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3 Things to Know before Buying a Term Life Insurance Plan

dateKnowledge Centre Team dateMay 12, 2021 views157 Views
3 Things to Know before Buying a Term Life Insurance Plan

If you want to seriously take care of your wealth and family, you need to start with a serious financial plan. However, while you take the first few steps towards planning, you cannot hope to leave your family financially exposed. So, what can you do to ensure financial safety for your family while you perfect the plans for them? When you start searching for financial instruments, the first thing you may come across is a – term life insurance. This is one of the most popular life insurance plans that people are buying to secure the future of their family by paying affordable premiums.

However, before you decide to buy a term plan online, here are 3 things that you must keep in account to choose the best one available:

1. Right Time to Buy

Ideally, an insurance policy should be bought soon after you start earning. Another reason to buy term insurance at a young age is the low premium value in comparison to life insurance. However, just in case you have missed the best time to buy a term cover, the second-best time is now. The crux of the matter is term insurance is a financial need, not a goal or a choice. Without term insurance cover, your family may suffer a financial and social setback in case anything happens to you.

So, once you have started to take care of their wellbeing and goals, term insurance will give you peace of mind.

2. Growing Term Insurance Cover

Another thing you need from your term insurance cover is the ability to grow with your life, especially if you are an early buyer. Of course, your present income will not always remain the same, as well as your lifestyle.

Your term insurance needs to keep following the trajectory of your personal financial growth. Thus, to keep your family adequately covered, you will have to choose one of the following options:

1. Buy a new term plan every few years or after a major financial change in your life

2. Buy a term plan which can grow as your life grows

Buying a new term cover every few years has a few drawbacks. One, you will need to complete the application process each time including the medical check-up, and two, your premium cost will increase each time you add a new life cover.

However, if you have the option of increasing your existing life cover policy, you can avoid the tedious application process and save money. iSelect Star term plan from Canara HSBC Oriental Bank of Commerce Life Insurance gives you the following two options to avoid buying a new policy:

  • Continuous growth option: The sum assured keeps growing every year at a fixed percentage until it becomes double its original value.
  • Life-Stage Growth Option: You have the option of raising your life cover after the following life events:
    • Marriage
    • Childbirth
    • Purchase of your first house with a home loan

While you must adopt the first option at the time of purchase, the second option is always available to you under a normal iSelect Star term plan.

3. Additional Covers you Need

While term insurance is important, there are other risks that your insurance should cover you from. Fortunately, you can add these additional covers to your term insurance plans including the iSelect Star term plan:

  • Terminal Illness Rider: Provides financial support to your family in case of diagnosis of a terminal illness like cancer, renal failure, etc.
  • Accidental Death: Accidental death can increase the financial burden on your family of recovering your body, or hospital expenses. Thus, adding an extra amount is helpful.
  • Accidental Disability Cover: Disability can affect your capacity to earn money. So, while you get back on your feet your term cover should continue. This rider allows a premium waiver in the event of a severe disability.

If you need more time to explore different options and make up your mind, start with the Saral Jeevan Bima. Then find the term insurance plan that suits your family‘s needs perfectly.

Get a Saral Jeevan Bima Cover

Saral Jeevan Bima is a standard term life insurance plan launched by IRDAI to serve the need for financial safety. The USP of this plan is that no matter where you buy this plan, the features and benefits are going to be the same.

So, you can get this plan even before you have time to search for other term insurance plans. Other features of this plan include:

  • Accidental death cover during the 45-day waiting period
  • Zero exclusions to the death claim except for suicide within the first 12 months of the policy
  • The identical premium for the same sum assured (the difference will be there due to individual risk factors such as occupation, smoking habits, etc.)

The plan does not provide other riders and covers. So, you will still need a basic health cover and Mediclaim to ensure financial support during a medical emergency.

Once you have secured the basic life cover and health covers for your family, spend some time learning about term insurance options. Here are a few details to help you start.

Is it Worth Buying a Term Insurance Plan?

Term insurance is an inexpensive alternative to take care of your family's financial needs in case of your untimely death. The term insurance offers a large financial cover for a long period such as 30 to 40 years. However, you might ask if you need a better and bigger term insurance cover since you already have a Saral Jeevan Bima.

Once you have planned your family’s goals and needs, you will get a clearer picture of why Saral Jeevan Bima was only a small part of it. Here’s what your term insurance cover needs to provide to your family:

  • Adequate funds (or a long-term regular income) to take care of household expenses
  • Funds to meet or pay off ongoing debt
  • Sufficient investment money to meet important future goals such as child’s higher education, marriage etc.

If you are the primary financial decision-maker in the family, you need to get a term insurance cover that can take care of all three. Adequate term insurance cover is 10-15 times your annual income. Generally, by any estimate, this much life cover is sufficient to take care of your family’s most important goals and needs.

Also, if you encounter other important life goals for your family, you can invest using life insurance plans like ULIP and savings plan. This way you can ensure the goal achievement and keep it covered from your untimely demise as well.

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Frequently Asked Questions (FAQs) for Term Insurance

A person can only purchase a term insurance plan till the age of 65 years, and they can choose the risk coverage for up to 99 years of age. One can easily buy the best online term plan between the age of 18 to 65 years.

This being a term plan doesn't offer any payout after maturity or expiration date.

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 70 years of age.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, a term plan pays a part of the sum insured to treat your disease.

Term insurance riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term policy remains active until the expiration date.
  • Income Rider: The rider ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to Ask while Buying a Term Insurance?

  1. 1. Amount of premium you have to pay based on your age, habits, education, and monthly income
  2. 2. The total number of benefits covered in the term plan. Do they include benefits that you care about the most?
  3. 3. How to save money on tax if you pay for the term plan?
  4. 4. Do they offer regular income options?
  5. 5. Can you change the coverage and premium in the future?
  6. 6. Does the claim consider valid if death occurs outside India?
  7. 7. Which kind of death is not covered by insurance?
  8. 8. Can NRIs take term insurance? If yes, what are the conditions?
  9. 9. Does the term insurance plan have a cash value if you decide to cancel the policy?
  10. 10. Under what circumstances can a term insurance plan be cancelled?
  11. 11. Can I pay the premiums online or make electronic payments?
  12. 12. What will happen to the term plan if the life assured starts smoking after purchasing the policy?
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