Are you about to buy a term plan? Here’s what you need to know about it.
One of life’s greatest ironies is that while everything remains the same for a long while, everything changes in the blink of an eye. You are left with no other option but to become a hopeless bystander to the various twists and turns life subjects you to.
But though you have no control over what life has in store for you, you can certainly remedy the financial repercussions. For instance, you can buy online term plans to mitigate the financial risk of a loss of income in your absence. Term insurance adequately protects your loved ones from an uncertain future by providing a large corpus to pay for their needs.
Being prepared for the future is easier when you buy an online term plan[1] – but be aware of these 5 most important facts first:
1 Term plans have the most affordable premiums. Any experienced financial advisor will tell you that investing in a term insurance policy is worth your while in more ways than one. The term insurance policy premiums are amongst the most affordable in India, while the sum assured is amongst the highest across all insurance products in the country[2]. It is better to take the term insurance policy when you are quite young – you might be unwilling to spend more money on an expensive policy, but you will also require life coverage. The term insurance plan provides sufficient coverage to your loved ones without unduly burdening your finances.
2 There is no maturity benefit in the term plan. Most people looking to buy life insurance policies are unhappy to know that term plans do not offer a maturity benefit of any kind. What this means is that as the policy holder if you outlive the plan tenure, then you do not receive the benefit of getting the paid premiums back. The underlying premise of the term plan is that it offers protection to your loved ones in your absence – the corpus is meant to substitute the income lost due to your sudden absence from your family’s life. Thus, the high sum assured amount (Rs 1 crore or above) is useful for your family’s needs in the future – children’s education and weddings, spousal support, household maintenance, repaying unpaid debts, etc. The sum assured is passed on to the nominee after the policy holder’s demise while the plan is still in force.
3 But someterm insurance plans have different features than others[3]. Increasing demand for more flexibility in the term plan features has led to leading term insurers relaxing some of them. While some insurance providers return the premiums paid at the end of a pre-decided premium term (while keeping the policy in force for the entire tenure), others offer flexible pay-out options to the policy holder’s family. For instance, the policy holder can assess the family’s future needs and decide on a monthly, quarterly, half-yearly or annual pay-out. This contrasts with the lump sum pay-out after plan termination, that most insurers followed as a norm earlier.
4 You can buy the term plan online.Leading insurance providers not only offer well-rounded term insurance plans with value-added benefits, they also sell their plans online[4]. When you buy the term plan online, you can fill out the term plan application online and submit any supporting documents asked for. Depending on the insurance provider you work with, you may have to undergo a medical test at the nearest medical facility that the insurer directs you to. Some insurance providers do not insist on a medical test to complete the purchase process. Apart from the convenience of buying the policy online, you must note that the premiums on online term plans are also priced lower. Since operational costs over the Internet are much lower, insurers are pleased to pass on the savings to customers. Since you buy the online term plan directly from the insurer, the premiums are priced lower because the insurer does not pay a broker to process your paperwork.
5 Term insurance benefits your loved ones[5]. In conclusion, it must be underlined once again that term plans are not meant to monetarily benefit policy holders. They are meant to safeguard the policy holder’s family in case of the former’s absence and loss of income. Though you may be absent from their lives, their daily needs will go on unabated and these can be met with a term insurance plan. Term insurance provides a way for you to protect your loved ones even from the beyond.
[1]https://www.policybazaar.com/life-insurance/term-insurance/articles/best-term-insurance-plans-in-india/
[2]https://www.avivaindia.com/term-plan/aviva-iterm-smart
[3]https://economictimes.indiatimes.com/which-term-plan-is-best-for-you/tomorrowmakersshow/47297825.cms
[4]https://instalife.avivaindia.com/InstaLife/AvivaiTermSmartLandingAction.do?_ga=2.161691326.301322134.1530063662-10075251.1521600212
[5]https://economictimes.indiatimes.com/tdmc/your-money/plus-and-minus-points-of-term-life-insurance-when-should-you-buy-it/tomorrowmakersshow/49269769.cms
