Term Plan - Term Insurance Plan

What is it?
A term plan is an Insurance plan which covers your life and in case of death gives the amount to your nominee assigned as per the policy and amount is equal to the amount you have taken. I.e. if you go buy a term plan of Rs 50 lac for yourself and in case you die, your nominee will be paid 50 lac .So it’s a basic life insurance cover plan which pays back only in case of death and get no returns etc. So whatever premium you pay for this plan, you will get no returns but if you die then the cover amount will be paid.

Who should buy this kind of Term Insurance Plans?
All individuals who have dependants on them financially should buy this plan. This is a must for people who are bread earners in the family and has no assets or lesser cash assets.

How much cover should I buy?
Don’t get fascinated by 1 cr -2 cr term plans. Buy what you think is right for yourself. Basic rule is if you have any loans, the cover should cover all loans and 10 years of your family current expenses. I.e. if your family is dependent on you for 30000 per month and you have loan of 20 lacs, you should take cover of 20 lac (loan) + 30000*12*10=36 lac and buy a term plan of 56 lacs which will cover your loans and expenses of the family.

What should be my tenure or how long should be my term policy?
One should go for maximum period i.e. if a plan a is covering you till 75 years go for that plan as the longer the plan, it will help cover you at old age. If a premium of a plan covering you till 60 years is lesser and some other plan is higher, one should opt for term plan which covers you till maximum age.

Online vs. Offline Term plan
The online plans are cheaper than offline as it helps insurance companies to save on distribution /broker cost so they give cheaper to customers. But if you are not comfortable for online, even buying an offline term plan is cheaper than other Insurance plans.

What is claim settlement ratio?

This is ratio which is available to people to see companies response to claims on such plan i.e. how may claims came to them and how many of them they have paid. For any company above 90% is a good enough ratio.

Should I go for Term plan with medical test or without it?

If you have got your medical test done and you know that you are perfect, choose whatever plan. But if you haven’t got it done in last six months get a medical test and that will help in anyways. But if you know that you have a diseases do not hide and take a term plan as most likely the Insurance company will pick this when you go to them for a claim in later stages.

Benefits of Term plan

1. Instant life cover
2. Extremely affordable premium
3. Hassle free process
4. Regular and single payment option
5. Available in online as well as offline mode
6. Tax benefit under sec 80C of Income tax act, 1961

Some more Facts about Term plan
1. Term plan are only the death benefit plan.
2. These are non-renewable plan once the term is over the policy will end.
3. The Premium remains same for whole tenure of the plan; it’s not going to increase with the age etc.
4. Term plan is available both online and offline the only difference is the online plan are much cheaper than its offline version. And it is not going to affect the claim settlement/rejection at any point of time.
5. Even now you are getting riders like Accidental death rider; Terminal illnesses cover etc with the online plans.
6. Almost all kind of death are covered in term only some co’s exclude death through natural calamities and suicidal death are covered only after 12 month of the policy

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