If you are a young professional who is planning finances, you are certainly thinking about some sort of cover for yourself or your loved ones.
Have you given a thought to term insurance? It may just be the kind of cover you need.
Term insurance is a simple and easy-to-understand kind of insurance plan. It is used to describe a policy which provides coverage for a specific period or term.
One term you are bound to hear often is sum assured. Sum assured is the amount that is payable to the nominee you choose while buying a term insurance policy. A term plan is often called a pure protection plan because it promises benefits to the nominee in the unfortunate event of the insured person’s death during the policy’s term. A term plan is different from traditional insurance in the sense that there are no maturity benefits.
Because of its simplicity, many young professionals choose term insurance. It is a straightforward kind of insurance cover that you can opt for when you are just starting out. You can choose the term you want: 5,10, 15 or even 20 years.
If you are wondering what is the age at which you can buy a term plan, you should know that the entry age is typically 18 years and the maximum age is 65 years.
A term plan is also more affordable than a traditional insurance scheme or a whole life policy. The premium you pay for a term plan is lower than the one you pay in a conventional insurance policy. It is appropriate when you are a young professional to choose a term insurance policy as it doesn’t dent your finances too much, while you also stand to gain a lot of peace of mind because you have chosen to protect your loved ones.
Term plans are also ideal for young people because of the flexibility they offer. If you wish to exit a term insurance policy, you just have to stop paying premiums. The policy ends, and you don’t gain any benefits. You can always renew your term plan, though.
You can claim a tax deduction on the premium you pay towards the term plan under the Section 80C of the IT-ACct, 1961.
Critical illness cover: This is a rider that helps you avail a certain pre-set amount if you have been diagnosed with any kind of critical illness.
Waiver of premium: This rider helps you protect your policy in case you have failed to pay your term insurance premium. The reason for non-payment could be a financial emergency or loss of job. A young person who is working in the gig economy or uncertain economic conditions may opt for this rider.
Accidental death benefit: This rider helps when the policyholder meets with an accidental death; the nominee gets the sum assured and the additional amount thanks to this rider.
Income rider: The family gets a monthly income for a specified period of time in the unfortunate event of the insured’s death.
Total/Permanent disability rider: This rider helps if the policy holder suffers from a lifelong disability because of an accident.
Return of premium: This rider helps the insured get back the premium paid on surviving the term of the policy. In a term insurance policy, there are no benefits if the insured survives the term but with this rider, the insured gets back the premium paid over the period.
All these term insurance riders can be bought at an additional cost. It helps to choose the most relevant policy and use it to suit your personal requirements.
Term insurance policies can be bought online; choose the iSelect Star Term plan from Canara HSBC Oriental Bank of Commerce Life Insurance and get multiple options such as whole life coverage, and inclusion of spouse in the same policy, among others. You also have the option to add coverage by way of accidental death benefit, child support benefit or accidental total and permanent disability benefit. There are also other riders available to make your term plan more comprehensive. So, get a term insurance plan when you are young and ensure peace of mind as you focus on other areas of your life.