four: Settlement of Claim
As per the regulation 8 of the IRDAI (Policy holder's Interest) Regulations, 2002, the insurer is obligated to settle a claim within 30 days of receipt of all necessary documents including extra documents sought by the insurer. If the claim requires further investigation, the insurer needs to complete its procedures within 6 months from receiving the written intimation of claim.
• Maturity & Survival Claims
The payment made by the insurance company on completion of the term of policy or maturity date is called maturity payment. The amount payable consists of sum assured plus any bonus/incentives.
The insurance company informs the policyholder in advance by sending bank discharge form for filling details in it. The form needs to be returned to the insurance company with an original policy document, ID proof, Cancelled Cheque and copy of passbook.
• Rider Claims:
Different riders can be attached to the base life insurance policy for enhanced protection. The riders can be an accidental rider, critical illness rider, waiver of premium rider etc. For different riders, different claim proceedings are required. Some riders may be valid with the death claim like accidental death rider or some riders need to processed standalone like a waiver of premium rider in case of disability.
For Critical Illness Rider- necessary medical documents such as first diagnosis report, Doctor's report, etc are required. For Accidental disability rider - a copy of FIR, Certificate of disability by the treating doctor, doctor's report etc are required.