You must have heard about term insurance. Many people will also have a term policy. Many may be considering buying a policy in the future. But many people would not have been able to get a term policy due to lack of information. So through this article, we are going to give you complete information about term insurance from A to Z i.e.
What is term insurance?
Term insurance is a type of life insurance policy. This policy offers cover to the insured’s family. Under this, the death benefit is given to his family on the death of the insured during the term of the policy, but this benefit is given only to the nominee. In this plan, there is no benefit in the event of the person not surviving or being untraceable till the end of the policy term.
Why buying a term insurance plan is important?
If you are the only earner in your family and apart from this there is no means of earning and he dies untimely due to an accident or illness. In this case, how will the monthly expenditure of the family go. If a loan is taken, how will it be repaid? Where will the money come for the education of children? In this situation, a term insurance plan helps in meeting the financial goals of your family. Your family can use the death benefit on the plan to pay off debts and meet daily family expenses. Therefore everyone should take a term plan because life is uncertain.
Benefits of term insurance
- The nominee is entitled to a lump sum upon the death of the policyholder during the term of the policy. This is called death benefit.
- Financially weak family gets financial help, so that the family can lead a good and happy life.
- If additional riders are taken advantage of in the policy, the family is provided cover in critical illness, partial and permanent disability and accident.
- Under Section 80C of the Income Tax Act, the premium paid for the policy provides tax benefits of up to Rs 1.5 lakh.
- The death benefit to the nominee is exempt from tax. There is no tax on its lump sum amount.
- If you have purchased a term insurance policy with maturity benefit, then the life assured gets the maturity benefit, but does not get the death benefit. The premium amount in the maturity benefit is returned to the insured.
How to buy a term insurance plan
There are two ways to buy a term plan – first offline, second online.
- You can buy the plan offline by agents of insurance companies.
- You can also buy term plans online. For this, you will have to fill in various details by visiting the website of a particular insurance company.
Things to keep in mind before buying a term insurance plan
Before buying a term plan, we should mainly look at the cover amount, the premium amount, the claim settlement process, the credibility of the company and the claim settlement ratio of the company. The claim settlement ratio represents the percentage of claims settled by the company in a year. Buy a plan of the same company whose claim settlement ratio is more than 90 percent.
Types of term insurance plans in India
Due to the large market, many companies want to strengthen their hold in the Indian market and due to this competition, many types of term plans exist in the market. These plans are –
Standard Term Life Plan – This is the most basic type of term insurance plan. The plan provides an option to pay the premium amount on an annual basis and the nominee is provided a lump sum upon the death of the insured during the term of the policy. This scheme is affordable, which can be easily borne by everyone and hence it is very popular among the general public.
Term Insurance Plan with Return of Premium – In this type of term insurance plan, the insured is provided with maturity benefit. If the policyholder survives after the expiry of the policy term, the premium amount is refunded to the policyholder. The popularity of the scheme is increasing due to the return of the premium amount.
Group Term Insurance Plan – The group term insurance plan is designed to meet the insurance needs of corporate, society, enterprises and firms. All employees working in a company, society or firm can avail this scheme. Under this plan, all members are provided equal benefits. Such plans are sometimes designed to suit the needs of the company, firm or society.
From the above-mentioned things you will have complete knowledge about term insurance, but before purchasing a plan, be very careful and after doing a comparative study of different plans, choose the best plan for you.