TERM INSURANCE

While we always want the best for our loved ones, there is also a chance of an uncertain mishap that may occur. Ensure your family’s future and financial independence even after you are gone, with an insurance plan. A life insurance cover is a good way to be ready for the future. Let us walk you through some of the basics to solve all your doubts. Let’s begin with Term Insurance. 

What is Term Insurance?

Let us introduce you to one of the most basic life insurance plans that you can opt for. A Term Insurance is defined as a type of life insurance that provides the insured with a protection cover for a certain period of time. If the insured dies during that time period specified in the policy and the policy is active, or in force, then an amount as death benefit is paid.  It thus offers you financial protection against the “cover” amount. This cover amount is decided basis many factors such as your age, health of the insured (or the policy holder), level of income, life-stage, and other such factors.

So how does term insurance work? The insurance company charges a fee (known as the premium) for a fixed period (also known as the tenure). During this tenure, in case of an unfortunate death of the insured, the insurance company will pay out the value of the death benefit or sum assured to the family or nominee. In case the insured survives through the tenure, the insurance company makes no payout. Thus, a term insurance helps you to plan for every uncertainty for you or your loved ones  

You can even opt for a higher cover when going for a term plan by including riders which can help increase the utility of the term insurance plan. The critical illness rider, for example, entitles the term insurance policy holder to a sum assured on being diagnosed with a critical illness. Besides this, you can include many other riders such as – accidental death benefit, loss of employment cover, disability cover, and waiver of premium cover, among others. You should select riders based on your specific needs to make the life cover more relevant and comprehensive.

Types of Term Insurance Plans

Sr.No.

Type of Term Insurance Policy

Features of the specific term plan 

1

Level Term Insurance

a common variety where the premium amount and life cover remain constant throughout the term of the policy

2

Decreasing Term Insurance

When the life cover decreases over time

3

Increasing Term Insurance

When we adjust the sum assured in accordance with the rising cost of inflation

4

Return of Premium

When the total premium amount, is refunded to the policyholder, if he/she survives the tenure of the term insurance policy

Why should you buy Term Insurance?

Will you buy an out of budget smartphone only because it’s camera is good? Or a car only after considering the mileage? You would generally research all the available features and cost of the product and finally choose something that is closest to your requirements.

Similarly, when it comes to term life insurance, it may be a good idea to know all the reasons you can buy a term plan for, so that you buy a cover that is best suited to your needs.

Here are few important reasons why you should buy a Term Insurance:

  • Financial Stability - Knowing you have a term insurance plan not only provides you the confidence to take calculated risks in life, but also provides you with peace of mind and a sense of stability. It prepares you for any future uncertainties and liabilities that may arise.                                                 
  • High Life Cover – Technically, there is no limit for the Sum Assured level that can be provided. If you fall under the underwriting norms of the company, you can avail very high levels of sum assured. So, be it coverage of Rs. 5 or Rs. 50 lakhs or Rs. 5 crores, a term plan would allow you this flexibility. In case the financial underwriting is possible, there ideally should would be no maximum limit curtailing your choice.                                                                                                
  • Low Premium - Good news there! The premium of a term insurance policy is generally lower than that of other insurance products. This is because it is the most basic form of policy available. It is also because a large part of the premium is calculated on the principles of probability and is contributed by multiple policy holders.                                                                      
  • Flexibility with Riders - In addition to death, in case of any other unfortunate event such as detection of critical illness, meeting an unexpected accident, or loss of income from the earning member of the family, the term insurance policy can come to your rescue. Always consult your financial advisors about riders that you may want to include in your term insurance policy. These may come at an additional premium.
  • Flexible as per your need - Each of us has specific financial goals. A simple term insurance policy can help you plan for your life goals. These could be providing for your old age post retirement, saving for your children’s education and weddings or even paying off unexpected dues. Most of these goals can be protected by investing in a well-planned term insurance policy. Also, as we grow older our life goals keep changing from education, to marriage, to providing for our family. A life insurance cover can be changed to adapt to each of these needs.                         
  • Lowest Claim rejection – In case of a term insurance,
    1. If the information provided to the insurance company is accurate and
    2. Supported by proper documentation there is a low chance of the claim being rejected by the insurance company.                      
  • Tax benefits - One can avail tax benefits under the Income Tax Act, Section 80C on the payment of premium amount up to a limit of Rs. 50 lakhs. In addition to this, the death benefits paid to the nominees of the policy holder are tax free. But there are some instances when pay-out by insurance company will be counted as taxable income. Therefore, do take the help of a financial advisor for understanding the relevant tax regulations at the time of purchasing an insurance policy.

iTerm

iTerm is the term insurance plan we offer. It is an online term plan which secures your family of the cover amount you choose against a monthly or annual premium. Look no further if you want to assure your loved ones of cost effective protection. With an option of life coverage till the age of 100 years, the plan also provides you the flexibility to choose the death benefit playout:

  • As a lump-sum payment, or
  • As fixed monthly income for 100 months, or
  • As a combination of the above

What’s more? It also has an option to increase your life coverage as per your increasing life stage requirements and have the option of an in-built terminal illness benefit, additional optional coverage against Accidental death, Critical illness, Women specific Critical illness & Disability.

Here is an example of how the plan works:

Mr. Abhay (Age 30 years, Non-smoker) opts for Aegon Life iTerm Insurance Plan. His plan details are:

  • Total Sum Assured: Rs. 1 crore
  • Lump-sum Sum Assured: Rs. 60 lakhs
  • Income Benefit Sum Assured: Rs. 40 lakhs
  • Policy Term: 50 years (coverage till age 80 years)
  • Premium Payment Term: 50 years
  • Annualized Premium: Rs. 8,676*
  • Monthly premium: Rs. 755

* *Premiums excluding taxes and cess

In case of Mr. Abhay’s death anytime till his age of 80 years, an immediate lump-sum pay-out: Rs. 60 lakhs and Monthly Income of Rs. 48,000 will be paid every month for 100 months. The total Death Benefit pay-out to Abhay ‘s nominee will be Rs. 1.08 crores

iTerm Plus 

This is a comprehensive online term plan where you can choose from a choice of four plan options which offer different in-built benefits like accidental death and critical illness. So, while you get no money back with iTerm Plus if all goes well through the entire term, it is the one plan that can assure your loved ones of adequate protection, if the worst were to happen. You can choose your level of protection by selecting any one of the below mentioned plan options.

(The premium payable under each of these plan options will be the premium for the base death benefit along with the additional premium for the inbuilt benefits, depending upon the amount of the cover chosen for the benefits.)

There is an option of insurance coverage till the age of 80 years and you may also choose to cover for 10 Critical Illnesses (Basic) or 36 Critical Illnesses (Enhanced). Even lump-sum payment in case of unfortunate demise, death due to accident, terminal illness and critical illness is possible.

Wait there is still more. The plan also provides for waiver of future premiums in case of Permanent Disability and Critical Illness and the option to increase your life coverage as per your increasing life stage requirements. Tax benefits on premium paid and benefits received as per prevailing tax laws can be availed.

Let’s understand this plan with an example: Mr. Abhay (Age 30 years, Non-smoker) opts for Aegon Life iTerm Plus Insurance Plan (Plan benefit option: Life) and wants to pay premium every year. His plan details are:

  • Death benefit Sum Assured: Rs 1 Crore
  • Accidental Death Benefit Sum Assured: Rs 50 lakhs
  • Policy Term: 50 years (coverage till age 80 years)
  • Premium Payment Term: 50 years
  • Annual Premium for Death benefit: Rs 9,592.
  • Annual Premium for Accidental Death Benefit: Rs 2,361 36
  • Total Annual premium (excluding taxes): Rs 11,953.

In case of Mr. Abhay’ s death any time before he turns 80 years, the following benefit will be payable to his nominee, subject to all due premiums under the policy being paid.

  •                 Rs 1 Crore in case of Natural Death or
  •                 Rs 1 Crore 50 Lakhs in case of Death due to Accident

iReturn

iReturn is our online term insurance plan that provides death benefits along with an inbuilt terminal illness cover. However, unlike a simple term plan, we do give you your money back if all goes well – so you get back the amount you pay as premiums at the end of the term. All future premiums are waived off, if the insured is diagnosed with a terminal illness. It also has an in-built terminal illness benefit, additional optional coverage against Accidental death, Critical illness, Women specific Critical illness & Disability. Tax benefits on premium paid and benefits received as per prevailing tax laws apply.

When Should You Buy Term Life Insurance Plans & What Should You Look For?

There are a variety of the plans in the market, sometimes making it confusing for one to select the right insurance plan. Worry not! Here are a few points we have listed down that may make your selection easy:

Go for life insurance when you are in your 20s- In case you have just start earning, and have dependents it is always prudent to purchase a life insurance policy at a younger age. The earlier you start, the lower is the premium – The premium of the term insurance plan increases with age. A healthy body maybe devoid of any disease and hence assumed to be at lower risk to cover for the insurance company.

Also, the number of premiums to be paid are spread over a higher tenure, decreasing the amount to be paid per premium amount.  Just to take an example a 24-year old, non-smoker’s premium can be as low as Rs. 541 per month for a 1 crore cover! But, if you wait for say ten years more, you would typically end up paying a premium of almost double that is more than Rs. 1000 for the same one crore cover. Another advantage by starting early is that you lock in your premiums for the rest of the policy tenure. So, depending on whether the regularity of your income or the rise or fall of it, the premiums to be paid remain constant.

Cover amount – As a thumb rule it is recommended to take about 15-20 times of your annual income. The amount of cover depends on certain other factors such as your age, gender, lifestyle, life stage and number of dependents. You can know your exact term insurance premium amount by filling in your details in our term insurance premium calculator here

Reputation of the Brand - There are several other factors you could consider while buying a term insurance plan. What is the Brand equity of the product you have selected? Always buy insurance policy from a brand of repute. When the name is world renowned Dutch based Aegon and the Times group (one of India s largest media conglomerates), one can be rest assured for claim settlement in the hour of need. The claim settlement ratio is hence another important statistic that you can consider. Aegon Life has a claim settlement ratio of over 97.33%. (Individual death claims settled in FY – 2016-17).

The Terms and Conditions - Read the fine print. While it is advisable to purchase riders, one should be clear on the conditions, time required in entire settlement process and the documentation required for claim settlement of the term insurance policy.

True Details - A term insurance plan needs the insured to submit true details to the best of his knowledge. Any information that is not found to be true or hidden can lead to a claim rejection for the insured.

Advantages of buying a Term Insurance Plan Online

So, you have made up your mind and have purchased a policy that is closest to your requirement. Good decision. It’s time to sit back and relax as now this can offer you a host of unique benefits and can be your best friend in the hour of need. The prominent advantages of a term insurance are -

  • Compare online - Since a term insurance is the simplest form of life insurance, most can be easily purchased online. The term insurance can be selected and paid by comparing many plans at the click of a button. You can understand the amount of cover required with the help of a premium calculator. The calculator will ask you certain questions such as age, medical illnesses, and about your lifestyle before deciding the right amount of premium you require for adequate coverage. Other services like premium payment, policy renewal can also be done online. In addition to this, term plans also provide you the flexibility of premium payment. You can choose to pay premium as per your cash flow position and income. The premiums can be paid monthly, quarterly, semi-annually or annual frequency.
  • Easy to Understand - Among the plethora of plans available in the market, the Term Insurance Plans is found to be the easiest to understand and one which has least timelines for claim processing and payment.
  • Tax – Free Proceeds in the hands of the Nominee- In the event of the unfortunate demise of the insured, the proceeds are tax-free for the beneficiary. So, a term insurance provides double tax benefit, not only to the insured at the time of payment of premiums but also to the nominee while receiving insurance proceeds.
  • Competitive Pricing - Today with stiff competition among insurance companies, there are term plans available that can easily provide a policy of few crores with a premium of only some hundreds per month. Which may be less than a single visit to a movie that you may have! The presence of several players in the market have only helped the customer compare the variety of policies at best rates.

How to Buy Term Plans online?

Now that you have been through the basics of term insurance plan and have decided your cover, you are just a few clicks away from purchasing a policy. We at Aegon Life Insurance make it really simple for policy purchase with quick and easy documentation.

Here is how you can go about it -   

1. You have the option of either uploading your documents on the website (https://www.aegonlife.com/product/iterm/iterm-insurance-online) or sending it to us via courier.

2. Just fill out a simple step-by-step form. Keep the following documents ready before you fill the form.

  1. Passport size photograph
  2. Identity Proof
  3. Address Proof
  4. Age Proof
  5. Income Proof
  6. Bank Proof

Once you fill the form and pay your premium we will guide you through the next steps which may include a medical check- up. If you have any difficulty, click on the call button anytime. You will receive a call from us to help you with any query.

3. You may need to appear for a medical exam. To obtain the best possible results from your life insurance medical exam, we suggest that you follow these basic steps. Avoid consumption of coffee, tea, tobacco or alcohol at least 12 hours before the medical test. Get a good night ‘sleep. To know more about all such tips on the medical test, please visit our website.

4. Always remember to fill in the nominee details for our policy. The Nominee can intimate directly to the company’s registered address or any branch offices in writing or log onto www.aegonlife.com to make online claim intimation.

5. We request you to be careful while filling the proposal form as this information is very critical for Risk assessment & decision on the policy. However, if you miss out any information, please write to care@aegonlife.com with the details.

6. You can courier an original copy of the cancelled cheque along with the original ECS MANDATE FORM, which is available on the website to Aegon Life Insurance, Building no.3, Third floor, Unit no.1, Nesco IT Park, Western Express Highway, Goregaon (East), Mumbai 400 063

For any further queries you can call us on 1800-209-9090 (Toll free) between 9:00 AM - 7:00 PM Monday – Saturday.

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