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Term insurance might be cheaper than you think

Term insurance might be cheaper than you think

term insurance might be cheaper than you think

Only 21% of Indians with a life insurance policy have a term plan. 70% of these people are of the view that term plans are only meant for those who serve as the breadwinner of the family. The reality, however, is that term insurance is one of the most basic and simplest forms of life insurance that offers complete financial protection to your dependants if you meet with any unfortunate event in the future.

Moreover, term insurance is cheaper than most forms of life insurance available in the market since it is a pure protection plan. It is designed to provide death benefits to your loved ones to help them meet their financial needs, such as your children’s education, loan repayment and maintenance of their own standard of living.

Let us take a look at what makes a term insurance plan so cheap and affordable:

1.Zero fund management charges:

A term plan has no investment component. It is a pure insurance product. A plan in which the money invested is linked to market movements requires regular monitoring and usually levies an additional charge for management of the fund. Term insurance has no portfolio, money management or administrative fees or charges since it is not an instrument of wealth creation. Hence insurers are able to offer competitive premium rates that you can choose from.

2.Limited by term:

One might hold the belief that owing to the low premiums, term insurance plans do not offer comprehensive coverage and only offer a low sum assured. However, this could not be further from the truth. A term insurance policy offers a high sum assured, even at low premiums. This is made possible since your term plan comes with a specific term attached, as opposed to a whole life insurance policy, which is taken for life.

3.Buy online:

Back in the day, insurance was sold through agents. However, today, you can easily purchase a term insurance plan online. These are 30 to 40% less expensive than their offline counterparts owing to little paperwork, elimination of intermediaries or agents and logistics. All this reduces the service and distribution charges of the insurance company considerably. This benefit is in turn passed on to the customers to help them avail of a policy online at affordable rates with quick processing and hassle-free purchase prices.

4.Compare online:

Not only does an insurance company offer you a premium calculator to help you determine the amount payable if you choose a term plan, you can also compare different plan options to arrive at a policy with benefits that suit your requirements. Comparison of different policies offered by market players can also be done online to arrive at one that suits your budget.

5. Age factor:

It is advisable to buy term insurance as soon as you start earning and are responsible enough to manage your own finances. This is because your age works to your advantage. Young, healthy individuals can get a policy with a much higher sum assured as compared to someone 10 years older at a much more reasonable rate. The earlier you purchase it, the longer you stay financially protected, and so do your loved ones.

6.Tax benefits:

A term insurance plan helps you save tax, thereby further lowering your financial outgo. As per Section 80C, you can avail of a tax deduction of up to Rs. 1.5 lakhs on the premiums you pay towards the policy. Apart from this, the death benefit paid out to your family to help them meet their expenses in the future is also tax-free under Section 10(10D). Although, this should not be the only reason to purchase a policy, however, it is incentive enough.

While aiming for the cheapest insurance should not be the goal, it is worth your while to give a thought to a term policy that you can purchase at a reasonable price and ensure the financial security of those dependent on you. The iSelect Star Term Insurance plan from Canara HSBC Oriental Bank of Commerce offers you comprehensive coverage at affordable premium rates along with riders to enhance coverage. Invest in a cost-efficient pure insurance term policy today to safeguard the future of your loved ones and nurture their dreams.

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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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