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How to Buy the Right Term Insurance Plan in 2021?

dateKnowledge Centre Team dateMay 18, 2021 views157 Views
How to Buy the Right Term Insurance Plan in 2021?

All of us have aspirations and long-term financial goals, and to achieve these we make a regular monetary contribution to build a corpus. This enables you to save a certain amount that would help you stay financially secured in the future. You may have to make a downpayment for your dream house or pay for a child's higher education. But have you ever wondered what happens to your family when you're gone? As life is uncertain and death is a harsh reality which you cannot evade, it's better to prepare for it in advance.

A term insurance plan acts as a cushion for your family's financial requirements when such a tragedy strikes. It's a unique financial solution enabling a family to continue with their lives in your absence. A term plan offers benefits like large cover at affordable premiums, additional riders, and many others. However, choosing the right term plan involves focusing on several features that would help you and your dependents more than other policies.

How to Choose the Right Term Insurance Plan?

1. Assess Your Needs

Before you start searching for the best term plans available, it is important to analyse and evaluate the coverage you need. The first step involves calculating the amount of coverage, which depends upon the number of dependents, their lifestyle and future aspirations. You may also add inflation as another factor in this list.

Right Term Plan

2. Premium Cost

Term insurance plans are the cheapest form of life insurance and they offer pure life cover. So, you should opt for term plans with the lowest expenses as this would translate into lower premiums for the same cover. For example, if you go for Canara HSBC Oriental Bank of Commerce Life Insurance iSelect Star Online Term Plan with a sum assured of Rs.1.5 crore for a term of 26 years, you will just have to pay Rs. 974 per month or Rs. 10,818 per annum. Also, determine whether you are purchasing an offline or online term plan. Buying a term plan through online channels is beneficial and more economical as you get to compare different policies on key parameters.

3. Critical Illness Riders

Besides death, there are other unfortunate events, like accidents, disability, paralysis and critical illnesses that can threaten the financial stability of your dependents. So, it is prudent to opt for term insurance with critical illness rider as a value-added cover. With this, you will get a lump sum amount in case you are diagnosed with any life-threatening disease.

4. Claim Settlement Ratio

The CSR is the ratio of settled claims against the total claims filed during a particular period: the higher the ratio, the better the insurer. Generally, the CSR of higher than 85 percent is considered good. It indicates that the company is doing well financially and settling the majority of the claims. With the CSR of 97.1 per cent in FY 2020-21, Canara HSBC Oriental Bank of Commerce Life Insurance offers exclusive benefits like swift claim settlement to take care of your loved ones when you're not around.

5. Additional Covers

Most good term insurance plans offer you an accidental death cover along with other benefits. You may also check for income benefits wherein your family members receive a regular income from the plan rather than a lump sum amount to fulfil their financial obligations.

6. Solvency Ratio

It is one of the major factors that enable you to find out the capacity of a life insurance company to survive for the long term. Again, the higher solvency ratio indicates that a firm can pay off its claims on time and survive in the long run. Make sure your insurer must always have a higher value of assets than liabilities like Canara HSBC Oriental Bank of Commerce Life Insurance has.

3 Quick Steps to Buy a Term Plan Online

You can buy a term insurance plan online at the ease and comfort of your home. You can research about the product and compare it to find the best available term plan before buying online. Here is a 3-step guide to buy term life insurance plan online:

1. Choose coverage amount, term, and riders

Before buying a term plan online, you must figure out the coverage you need. You must always buy a plan with adequate coverage so that your loved ones can manage the financial shock if you happen to pass away. The next thing that you need to understand is for how long you want to insure yourself. Some plans like iSelect Star term plan offers whole life option. You can insure yourself till you turn 99. Add riders like accidental death benefit, child support benefit and others to enhance your plan.

Learn more about whole life option.

2. Fill in your personal and medical history

When you decide to buy a life insurance policy, the insurers need to assess your personal and medical history. Fill in the application form and enter all the details that you are asked. You will also be asked a series of question on your existing health conditions. Ensure that you provide accurate information to avoid rejection of your application.

3. Decide the premium payment term and pay premium

Insurance companies are offering plans that have various premium payment terms. You can choose to pay the premium in a single bullet or for a limited duration of 5/10/15/20/25 years. Also, you can choose to pay the premium only during your working years i.e., till you turn 60. Once you decide the premium payment frequency, you will have to seal the deal by paying your first premium.

Learn which is cost efficient: paying premium monthly or annually?

When considering a term plan, do keep in mind is that not all insurance policies are the same. Some provide standard features, while insurers like Canara HSBC Oriental Bank of Commerce Life Insurance offer a host of invaluable features that would help you and your family in the long run. Choose an online term plan that suits you the best as per your financial requirements and circumstances to take care of your loved ones in your absence.

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Frequently Asked Questions (FAQs) for Term Insurance Plans

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 insurance 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 65 years of age. This is a term plan with return of premium option – that means all the premiums paid throughout the tenure will be paid back to you if you outlive the policy.

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 when you buy the best term plan in India.

If your key purpose is to give your Family financial protection, go for the best term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan. iSelect Star is a term plan with return of premium option. All the term insurance premium will be paid back to you, if you outlive the policy term.

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, the best term insurance plan pays a part of the sum insured to treat your disease.

Term life insurance plan 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 plan 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 insurance policy remains active until the expiration date.
  • Income Rider: This rider in a term insurance plan 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 insurance 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 the Best Term Insurance Plan?

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