Although beautiful, life has its ups and downs. And while no one knows what the future holds, planning for it is something that’s important. Leaving one’s family high and dry without a financial backup is everyone’s nightmare. This is especially true when you are the sole breadwinner of your family. Therefore, securing yourself and the needs of your family is an important part of future planning. This is where the concept of life insurance comes into play.
However, if you are looking for a plan where a minimum amount of premium earns a large sum assured, then term insurance plans are the perfect choice for you. Such plans ensure that in the event of you passing away, the beneficiary of your policy gets a hefty sum assured. Therefore a term plan acts as a financial backup for your family in your absence. This plan, as the name suggests, generally comes with a stipulated timeframe.
Here are a few things you should know before investing in term insurance :
The premiums charged on this kind of a policy are generally much lower than other plans. This is because, unlike a whole life insurance, this policy acts merely as a protective cover rather than an investment option. There is no survival benefit, in case the insured lives past the policy’s maturity. There are a few plans that have the option of the insured getting back the premiums paid. However, these plans usually come much higher premiums.
To be eligible for a term plan, you need to be above 18 and below 65 years of age.
If the need arises, a few term policies give you the option to convert them into a whole life insurance or endowment plan with minimal or no charges.
If you are unable or forget to pay a premium by the due date, there’s still hope! First, check online to find the status of your policy. Most of the policy contracts offer a grace period of 30 days. Such an arrangement gives you additional time to pay your premiums after the due date rather than the policy being considered as lapsed.
Surrendering a plan
If you wish to exit from or surrender your term insurance plan before maturity, you can easily do so. An exit charge will be levied depending on the policy terms. However, you will not have to pay any charge after five years.
Under section 80C of the Income Tax Act, 1961, all premiums of up till INR 1 lakh under this policy are exempted from taxation. Also, the claim received by the beneficiary is tax-free.
Choosing a term plan
There are a couple of things you need to keep in mind while selecting a good term plan, such as:
- Comparing different insurance companies and their offerings
- The reputation of the insurance provider you’re choosing
- Getting a quote for a term insurance plan, which includes the required coverage amount as well as the premium amount to be paid
- Inflation influences on the premiums you pay and the coverage benefits
At Aegon, we provide a variety of term insurance plans to choose from:
iTerm Insurance Plan
This plan comes with two death benefit options. In the first option, it pays 100 percent of the sum assured to the nominee at once. In the second option, the nominee gets 1.2 percent of the sum assured on a monthly basis for 100 months. The plan offers life cover till 80 years of age.
iTerm Plus Plan
This comprehensive and cost-effective product allows you to choose from four different plan options based on your needs. It offers you coverage as long as 80 years of age and gives you an option to cover about 10 critical illnesses as part of its basic plan or 36 critical illnesses as part of its enhanced plan. Apart from this, it also lets you increase your life coverage depending on the stage of life you are in.
iReturn Insurance Plan
As part of this plan, you are returned all the premiums paid towards your policy at the end of its tenure if all goes well. Apart from having an inbuilt terminal illness benefit, this plan also waives off all future premiums in case, you are diagnosed with a terminal illness.
Easy Protect Plan
This plan pays your nominee a monthly sum of INR 10,000 for the next ten years, in case of your demise. Additionally, it doesn’t require you to undergo any medical tests when you avail of the plan.
A term insurance is a great tool to secure the future of your loved ones. Choose the plan that suits your needs the best. However, the key here is to look for policies that offer you not only low premiums but also comprehensive protection you can fall back on.