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Easy Guide to Buying Term Life Insurance

Easy Guide to Buying Term Life Insurance

Easy Guide to Buying Term Life Insurance

When buying term insurance online, a term insurance calculator must be your go-to tool for calculation of a basic premium to begin with. Having a basic quote according to your age, gender and income etc. will help you decide how much term insurance cover you need and how the additional benefits may work later. In short, you must start with using an online term insurance calculator to make sense of the term or life insurance you are purchasing.

So, here’s a quick guide of all the information required for term insurance application:

Personal Information

In the first step, most of the times you will need to only provide your personal information like name, age, smoking habit, contact number, e-mail and annual income.

  • E-mail is important: You should be careful with the e-mail ID and annual income entries as some insurers may e-mail the application ID to you. You will need this ID to access your saved application again if you cannot complete it in one instance.
  • Income Defines the Maximum Eligibility: Your annual income for the life insurance calculator refers to the annual take-home income and not CTC. This is the income which will define your maximum life cover eligibility.

You may also need to select the policy term in this stage, which gives you the first idea of your annual or monthly premium for the cover. This amount is the estimate premium for your base term insurance plan.

Select Policy Term & Premium Payment Term

Now is the time to decide how long you wish to continue the life cover. Typically, it would be until the retirement age. But in the times of home loans and uncertain future, continuing the cover for a little longer could be better for the family.

Irrespective of your policy term, your premium payment term can be shorter and may end much before retirement. However, a shorter premium payment term will increase your regular premium size. So, keep an eye on the premium amount you will need to pay. The common premium payment term options available are single one-time payment, regular payment as long as the policy term, and limited pay, where you pay for a lesser duration of time but the policy benefits continue beyond.

Additional Information & Plan Selection

In this step, you will need to enter information about yourself in detail. The form might require you to enter your location of residence, type of occupation, family details, health conditions & income etc.

  • Existing Life Insurance Cover: If you already have life insurance cover, you can enter here and see whether it affects your eligibility for the new cover. Usually, the insurers would try to keep the maximum life cover of an individual up to 20 times the annual income.
  • Secure your Life Stage Goals with Level or Increasing coverage options:

    1. In the case of level term insurance your life cover remains the same throughout the policy term. However, you can choose to increase your cover after specific life events like marriage, childbirth, etc.

    2. Increasing term cover will increase at a fixed percentage every year, until your total sum assured under the plan grows by 50% of the base cover.

  • Choose a plan option that suits your needs:

    1. Life cover with the return of premium: In this cover, the entire premium you pay for the policy will come back to you upon surviving the policy term.

    2. Life Plus or Whole life insurance cover: Whole life plan refers to the 99 years cover, which continues until you hit the 99 mark on your years. Once you do you can receive the sum assured as maturity benefit. In the meanwhile, the policy covers your family against your demise.

Select Additional Benefits

After your existing life insurance information, you have the option to select add-on covers like – accidental death and disability cover, child support cover etc. With iSelect Star you do not need to purchase a separate critical illness cover as it offers inbuilt coverage for terminal illness, along with the usual term insurance death coverage.

You can also select a life cover for your spouse, under the same policy. If your spouse is also employed you can select an adequate life cover for her, if not the cover is limited to a specific amount. This life cover can also be level or increasing.

Selecting Benefit Payout Options

This is one of the most important steps when buying a term insurance, because this determines how your loved ones receive the policy amount in your absence. Here you get to decide whether your family receives the entire life insurance benefit in a lump-sum payment or also receives a regular income.

You can also divide your total sum assured between lump sum payout and regular income. Remember your family will need both:

  • Regular income to run the household and meet their immediate needs, and
  • Lump-sum to pay-off liabilities and save for financial goals

Review and Premium Payment

Once you have calculated your final premium based on all the added benefits and covers you can review your choices. In this step, you will be presented with a summary of everything you have selected. If you are satisfied with your selection go ahead and pay the premium.

Remember that this premium is subject to change during the underwriting process basis of your personal details and health conditions. However, it is most likely to remain a number close to what was quoted.

Medical Checkup & document submission

Now, this is the verification stage, where you require under going a few medical tests depending on the need, and submitting necessary documents for verification. This is the final step before a policy decision is made by the life insurance provider. The life insurance company may modify your proposal on the basis of your personal risk profile and financial status.

Life cover being a personal protection plan will be different for everyone. The initial premium, however, is a generic premium estimated for a group of individuals. Thus, changes to final proposals based on individual conditions are a common occurrence. So, don’t worry and secure the life cover for your family.

Speak to an insurance specialist now!

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