Term Life Insurance

A term insurance plan is a life insurance policy that is purchased for a specific tenure (generally 10-40 years). Being a pure life insurance policy, a term plan provides only a death benefit and no maturity benefit.

During the tenure of the policy, if the insured individual passes away, the nominee receives the death benefit (sum assured). There is no element of savings in term life insurance and hence there is neither a maturity benefit nor a survival benefit under a term plan. The plan comes to an end when:

• The insured passes away, and the death benefit is paid to the nominee
• The insured outlives the policy term.

Mostly, a term insurance plan requires the policyholder to pay a regular premium at regular intervals. Term plans may also provide you with rider options like accidental death, critical illness, etc. so you can enhance the coverage of the plan.

The premium rate, as compared to savings plans, is relatively cheaper for term insurance. This is primarily because the plan is a pure life cover where the benefit is only availed if the insured dies during the tenure. In case the policyholder outlives the policy tenure, no benefit is provided. Term life insurance is one of the most popular life insurance plans as everyone wants financial backup for their family in case, they are no longer around for them.

A term life insurance plan can be purchased by anyone who is looking for a pure life insurance plan with affordable premiums. However, a term plan is highly recommended for any individual who has dependents. It may be parents, guardians, couples, business people, investors, self-employed, professionals, and retired individuals as well. Check out the list below for better insight:

• Retirees - It would be a wrong concept to assume that only those who have dependents should buy a term life insurance plan. Even those who are in their retirement phase can purchase a term life insurance plan. Because the benefit is given to the nominee, buying a term plan ensures that you leave an inheritance for your family behind


• Working people - Be it men or women, the working member of the family has different types of financial liabilities. Be it buying a new home or carrying expenses, the regular income of the family member is essential. In such a case, if any of the working members of the family dies, the family can be left in a financial crisis. But having a source of finances, through a term life insurance, means the family can use this amount to clear financial liabilities and lead a peaceful life.


• Parents - Parents are responsible for the various financial needs of their children. Right from their primary to higher education and living expenses, everything has to be well-managed, so the child gets maximum opportunities in life. However, the untimely death of the primary earner can leave the whole family perplexed and in grief. In such times, the benefits from a term life insurance plan can prove to be strong financial support.


• Couples - Term insurance can also be one of the most valuable gifts that one can give to their spouse. No matter if both or one of the spouses is earning, having financial backup gives a sense of peace and security to the other and acts like a helping hand in times of need.


• Youngsters - Having dependents or financial liabilities are not the only case scenarios where you can buy term life insurance plan. Even young professionals and entrepreneurs can purchase term insurance. When you buy term life insurance plan in your early days, the premium charge is low. However, as you grow old, the premium you may have to pay will also increase.


• Taxpayers - Term insurance is one of the easiest ways of saving on tax. All those taxpayers can buy term life insurance plans to avail of a tax deduction of up to INR 1.5 lakhs under Section 80C of the Income Tax Act, 1961. Apart from this, the death benefits of the term plan are exempted from tax under Section 10(10D) of the Income Tax Act 1961.


• Investors/business people - Those who are regular investors (like SIP investors) need to make regular investments in order to grow their money. The sudden death can lead to either termination of the investment or loss. However, with the benefits received from term insurance, the family can continue investing on their behalf. Even business people must invest in term life insurance to ensure that their business is not hampered even when they are not around


• Self-employed - Those who start a business on their own may avail themselves of loans from different sources. In such a case, if the person passes away, the family may be left with a lot of financial burdens. But if you have term insurance, the benefits received can be used to clear out financial burdens.


• People who have debts/ liabilities - During the course of life, there are several requirements, and for some of these needs, you may avail yourself of loans and debts. If you are someone who has liabilities and loans, it is always advised to purchase term insurance, so your family does not suffer the burden when you are no longer around. They can use the term insurance benefits to clear the debts and liabilities like home loans, car loans, etc.

A term insurance plan offers various benefits to the policyholder and the nominee. Check out the list below to understand the features of term insurance:

• Easy entry - Most term plans have a rather simple and straightforward eligibility criterion. Right when you reach the age of 18, you can purchase a term insurance plan. So, you do not need to wait any longer to provide financial security to your loved ones.
• No hectic procedures - The process of purchasing a term insurance policy is quite easy. You can buy the plan online or by visiting the nearest branch of the insurer, as per your choice. Most companies follow a quick and simplified claim settlement procedure as well.
• Get long-term protection - A term insurance plan provides you with coverage for a longer tenure. Until the plan matures, you can stay relaxed without worrying about your family behind you.
• Pay premiums as per your preference - The premium-paying tenure of a term insurance policy is chosen by the insured. You can pay the premium monthly, quarterly, half-yearly or yearly basis.
• Choose a sum assured - The sum assured is chosen by the insured. The higher the sum assured you pick, the higher your premium will be. So you can customise it as per your needs.

Under a one term life insurance plan, you enjoy three sets of direct benefits, that is, low premium, life cover, and tax-saving. Apart from this, there are several others to mention. Here is a list of benefits served by term insurance:

• Death benefits - The basic aim of term life insurance is to provide the nominee with a death benefit in case the insured dies during the tenure of the plan.
• Tax deductions - The premiums payable for term life insurance policy are eligible for tax deductions. If you are paying the term insurance premium, you can avail of tax exemption up to INR 1.5 lakhs under Section 80C of the Income Tax Act, 1961. The death benefit received is tax-free under Section 10(10D).
• Return of premium term plan (TROP) - Under return of premium term plan or TROP, you also get a maturity benefit. If the insured outlives the tenure of the policy, he/she receives a maturity benefit which is a lump sum amount equal to the premiums paid so far.
• Affordable premiums - The premiums charged for a term life insurance plan are quite affordable compared to other life insurance plans because term insurance does not have a savings element.
• High sum assured - You get a high sum assured for affordable premiums. The insured can choose the sum assured and pay the premium accordingly.
• Disability cover - The insured is also eligible to get cover against physical disability or any critical illness (as mentioned in the policy terms). However, the option of this built-in feature or adding such a rider can vary from insurer to insurer.
• Financial pillar for the family - A term life insurance policy acts as financial support for the family in case of the unfortunate death of the insured.
• Add-on benefits - Some of the term insurance also offer the option of add-ons. By paying a slightly higher premium, you can avail of wider coverage.
• Flexibility of terms - The insured gets the option of choosing tenure and the sum assured of the term life insurance policy. Accordingly, the premium is charged.

There are different types of term insurance plans that you can choose from. Check out the list below:

• Level term insurance plan
  A pure term plan is a basic plan that only provides a death benefit in return or regular premium payment. It does not include other benefits like illness coverage or maturity benefit. The premium remains constant throughout the policy.


• TROP (Return of Premium Term Plan)
  Return of premium term plan or TROP is a term insurance where the insured receives a maturity benefit if he/she outlives the policy tenure. All the premiums paid so far/lump sum maturity benefit is returned to the insured.


• Increasing term insurance
  As you move on in life, your responsibilities may increase as well. Under an increasing term insurance plan, one has the option to increase the sum assured at regular intervals. This way, your loved ones can deal with their growing financial liabilities.


• Decreasing term insurance
  As opposed to the increasing term insurance plan, if you feel that with growing age your liabilities may come down, then you can opt for this type of term insurance. At a predetermined age, the sum assured will decrease.


• Convertible term insurance
  As the name suggests, when you opt for a convertible plan, you have the option of converting a regular term insurance plan into a whole life or an endowment plan later in life. Such a plan allows you to deal with your changing financial situation.

Add-ons
By paying a higher premium, you can increase the coverage of your term life insurance. There are options for add-ons like critical illness, disability cover, etc. In such a policy, you get cover for mentioned health crisis along with a life cover.

Life remains an unpredictable journey, and you never know about the next turn. So, it is always better to purchase life insurance as soon as you realise it. A term life insurance policy is a pure life cover that is purchased with the intention to provide financial stability to your family/dependents if you are no longer around. Also, if you purchase term insurance at an early stage of life, the premium is low. Right when you turn 18, you become eligible for different types of term insurance plans. So, choose the one that suits you and ensure that your family and loved ones do not suffer a financial crisis amid an emotional crisis.

Before you purchase any life insurance policy, it is essential that you understand the eligibility criteria for the same. Anyone above the age of 18 years can apply for a term life insurance plan. It is most popular among earning individuals as their income is also accompanied by several financial liabilities. Check out the various eligibility criteria for a term life insurance policy given below:

• Age - Individuals between the age of 18 and 65 years of age can buy a term plan. The upper age limit may differ depending on the insurer.
• Policy tenure - The insured needs to purchase a term life insurance plan for a minimum period of 5 years (it is subject to vary depending on the terms of your chosen insurer).
• Nationality - Indian citizens and NRIs above the age of 18 years can purchase a term life insurance policy.
• Medical test - Sometimes, insurers require applicants to go under a medical test before purchasing a term life insurance plan.

The insurer has the flexibility of choosing the sum assured under term insurance. The premium is accordingly charged. The higher the sum assured you choose, the higher the premium goes. So, the first step is to realise your premium paying budget and then make the best deal out of it.

You can use the help of the HLV number (Human Life Value) to understand what amount of sum assured your family will need if you are no longer around. It tells you the future cost of your current expenses and liabilities. The HLV calculator is an online tool where you need to enter your age, annual income, the life cover you want to purchase, and details of your finances. The calculator will immediately calculate the particulars and give you a lump sum idea of the amount of cover you may need in a term life insurance.

A term life insurance ensures a lump sum assured payout to the nominee if the insured individual dies during the policy tenure. At the time of purchasing the term insurance, you can choose the payout option, and accordingly, the sum assured will be released to the nominee. The payout options can be either of these:

• One time/ lump sum amount payout - If you choose a lump sum amount payment, the nominee will receive the entire sum assured together as a death benefit if the insured passes away during the tenure of the term insurance.
• Staggered payouts - In case you feel your family is not entirely financially literate or they may not be able to manage so much money together due to some other reasons, there is the option to opt for a staggered payout of the death benefit.
• Increasing income option - Under the increasing income, the nominee receives some portion of the sum assured as a lump sum, and the remaining on a monthly basis for the next 10 to 15 years. Until the entire sum is released, every year the income increases by 10% to 20%.
• Monthly payout option - The income option releases about 50% to 60% of the sum assured as a lump sum. The remaining is paid out on a monthly basis until the entire sum assured is released to the nominee.

Are you wondering what is the need for purchasing term insurance? Well, it can be one obvious question for those who are new to a life insurance policy. There are several reasons that justify purchasing a term life insurance, like

• Your dependents - If you are one of the sole earners in the family, then it becomes extremely essential for you to protect the future of your dependents. In case of an unfortunate event, your family will not have to go through financial loss.
• Your assets under loan - You may have availed yourself of loans that are yet to be paid back. In such a situation if you are no longer around, your family may have to go through a hard time. However, with the benefits of term life insurance, your family can easily pay back loans and debts.
• Health protection - By adding a few riders to your term insurance, you can widen the coverage of the plan and several health conditions like critical illness can be covered under the plan.

There are certain facts and figures that you must check to get your hands on the best term insurance. So, before saying yes to the one, tick the checklists given below:

• ICR and CSR - ICR stands for Incurred Claim Ratio and CSR stands for Claim Settlement Ratio. ICR is the ratio of the net premium received and net claims settled in one policy year. It gives you an idea of the profit that an insurance company makes out of the total premium received. Try going for a company that has an ICR between 50% to 90%.
  On the other hand, a claim settlement ratio tells you the ratio of total claims settled out of the total claim raised. A high CSR, preferably above 90%, indicates that your claim will most likely be settled. So, make sure you check both


• Rider options - Check out the option of rider offered by the insurer in case you do not just want a base term plan. Try choosing a plan that offers riders that are most suitable for your needs.


• The sum assured Vs premium charged - The sum assured offered in return or the premium should be reasonable. Hence, make sure you go for a plan that best suits your need.


• Your budget - The best term insurance plan for you can be picked once you fix your budget and search for the one under it. Compromising your budget or exceeding it may affect other financial commitments in your life. So, try to go for a realistic plan.


• Your family's need - The sum assured can be chosen by the insured individual. So, know the needs of your family's future finances and plan accordingly. You should opt for a plan that offers maximum coverage and fits into your budget too.

While you can buy term insurance from a life insurance company directly, you would not be able to do thorough research on the different options that you have. On the other hand, when you choose SecureNow to buy a term insurance plan online, you can make a quick and easy analysis of all the different term insurance plans that are popularly available in the market.

You simply need to spare a few minutes and enter a few basic details, and in an instant, you will be able to glance through the most-suited options. You would not be able to check out the features each plan offers, but also see if the premiums fit into your budget or not. Therefore, when it comes to buying the best term insurance policy in India, you must surely give SecureNow a chance.