We need to realise that having a family is a blessing. It is often that we take our time with them on granted, depend on them during dire straits and yet fail to express our gratefulness. Therefore, it is our responsibility to shower our love upon them and provide them security, not only for the present but also for the future. Go ahead fulfilling your part of the responsibility for your family as you buy a family life insurance.
Why buy life insurance?
You might wonder, “Why to buy life insurance?” Firstly, life insurance is not an option anymore; it is a necessity. And just like you cater to every basic need of your family members, make sure you invest in a plan that shall cover them for life. Secondly, we all know how uncertain life can be. Imagine how financially broken your family will be after you as they take over every day-in-day-out expenses, meet your liabilities and still send the children to school/college. Just as to make sure that, your family is left with enough finances and resources to carry on just as planned insurance is necessary. Lastly, who knows what the future holds? You might just have to deal with huge contingent liabilities. For instance, what do you do if you get diagnosed with a life-threatening disease anytime in the future which requires treatment and medication costing a fortune? What do you plan to do in case you are disabled partially or fully in the future and no longer can you earn? In both cases, your family has to bear the ordeal of meeting the lump sum expenses out of the pocket, which can break you and your family financially. Investing in life insurance with additional raiders from an early age such as critical illness or accidental death or disability will save you and your family from the distress.
There are various online term insurance plans for a buyer to check out and compare before zeroing on a plan. In this article, we will talk about term insurance plans and their features followed by what to look out for in a term plan online.
What is term insurance?
Term insurance is a type of life insurance plan, which provides financial coverage to the insured up to a certain period of time, which is usually the policy term. In the event of death of the insured within the term of the policy, the sum assured is paid as a death benefit to the nominee. The payment may be lump sum or lump sum amount and monthly payment both combined.
However, in case the insured survives the tenure of the policy, no coverage is guaranteed. The insured either has to extend the coverage of the policy with a whole new payment condition, or he shall not receive any returns at all.
Features of term insurance
Term Insurance Plans are made to ensure your family remains stable financially even after you. The amount received by your family as a death benefit in the event of your death during the policy term will make sure their financial needs are duly met, and the basic course of life is not affected.
Term insurance has the following features:
- The term of the policy – The policyholder gets to choose the term of the policy while buying the policy, the minimum term being 5 years. Policy tenure can range from 25 years to whole life (for monthly premium payment) depending on what policyholder opts for. He policy term ranges from 5 years to 15 years for the ones who are willing to pay a single lump sum premium. A smart choice is to go long-term with your term plan as the monthly premium equals your coverage in the long term. Therefore, you get the same amount of coverage as your investment.
- Entry age – Anyone who is 18 years of age is eligible to take up term insurance. The maximum age limit is 65 years. Investing in term insurance for a long-term will make sure you have wider coverage, and therefore, one must take up a term insurance plan at an early age. Opting for term insurance at an early age is also beneficial because the premium amount is relatively low then and it increases with age. Therefore, choosing the best term insurance at an early age will ensure the premium amount doesn’t change much as you grow older.
- Choice of the plan – Term insurance offers buyers myriad options to choose from. In case you decide to pay for a single life insurance policy, it will provide coverage for your life during the policy term. A single life policy is usually taken for the breadwinner of the family. A joint life policy covers both the policyholder and his/her spouse throughout the policy term. One may also take up a family life insurance which covers for an entire family under a single premium rate.
- Tax benefits – Life insurance plans premiums are eligible for tax deductions under Section 80C and any income received from investing in life insurance is labeled tax free under Section 10 (10D). Also, according to Section 80D premiums paid for Critical Illness Benefit are exempted from Income Tax.
- Maturity age – Generally, the maturity age for term insurance plan is 65-70 years but the insured gets an option to go for a higher maturity age as well. However, taking an insurance coverage for lifetime with cost the insured more, for old age comes with obvious heath risks and therefore the coverage against such health risks is relatively costly.
- Survival Benefits – The policyholder is credited with the survival benefits in case he survives the policy term. The survival benefits include sum assured along with other accumulated bonuses.
- Flexibility in payment of maturity amount – Term insurance plans offer various payout options which provide the benefit of flexibility to the policyholder. The two types of income plans to choose from are: Fixed Income plan which pledges to provide the policyholder and his family with a fixed income every month and Increasing Monthly Income Plan which helps the policyholder grow his income by 10% each year and so increase your monthly payment proportionately.
- Raiders available – It is always a smart choice to take up additional raiders which increase the coverage. Having an increased coverage will rule out the possibility of being under-insured and also spread out the area of coverage. Raiders require you to pay a little extra from your pocket and are available as:
- Premium Waiver Raider- Under this addition raider the policyholder is free to avoid paying any premiums in case he is critically ill or disabled in the future.
- Critical Illness Raider- A typical life insurance does not pay in case the policyholder is diagnosed with any life-threatening illness in the long term, and thus, the policyholder has to bear huge cost of hospitalization, diagnosis, and treatment from his own Instead, paying a little extra for a critical illness waiver will go a long way and cover for expenses resulting from diagnosis and treatment of any critical illness that may show up later in life.
- Accidental Death Benefit Raider- This raider hikes the death benefit in the event of the death of the policyholder by accident. Pay a little extra and add-on an accidental death benefit raider to your regular insurance plan and your family shall get increased coverage at the time they need it the most.
It is necessary that you know all about the features of a term insurance policy that you can benefit from. It is also compulsory to know about the different types of term insurance plans so as to know which plan would cater to your future financial requirements the best. Do your calculations before your zero in on any kind of policy. Learn how much you need to invest in order to be able to meet future financial goals, what it costs each month and the coverage that provides you. Check a number of websites and go through their products before you buy them. Read their claims and get free quotes from a number of companies. You may also do your research and read review for their products or talk to your financial advisor to know more about what life insurance investment policy you must take up.
Insurance is an integral part of your life and therefore you must include it at the earliest. Taking up a life insurance is the best value for money as it provides you and your family with the guarantee of security even after you. While buying a life insurance policy, do not forget to compare different polices from a number of insurance providers with the help of an online comparison tool before you buy. It is best to take up policies which come with a free look period within which you can review the terms and conditions and decide if you want to continue with the policy or not. Secure what comes in the future for your family and take up a term insurance plan online.