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Buying a Term Insurance Plan is a Good or Bad Idea?

dateKnowledge Centre Team dateJuly 07, 2021 views217 Views
Buy Online Term Plan | iSelect Star Term Plan

Our lives and the events happening in our lives are forever unpredictable. It can be prone to a harsh misfortune or critical illness that can instantly influence your economic stability. If the sole earning person in a household suddenly expires, the deceased's family members may experience some significant financial crisis.

The savings which the dependants possess may not prove to be sufficient to meet all their financial needs. Hence, under any such circumstances, a term or a life insurance plan can be beneficial. A term plan is a life insurance policy that individuals can purchase to safeguard their own life. A fixed duration and sum assured are always defined under the term plan. A term insurance policy guarantees this financial protection and sustains the family members to dispense with the financial loss if the earning member of the family dies untimely.

This collective sum provided by the policy provider can assist the dependants in setting off all the liabilities left behind the departed person and lead a well-disposed life.

Buying a Term Plan: A Good or Bad Idea?

A term plan extends insurance cover in the form of the mortality benefit to the nominee of the policy in case of unpredictable death of the insured individual. In the current times, buying a term plan is a great decision and has become essential because a term life insurance plan guarantees a secure and guarded financial future for people and their loved ones.

Along with financial protection to a person and his loved ones, a term insurance plan has plenty of other advantages like reasonable premium charges, additional rider advantages and copious more. This is what makes term plans a good investment option in tough times.

Here are some of the advantages of buying a term plan:

1. Huge Sum Guaranteed with Economic Premium

A term insurance plan is the most simple and purest form of an insurance policy. The most significant advantage of investing funds in a term plan is its ability to be pocket-friendly. Compared to many different life insurance policies, a term plan unquestionably holds the most economical premium amount.

Apart from this, one important thing that people must always bear in mind that it is always better to invest funds in a term plan at an early age. The main reason behind purchasing a term plan early is because the earlier you start investing in a term plan, the lesser premiums you will be obligated to pay and the higher the coverage amount.

2. Enhanced Flexibility and Reduced Losses

Another advantage of investing in a term plan is because these plans are highly flexible. In addition to this, it is more manageable for individuals to opt out of a term plan than an insurance policy based on the capital value.

Suppose a person is not in a situation to pay their premium instalment on time. The term plan will automatically be terminated after the grace period, and there will be no additional adjustment needed on the part of the insured person.

This makes it different from a capital value policy. The breach of premium payment will result in a significant loss as the banks, or the insurance provider will make various deductions even after termination.

3. Tax Benefits

A term plan further provides tax advantages within two distinct sections of the Indian Income Tax Act, 1961. A person purchasing a term plan will receive tax exemptions on the policy premium amount under Section 80C.

Furthermore, a person holding a term plan will also be eligible to receive maturity advantages under section 10 (10D) along with receiving exemptions on Return of Premium Plan (TROP).

4. Additional Rider Advantages

Buying a term plan can provide you with multiple additional rider benefits. You can easily choose a rider and opt for it as an add-on to strengthen your term plan and that too at the most nominal increment on the premium amount.

However, you must note that these additional rider benefits can vary from one insurer to another. Therefore, it is always advised to check all the terms and conditions related to the additional rider benefits mentioned in the policy and then make a prudent determination.

5. Terminal Illness Cover

People may undergo any critical or severe illness at any stage in their life. The medical treatment expenditures incurred towards these critical ailments could quickly drain all a person's savings. Hence, it is essential to be financially ready for such situations.

Suppose you have recently been diagnosed with a critical disease or think you might suffer in the future due to genetic history. In that case, it is always advisable to opt for terminal illness cover on your term plan. This terminal illness cover is readily provided with a term plan with a minimum premium increment, and it is always advisable to add this cover in a term plan.

Learn if you should take terminal illness cover with a term insurance plan?

With a far-reaching variety of term plans available in the modern market, people can always purchase a term plan that fits their specifications and requirements. A term insurance plan is the most dependable to guarantee that you and your family hold sufficient monetary coverage to tackle life's predicaments.

You can use an online term insurance calculator to ascertain the specific amount of term plan premium they will be expected to pay for the chosen plan.

Canara HSBC Life Insurance is a leading financial institution that grants the best term plans with various benefits like complete life cover till 99 years of age. Their iSelect Star Term Plan is deemed one of the most commendable term plans that comprise affordable premium rates, flexible premium payout, comprehensive coverage, and presenting people with an option to cover their spouse in this term plan.

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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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