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A beginner's guide to term insurance

Sudeep lives a carefree life. The only goal he has in mind is to travel the world. He works hard so he can travel. He is constantly scouting online for cheap flight tickets for his next excursion. His Instagram profile is filled with beautiful pictures of his expeditions around the world.

He thinks he's got his life figured out, until this one day his college hosts a reunion party. Sudeep heads to the venue, ready to charm his friends with his travel tales. Little does he know that he's in for a surprise himself.

Twenty minutes into the reunion, he realises everyone is talking about their future, their investments, buying a house, building a family, etc. so he drags his closest friend Kabir to a corner of the hall and disses the 'nerds' who aren't doing anything 'exciting' with their lives.

Sudeep : l"Dude, why are these people discussing insurance and investments? They need to get a life!"

Kabir : "I don't find anything wrong with being smart about your finances and securing a financially stable future for your family."

Sudeep : [taken aback]: "No way! When did you become one of them?"

Kabir : "I'm the same person I was back in college, just more responsible. I believe it's time for us to start planning for the future."

Sudeep : "Future? Really? It's been just five years since college, dude!"

Kabir: Don't blame you for not taking your financial responsibilities seriously. When we're in our 20s, life can seem exciting and overwhelming. Though we spend most of our time working to excel in our career - and later to support a family - it's easy to overlook the need for buying insurance to safeguard the financial future of our family. But let me ask you this: You love to take risks every step of the way, don't you?"

Sudeep : "Oh yeah! Life would be too boring without any risks."

Kabir: "Is there any thought that's ever held you back from taking any hasty decisions?"

Sudeep : [thinks hard]: "Well, sometimes I have second thoughts about my actions that could affect my family in any way."

Kabir: "So, if your family's wellbeing makes you think twice about your decisions, why not take a wise step to ensure it? By insuring yourself, you get much-needed peace of mind that your family will be taken care of even if you're not around."

Sudeep : "Okay, that might make sense. But to be honest, I am intimidated by even the mention of insurance. So I've never really researched about it."

Kabir: In that case, you can start with something as simple as a term insurance.

Sudeep : [baffled]: "I don't even know what that means. What is term insurance?"

Kabir "Term insurance is simply a type of life insurance in which you are provided with a cover for a certain number of years. To put it simply, if you purchase term insurance for yourself for 15 years, you will have to pay a monthly or annual premium for those 15 years. In case of an unfortunate incident, your family will receive the sum assured by the insurer."

Sudeep : [dubiously]: "Okay but aren't insurance premiums too/content.?"

Kabir : "High? Absolutely not! Term plans are extremely affordable, making them ideal for people like us. I bought a term plan last year for Rs 1 crore at a monthly premium of less than a thousand bucks. We spend far more than that on clubbing every week!"

Sudeep : "Seriously? I really was living under a rock, wasn't I? Are there any more features of term plans I must know of?"

Kabir : "Yes! With term plans, you get plenty of benefits."

Also Read : What is Term Insurance

Benefits of term insurance

Flexibility of paying premiums:
As per your budget and convenience, you can choose to pay your premiums annually, semi-annually, quarterly, or monthly.

Flexibility to choose policy term:
With most term insurance policies, you get to select the policy term, which could be anywhere from 5 to 40 years.

Multiple payout options:
Term insurance can be paid out in a number of ways. You can opt for a lump sum payment, lump sum plus monthly payment, monthly income for a fixed term, or monthly income till the end of the policy term.

Tax benefits:
Tax breaks can be availed of based on the prevailing provisions under Section 80C of the Income Tax Act, 1961

Spouse cover:
Many insurers offer an option to cover your spouse within your policy.

Increased cover:
As you move on in life, your responsibilities are bound to increase. Most term insurance policies provide you with an option policy inception to increase your cover as your responsibilities increase over the policy term.

Click to use : Term Insurance Calculator

Optional built-in cover:
Term insurance plans offer you the option to cover accidental death and accidental total and permanent disability.

Kabir : "Okay, I guess that's enough gyaan for one evening!"

udeep: "Thanks, Kabir. I'll be sure to look up term insurance as soon as I get home. Since you seem to have become an insurance expert, is there an insurer you would recommend?" The ideal choice

Kabir : "My research tells me that iSelect Smart360 Term Plan by Canara HSBC Oriental Bank of Commerce Life Insurance is one the best and cheapest term plans available online. The premiums are as low as Rs 365 a month. Not just that, it allows you to customise virtually all aspects of the cover you are opting for - be it the terminal illness cover, spouse cover. You also get to choose the coverage option (level or increasing)."

Sudeep : "Wow, that sounds like a great deal!"

Kabir: "Indeed! So, are you also becoming a - what was the word you used - nerd?"

Sudeep :[sheepishly]: "Haha! I no longer feel it's nerdy to think ahead anymore."

Kabir :[grinning]: "Be a trapeze artist, live your life freely, follow your dreams. Just ensure that a safety net is in place."

Sudeep : "I promise I will, but only if you stop with your analogies!" It's time to wind up the reunion. Sudeep bids his friends goodbye and heads home. The next day, true to his word, Sudeep makes one of the wisest decisions of his life and buys a term plan to secure his family's future. Why don't you?

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