What is term insurance?
Term insurance policy is the purest form of life insurance that provides financial security to your family when the policyholder dies. The policyholder is insured for a specific period of time, lets get to know more about term insurance policies, their importance, and how to choose a policy.
Who should buy a Term insurance plan?
Any individual who is above 18 can buy term insurance. Policies also have other benefits so that any individual can invest in them. This helps in the financial planning of the investor by returning maturity benefit during the event of any uncertainty. Other benefits of the term insurance plan are discussed below.
Young people seeking financial constancy.
The premium of any term insurance policy is low when bought at a young age. As young people who age between 20 and 30 years have less financial indebtedness, they can preferably invest in this policy.
Financial planning for newly married couples
Financial commitments increase for an individual after their marriage. They might have already taken home or vehicle insurance. If any uncertainty occurs for the breadwinner the financial stability of the investor gets disrupted. A term insurance plan can be a great support as it comes with a death benefit.
Financial support for a family
When an individual reaches the age of 40 or above his financial commitments increases even more than before. They have to manage their child’s education and start to save money for settling their children. When the jobholder dies at this point, it creates huge financial insecurity in the family. Term insurance at this period is very much advised by our financial consultants.
Retirement planning.
An average individual retires at the age of 55 and is also at high risk of death. Any uncertainity at the age of 55 should not leave your partner in trouble. Even though term insurance could not bring back life, it could provide great financial support for your partner.
What are the Benefits of a term insurance plan?
Below are the benefits a policyholder receives for a term insurance plan.
- Term insurance has a Low-cost premium.
- Policyholders pay for a specific period making it cost-effective.
- Term plans can be customized to investor needs.
- Nominee receives sum assured during uncertainty.
- Policyholders can avail themselves of tax benefits.
- Critical illness can also be covered over term insurance.
- Policyholders also get covered for accidents.
- Additional benefits can also be added with riders.
Let understand the benefits in detail.
Affordable premium
The term insurance covers a specific period, hence can be afforded at less cost. Wherein the whole life insurance policy has to be paid for a longer period. In terms of insurance policies, the premium is even less when bought early. When bought through CapsInvest the premium can be bought with further discounts.
Cost effective
Insurance is mostly proffered for financial protection; most individuals’ financial commitments end at 55 years. The policyholder only pays for the specific term period making it cost-effective. The policyholders get financial protection and spend on actual needs.
Customizable
Term insurance plans are highly customizable, this directly reflects on the premium amount. Customization like – Increasing the death benefit, adding benefits, Changing the payment period can be made. Being customizable makes this policy the most preferred investment for an individual.
Death benefit
If the individual faces any uncertainty the dependants receive a sum assured. Sum assured is the cover chosen by the individual while buying the policy. The dependants receive the sum assured when the policyholder dies of uncertainty.
Income tax benefit
A policyholder can also avail of tax benefits under section 80C for the premium of the policy. The sum assured received by the dependants are also eligible for tax benefits under section 10 (10D).
Critical illness coverage
If the policyholder wants to be insured for critical illness the same can be offered with term insurance. Now, the dependants are eligible for the sum assured if the policyholder dies from a critical illness.
Accidental death coverage
Same as critical illness coverage, here the policyholder gets insured for accidents. The dependants of the policyholder receive sum assured when the policyholder dies by chance.
Rider benefits
A rider is an additional benefit that can be added to a term insurance policy. Other riders include Waiver of premium rider and income benefit rider where the policyholder can customize the payment of premium.
How to Choose the Best Term Insurance Plan?
An investor should take an informed decision while making an investment. Term insurance being one of the important investments, individuals should consider the below-discussed points before choosing a plan.
Buy early
You can get an affordable premium by buying a term insurance policy at a young age. As the plan starts early the premium amount is also less compared to the number of payment years. As an individual gets older the policy gets costlier because of health knottiness.
Financial consultant
Financial consultants are finance professionals who have a great understanding of insurance and other investments. They can understand your financial needs and suggest a suitable policy. This helps you save time and choose the best policy.
Claim settlement ratio
The number of claims settled among the filed claims is called as claim settlement ratio. A good claim settlement ratio which is 95 percent and above is advised. This helps in a hassle-free settlement of claims.
Understanding the policy
The policyholder should understand the term insurance policy clearly before purchasing. The premium of a policy has to be paid periodically, it can only be canceled at a cost.
How to choose term insurance cover?
- Decide the amount of death benefit you require.
- Calculate the number of years to be insured.
- Choose the pay-out options (lump-sum, Lump-sum and monthly income, only income)
- Add only the required riders.
- Increasing cover makes premium cheaper, always prefer that.
- Purchase under MWP (Married Women’s Property Act)
- Speak with a financial consultant.
How to reduce term insurance premium?
Paying a low premium for term insurance is a saving that an individual can make. Here are a few things that you can do to reduce the premium amount.
Unhealthy habits
The term insurance covers the life of a person. It is critical to consider the same when deciding the premium for the policy. If the person has unhealthy habits like smoking or drinking the premium will be high. It is a fact that people with unhealthy habits tend to die sooner than healthy people.
Age
As discussed above, the age of a person impacts the premium the most. The younger the policyholder is the lesser the policy premium will be. It is better to take life insurance at a young age to have a less premium amount.
Gender
Gender has also become a factor that impacts the policy premium. It is acknowledged that females tend to live longer than males. Thus, the premium for females is lower than for males.
Profession
When a profession has high risk, the premium also increases. Professions like Stunt masters, racers, and athletes have a high premium as their risk of death is high compared to an average individual.
How to buy term insurance online with CapsInvest?
Buying a term insurance policy online is an easy process, compared to the traditional method.
Fix an online appointment
Fix an appointment with a financial consultant to understand the investments and to get basic knowledge.
Convey your needs
The best term insurance policy is the one that best suits your needs. Once you convey your needs to the financial consultant, you can receive various investment options.
Choose the policy and make an online payment
Once you find a suitable policy make the payment and get real-time tracking on the mobile application.
