Term Insurance

A term insurance policy is a pure protection life insurance. If the policyholder/insured passes away during the policy's term, the nominees will receive a sizable payout from the term insurance policy. The financial benefit from the policy is the death benefit, which you can select when buying the policy as the sum assured. In the event of an unfortunate death, the term life insurance cover will provide a large sum of money to the beneficiaries so that they can:

1. Look after their regular monthly living expenses.
2. Pay off any financial liabilities, such as a car loan or housing loan.
3. Invest money towards important life goals such as children’s education, marriage, and building a retirement fund for the spouse.

Consider a term insurance policy the most conventional kind of insurance. In most term insurance plans, the premium remains fixed throughout the policy term, based on the age and risk profile at the time of purchase. It also includes coverage for the increased mortality risk and additional levies imposed over an extended time. This is how it functions:

• Choosing the cover: You need to buy a policy based on various factors such as age, income, lifestyle habits, needs, inflation etc.
• Adding Required Benefits: Add needed add-on covers, such as critical illness and premium waiver, and select the duration of the policy.

• Claim Details: Fill in the correct nominee details so that they don’t have problems while claiming the sum assured.
• Buying the Policy: Choose how frequently to pay the premium for these policies - single pay, limited pay or regular pay.

There are several reasons to buy a term policy. The most basic type of life insurance is a term plan, which has reasonable rates and provides coverage for a predetermined amount of time.Throughout the policy period, it provides both financial security and life insurance. Besides safeguarding your life, the following are reasons why you should consider buying a term plan:

Insurance experts recommend buying term insurance plans covering 15-20 times your annual income. For example, if your yearly salary is ₹8 lakh, a term insurance plan must include a minimum ₹1 crore term plan. Human Life Value (HLV) is a scientific method to calculate your life insurance needs.

• Age: Younger adults can generally pay premiums for a longer duration and are usually charged lower premium rates. Older applicants may face higher premiums due to higher health-related risk.
• Current Cost of Family: Each family has its lifestyle and expenses. The amount needed to cover those regular expenses will vary from family to family. You don't want your family's lifestyle to suffer if something happens to you. Hence, you must consider the current expenses to ensure you buy a term insurance plan with the right sum assured.
• Education: Your child’s future depends on your savings. Term insurance allows you to protect your child’s future even if you are not around. You don't want your children's education interrupted due to financial problems. Calculate the sum assured that covers children's education and buy the right term insurance plan.
• Wedding: Financial issues may impact your child’s marriage. If you are concerned about your children's wedding and want them to have it the best, whether you are there or not, you must consider it while calculating the sum assured. The best term life insurance plan helps you at every stage of life – no matter what.
• Premium: You should calculate your ability to pay the premium. The premium amount must be more comfortable to pay so that you won't think of continuing with your term policy. Also, choose the right premium payment mode based on your finances. A term insurance plan offers multiple premium payment options that you can choose from.

Yes, buying term insurance online is safe. Buying an online term insurance has the following advantages:

• Knowledge at Your Fingertips: You may find all the information you need to buy a term insurance plan online by visiting the website. You receive everything, including the ability to add riders and eligibility.
• Safely Monitor Premiums: One of the key advantages of buying term insurance online is transparency and convenience in managing policy details and payments. You can easily track policy payments, renewals, premium due dates, and other pertinent data.
• Economical: Buying term insurance online is inexpensive. You save significant money because you have many options from many insurers.
• Online Insurance Plan Comparison: Comparing several insurance plans online is one of the best things about online term insurance. By comparing, you may select the finest term insurance plan.
• User-Friendly: With a user-friendly experience, the technology helps people make wise selections. The straightforward approach makes it simple to buy a term insurance policy online.

A term insurance plan is one of the essential financial tools in your life. You must buy term life insurance coverage if you have dependents or relatives who would suffer financially and depend on you. 

• Claim Settlement Ratio: The number of claims the company covers out of the claims filed.
• Solvency Ratio: Insurer's capability to meet obligations. It should be at least 1.5.
• Customer Experience: An excellent customer experience ensures smoothness during the policy.
• Benefits of Term Plan: Select the company based on the various benefits it offers.

The duration of a term plan depends on when you see yourself fulfilling all your goals. Choose the duration based on your and your family’s future needs. Consider these factors when deciding on the duration of a term insurance policy.

1. Financial Liability: Your financial liabilities will help you decide the policy terms you need. For instance, if an individual has a 10-year loan, the term insurance policy needs 10 years.
2. Dependents: Considering how long your loved ones will be financially dependent on you will help you decide the terms of your policy. Term life insurance policies help your dependents pay their expenses in your absence.
3. Large Expenses: It is a large one-time expense in the future. For e.g., if your child is 10 years old and you buy term insurance to provide coverage until their marriage or education, the policy duration could be 20-25 years.
4. Age: You should buy the best term plan at a younger age but for a longer duration. If you are 30 and opt for a 10-year plan, it will expire at 40. There are fewer chances that you will need coverage before this age. 

There are different types of term insurance plans that you can buy. Here’s a list of term insurance plans to choose from that may help you secure the dreams and aspirations of your loved ones.

1. Standard Term Insurance Plan:

A standard term insurance plan pays a fixed sum regularly for a specific amount of life cover until retirement age. It is also called a level-term plan because the sum assured and policy premiums do not change throughout the policy's tenure.

For example, if you buy a ₹ 1 crore term insurance plan for 30 years at 30, you may need to pay about ₹ 10,000 per year as a premium. You will pay the same premium regularly for the next 30 years, and your coverage amount will remain the same throughout the term of the insurance policy's tenure. Once you complete the 30-year tenure, the term insurance plan will simply expire.

2. Whole Life Term Insurance:

A whole life insurance plan allows you to use your term cover as a tool of wealth transfer to the next generation. The unique feature of the whole life plan is that the cover continues till the age of 99. Thus, the benefit payout from this term life insurance plan is almost certain.

For example, you purchase a ₹ 1 crore term insurance plan for your whole life and choose to pay till 60. The term insurance plan will cover your family in case of early demise during your working years, like the standard term insurance plan. After retirement, the plan will pay the benefit even in case of natural death. However, if you survive the term of the policy, i.e., you attain the age of 99, the policy pays the entire sum assured to you.

3. Increasing Term Insurance Plan:

An increasing term life insurance plan is similar to a standard term plan with one unique difference. The sum assured grows every year by a fixed percentage of the base sum assured.

For example, assume that you buy an increasing term cover with a ₹ 1 crore base sum assured. The life cover will grow at a rate of 5% per year. In the second year, your total life cover will be ₹ 1.05 crore, in the third, ₹ 1.1 crore, and so on.

The growth only stops in the following three cases:

• The term insurance plan expires; that is, the policy tenure is over
• A claim is made on the policy.
• The total available sum assured becomes 200% of the base sum assured; i.e. the cover started with ₹ 1 crore and is now ₹ 2 crore.

4. Decreasing Term Insurance Plan:

A decreasing term plan is a term insurance where the life cover and sum assured continue to decrease over time. Such term insurance plans are usually linked to a long-term loan and protect the borrower’s family from the borrower’s early death. When linked to a loan scheme, the tenure of this term insurance plan is also limited to the tenure of the loan. The sum assured declines as per the principal loan balance.

For example, Rahul buys a decreasing term insurance policy with a sum assured of ₹ 1 Cr and a decreasing rate of 5% per year. If he dies in the second year of the policy, his family will receive ₹ 95 Lakhs, which is ₹ 1 Cr less 5%.

5. Joint Life Term Insurance Plan:

This term insurance plan allows you to add your spouse under the same cover. This addition is also applicable to a homemaker spouse. The biggest advantage of buying the best term plan – jointly is that the surviving spouse may not need to pay the premiums to continue their life cover after a claim. If you are looking for a smart term plan that covers you and your partner, then iSelect Smart360 Term Plan is your go-to option, as it allows you to add your spouse to the same policy. Another aspect is that you can manage a single policy far more easily. You can select any option while searching for the best term insurance plan.

6. Convertible Term Insurance Plan:

Convertible term plans are those that you can convert to another life insurance plan after buying. Usually, you can convert this term plan to a whole life or guaranteed savings plan. The conversion window could be limited to the first few years of purchase. What plan the convertible plan can change to is also decided by the insurer and is limited in some senses.

For example, you bought ₹ 50 lakhs of term insurance at 25. Before reaching 30, you decide to use whole life insurance with added benefits. When you convert the plan, the premium and sum assured are adjusted to suit your needs.

7. Group Term Insurance Plan:

Group term life insurance is a popular employee benefit for many companies today. Insurance helps employers secure their employees’ families financially, helping the workforce focus and relax about the safety of their family’s future.

Group term insurance is a type of life insurance in which one contract covers a whole group of people. Typically, a policy owner is an employer or business similar to a trade union, and the policy includes employees or team members. Group-term insurance is often provided as part of a comprehensive employee benefits package.

This is a win-win deal for both the employer and employees. Also, if you do not have any other insurance, a group term life insurance will offer a basic safety umbrella.

Depending on your financial goals, you can choose either a term plan or a whole life insurance plan. Each of these plans will offer different benefits as follows:
 

When buying the best term insurance plan in India, conducting thorough research and assessing your specific needs is crucial.

• Evaluate the Coverage Need: Start by evaluating your financial situation, future obligations, and the lifestyle you want to secure for your dependents in case of an unforeseen event.
• Compare the Policy: Understand the coverage amount required to support your family and account for outstanding debts, and daily living costs. Compare different insurance providers regarding factors like premium rates, claim settlement ratios, and customer reviews.
• Align Your Needs with Coverage: Pay attention to policy features like riders and add-ons to tailor the plan to your unique requirements. Additionally, take note of the policy duration and whether it aligns with your long-term financial goals.
• Consult Experts: Consult with insurance experts to gain insights into the terms and conditions of various plans. Ensure that you make an informed decision that provides comprehensive coverage for your loved ones. 

When you're young, you're more likely to find cheaper premium insurance because your mortality risk is minimal. You may also have additional debts, liabilities, and financial obligations later in life. As a result, it is preferable to purchase a term insurance policy when you are young, preferably in your twenties. As soon as you start your first job, you should purchase term life insurance plan. Premiums increase as you get older. As a result, the sooner you buy - the better. As you become older, you get closer to your life expectancy, which increases your insurance costs.

Conclusion

Term insurance plays a crucial role in protecting your family’s financial future at an affordable cost. By selecting the appropriate sum assured, policy duration, and riders, you can ensure long-term financial stability for your dependents. Evaluating factors such as claim settlement ratio, tax benefits, and premium affordability helps you select a term insurance plan that aligns with your life goals and responsibilities.