A term insurance plan is a pure insurance product. In case of the demise of the insured during the tenure of the plan, his/her nominees get the sum assured. But if the insured person survives the term of the policy, the nominees get nothing. Many variants of term insurance are available in the market: offline (product sold by agent), online, single premium, increasing cover, limited payment term, staggered pay-out policies, and return-of-premium term plan.
Most of the policies traditionally sold in India--money back, whole life, endowment, Ulips, and so on--have been insurance-cum-investment products. Rather, they were primarily investment products with usually a thin sliver of insurance on top. Even though a person may be paying a high premium on these policies, he may not be adequately insured.
Term insurance policies address the insurance needs of customers very well. With only a small premium, a person can buy an insurance policy having a very large sum insured. Buying a term policy guarantees peace of mind. The breadwinner knows that even if something were to happen to him, his family's financial future will not be jeopardised. There will be enough money to pay off the home loan so that his family is not deprived of this major asset. Provided he has bought adequate insurance, there will also be enough to take care of the family's day-to-day expenses, and to pay for the children's education and marriage.
Buying term insurance also makes you eligible for a few tax benefits. One, the premium you pay is eligible for deduction under Section 80C of the IT Act. Two, any sum from the policy that your nominees receive from the policy will be exempt from taxation under Section 10 (10D).
You must be at least 18 years old to buy term insurance. The maximum age for entry can extend up to 65 years (varies from one company to another).
If the sum assured is high (again the minimum limit varies), you will have to undergo a medical test. Insurance companies undertake a test to ensure that the person is healthy and does not already carry a medical condition that could affect his life span. If the medical tests reveal certain health problems, the insurer could either turn down your application or could charge a higher premium.
Credit Sudhaar can help you calculate how much insurance you need to safeguard your family's financial interests adequately. Often, when people do this calculation themselves, they overlook the impact of inflation. A cover worth Rs 1 crore may seem high today but may prove woefully inadequate after 20 years due to inflation. You may also not factor in all your liabilities and the family’s future expenses when calculating this amount.
We can also help you choose the type of term insurance (from those listed above) that suits your needs best.
Credit Sudhaar can help you calculate how much insurance you need to safeguard your family's financial interests adequately. Often, when people do this calculation themselves, they overlook the impact of inflation. A cover worth Rs 1 crore may seem high today but may prove woefully inadequate after 20 years due to inflation. You may also not factor in all your liabilities and the family’s future expenses when calculating this amount. We can also help you identify the right insurance company based not just on a simple comparison of premium rates, but on a mix of criteria: premium rates, claim settlement ratio (which determines the probability that your family will get the sum insured), insurer’s reputation for customer orientation, and so on.
We will also help you select a term plan having the right tenure. The tenure of a term plan should end only when your life's responsibilities have ended, which in these days of late marriages can extend into the 60s.
Proof of age: Driving licence, school or college certificate, PAN card, passport, or birth certificate.
Identity proof: Voters ID card, PAN card, driving licence, Aadhaar card, passport, or a letter from a recognised public authority or public servant with photograph verifying the identity.
Address proof: Telephone bill, ration card, electricity bill, bank account statement, or a letter from a recognised public authority.
Income proof: Income tax return, assessment order, or employer’s certificate. Self-attested copies of all these documents have to be submitted.