Term Insurance | Best Compare Term Insurance 2020

Term Insurance

 

"Term insurance is the most economical form of insurance that offers a higher life cover for a specific period. You can avail a term insurance policy by paying a lower premium and securing your family's financial needs in your absence"

What is term insurance?

can be defined as a type of insurance that is taken for a fixed period or a fixed period (number of years). The basic distinguishing feature of term insurance is that unlike other types of life insurance policies, a term insurance policy is less expensive as it has no cash value. The policy is useful only if the policyholder dies within the time frame during which the insurance policy comes into force. 

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Term insurance policies are offered by almost all the major insurance providers and they come for various terms like 10 years, 20 years, 30 years etc. The most important thing about term insurance policies is that most of these policies have a built-in feature. Insurance policy converted to permanent life insurance policies irrespective of the health status of the policyholder.

Need to buy term insurance:

Term insurance is generally overlooked compared to other insurance products. The main reason for this is that the insurance schemes do not provide any additional benefit other than the sum assured or the sum assured on the death of the policyholder. </p>
However, there are several benefits of purchasing a term insurance policy. These include: </p>

Financial Security - Term insurance plans are a great way to build a financial safety net. This is especially true in today's world, as such a scheme provides for the financial security of the dependents of the policy holder in the event of his death.
  
Basic Insurance Products - Instead of opting for a plan with a host of other add-ons and paying a higher premium, opt for a term insurance plan with a fixed, affordable premium for almost the same features.
    
Maximum returns - Term plans also cater to everyone's needs. A term insurance plan is one in which the profit received is much higher than the amount invested, resulting in higher returns without the hassle of managing investment funds. TROP plans, along with regular plans, offer a 105% return on the premium paid as a benefit on maturity.
 
Adequate coverage - You can choose the sum insured under a term insurance policy so that it provides you with adequate coverage. Financial advisors are of the opinion that adequate cover is equal to 10 times your annual income. It should be noted that insufficient coverage defeats the purpose of being insured. Along the same lines, it is important that you review your insurance cover and identify areas where you can deduct, so that you are not over-insured.
 
Jeevan Raksha Bima - A regular insurance plan has no survival benefit, many insurers have designed plans, that is, term return of premium plans (TROPs), which provide a survival benefit in the form of a premium refund to maturity.
   
Policy Term - Term insurance plans provide you coverage for a fixed term. This indicates that you can take term insurance for a fixed period in which your family is financially secure. After this you can retire comfortably.

Reduced claim rejection - If the life insurance policy has been active for more than 10 years, the claim is rejected. Therefore, it is ideal to purchase term insurance to ensure that your claims are respected. 

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Flexibility - Most term plans provide you the facility to buy the policy online or offline. Also, many insurers do not insist on health check-up if the sum assured under the scheme is 50 lakhs or less.

Riders - Term plans can be extended through the use of riders providing additional protection. These riders can be purchased from the insurance company at a nominal cost. Some riders available under the term plan are accidental death benefit, critical illness, partial or permanent disability, waiver of premium, etc.

Low Brokerage - If you opt for offline term insurance policy, you will pay the lowest amount as broker commission. Brokerage is usually calculated as a percentage of the premium paid. Since the premium for a term insurance policy is usually lower, the overhead of broker fees also decreases. If you choose an online plan, there will be no broker fee.

Flexible Payment Options - Term insurance policies provide flexible premium payment options, allowing policyholders to choose a payment plan based on their convenience. Premium can be limited salary, single salary or regular salary. Policyholders who choose a limited or regular salary plan can pay their premiums monthly, quarterly, half-yearly or annually.

Choice of plan - Many insurers offer policyholders an option when it comes to the type of plan they want to choose. Policyholders can choose between single or joint life plans based on their need. They can thus expand coverage for the dependent spouse or choose a plan specifically for the family breadwinner.
  
Tax Benefit - The last, but not the minimum, premium paid for a term plan is eligible for tax benefit under Section 80C of the Income Tax Act. The death benefit received by the nominee under the scheme is also eligible for tax deduction under section 10 (10D). 

Best Online Term Insurance Plans in India:

Online term insurance plans are offered by insurance companies for the convenience of their customers. Some important advantages are:

• When you buy term insurance through an online portal, you may benefit from a lower policy cost than buying in a traditional way. From an insurer's point of view for online sales, the involvement of life insurance agents and field officers is limited, making it a more economical way to sell insurance. Therefore, the insurance company passes on this benefit to the customer.

• The entire process of online application is done in a hassle free manner.

• The customer is not affected by the insurance advisor or agent when purchasing the plan.

• The customer is served the same way, regardless of the way he buys the plan, ie online or offline.

• Although the premium for these plans is low, you should not be apprehensive about purchasing these policies. Online plans have low premiums for two main reasons:

    i) There is no intermediary in the transaction.

    ii) The online buyer is considered a low risk customer for the insurance company. He / she will be educated, earn well, and are likely to have health insurance. In the event of an emergency, he will be in a position to reach the hospital on time and to access quality medical facilities. These factors contribute towards reduced risk and premium reduction.

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Some important things to keep in mind when purchasing insurance online are:

•     Future premiums may vary - the online price quote you receive is provided based on an assumption that you take a general risk in terms of health, occupation, and your family's medical history. After you have submitted all relevant documents, the insurer may request you to undergo medical tests to arrive at the actual policy cost. If the medical report indicates that you are exposed to certain risks, your insurance premium may increase.

•     Do not let the policy in the event of laps - the act of purchasing an insurance plan online is definitely a smart move. However, you should not miss the premium payment. Since no insurance agent reminds you of the due date of payment, it is easy to remember to renew the insurance. It is advisable to send ECS mandate to your bank so that the premium amount is automatically deducted on the due date. Setting an alert on your mobile phone or computer is also a great way to remind yourself of the payment date.

•     Do not hide the relevant facts when applying - if you are a smoker or use tobacco in some other form, your insurance premium will be 25% -30% higher than the person who does not use tobacco. However, you should never hide this information in your application for insurance. At the time of a claim, if the insurer finds that the customer had hidden the information, the claim will be rejected. The insurer may also cancel the policy, as applicable.

Best offline word plans in India:

• Offline term insurance plans are more expensive than online plans. Despite this, they provide a good amount of life insurance coverage for relatively low premiums. Offline term insurance policies are far more cost effective than endowment or money-back insurance policies. Some of the benefits of taking an offline plan include:

•      The policy holders get the help of insurance agents when applying for the scheme.

•      Customers can receive reminders on premium payment due dates from insurance agents, allowing for timely payments. 

How does term insurance work?

Term life insurance

An insurance policy can be considered one of the most traditional forms of insurance. Most insurance plans have a premium that increases in small amounts over time. This is for a decrease in the value of money as the years pass. It also covers the increased risk of mortality and additional charges levied for a longer period.

To understand how it works, you can see it in these three situations:

• Buying a policy: To be able to buy a term insurance policy, you do not need to set aside thousands of rupees every year. Many insurance policies cost you a maximum of Rs. 1 crore for a premium which is approximately Rs. 10,000 per year (These are indicative figures. Actual premiums may vary depending on the sum insured and insurance providers).

•     Placing a policy: Like any other insurance policy, you pay a premium for these policies at the frequency you choose. These premiums can be paid every month, every quarter, every 6 months or once a year. They can be paid as a lump sum instead of being paid at regular intervals.

•     Reducing Profit: Term insurance plans do not usually come with any maturity benefit. Term insurance plans usually do not come with any maturity benefit, except term insurance. Their main objective is to provide life insurance cover and this is what they do. If the policy holder dies, the person named as the beneficiary of the policy will receive the sum assured.

The way it works is also one of the reasons you will see that a lot of insurers refer to these plans as pure protection plans. There are no frills associated with the scheme. You pay a premium and if something happens to you then you get a fixed amount.

High Sum Assured for Low Premium:

Term insurance premiums are the lowest in the insurance sector, allowing prudent and relatively inexpensive ways to protect dependents of policyholders in case of untimely demise. The Sum Assured associated with term insurance plans is also relatively higher than the premium amount. TROP plans, along with regular plans, offer a 105% return on the premium paid as a benefit on maturity.
Plan Picks:

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A number of insurers offer policyholders an option when it comes to the type of plan they want to choose. Policyholders can choose between single or joint life plans based on their need. They can thus expand coverage for the dependent spouse or choose a plan specifically for the family breadwinner.

death benefit:

On the death of the policyholder during the policy term, his / her dependents stand to receive the amount chosen at the time of choosing the policy. This amount depends on the term plan, regardless of what the policy term is during the death of the policyholder, irrespective of whether the amount increases, decreases or decreases.
tax benefits:

Policyholders can claim tax exemption under various categories based on selection for a term insurance policy. Tax exemption on premium amount can be obtained under Section 80C of Income Tax Act.

Policyholders can claim exemption under Section 10 (10D) of the Income Tax Act for the benefits received through insurance policies.
Survival benefit:

While a regular term insurance plan does not have any survival benefit, many insurers have designed plans that offer a survival benefit in the form of a premium refund at maturity.

At the maturity of the policy, the surviving policyholders only stand to receive benefits under the TROP policy. In the case of a TROP policy, the policyholder will receive the premium amount paid as a lump sum for the duration of the policy.

Add-on Benefits:

Many people have started opting for add-on features in their regular insurance policies. These add-on schemes will increase the price of premium being paid but will provide additional benefits in case of accidental death, critical illness, total and permanent disability benefits etc.

Types of term insurance plans:

How to choose a term insurance plan:

The market is flooded with term insurance policy options with varying policy terms, benefits and even assured amount. Reducing this cycle of policies and making sure you choose the one that fits best and meets your needs is a difficult task.

The following points should be kept in mind when looking for a term insurance plan:

    Reliability:

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•     When taking an insurance policy, it is always appropriate to look at the reputation of the insurance company. This is important because a term insurance policy is a long-term investment and as a policyholder, you should not be in control of the company that the company suffers from or suffers from any difficulty. Examining a company's FICO score would be a good way to measure its stability and reliability.

    Claim Settlement Ratio:

•     The claims settlement ratio of an insurance company is an indicator of the number of claims out of every 100 claims received by the company. Insurance companies with a healthy claim settlement ratio are seen as a more reliable and better option, as higher settlement ratios are considered favorable. IRDA publishes the claims settlement ratio for all insurance companies for a particular year.

    Riders / Add-on Covers:

•     Apart from regular policies, riders provided by the insurance company should also be considered. A policy that provides basic coverage and provides additional benefits and sees the rider as a safe, and a wide range of insurers, is considered a good option.

    Cost:

•     The amount you will pay in terms of the premium for the given protection is an important factor in choosing the term of the insurance policy. Considering that the tenure of these policies can be up to 20 years, the amount paid annually as premium is a significant amount. Thus companies providing reasonable protection for lower premiums are preferred by policyholders.

    rate of inflation:

•     When choosing a term insurance policy, keep factors like inflation in mind. Term insurance policies are usually taken for 10-20 years, during which inflation will destroy the value of the rupee, resulting in lower returns at the time of maturity. To offset this, consider companies that offer plans where cover increases up to 5% - to keep 10% a year in line with inflation.

    Policy Comparison:

•     It is advisable to compare insurance plans online, so that you have a clear idea about the options available. Policy comparisons are provided by neutral third-party financial websites, which is free. Therefore, it is wise to use this feature as much as possible.

    Attach an insurance advisor:

•     If you feel that you are unable to decide on a plan yourself, you can always take the help of an insurance advisor for the same. In this way you can be assured of expert insurance advice / suggestions that will enable you to choose the right policy.

    Policy Terms and Conditions:

•     It is important that you read the terms and conditions of the policy document thoroughly before signing on the dotted line. This enables you to understand the minute details related to the findings and exclusions under the plan, so that there is no future confusion.

Term insurance eligibility criteria:

Before anyone can take a life insurance policy, they have to fulfill certain eligibility criteria:

•   The minimum age of the policy holder should be 18 years while taking the plan.
•   The maximum entry age will depend on the minimum term of the policy.
•   The maximum age at maturity for these policies can be 75 years but it can change from one insurer to the next.

•   The minimum age for maturity will be determined based on the minimum age for admission and the proposed minimum term.

•   The sum assured will also be a factor in calculating eligibility because many policies have a higher minimum sum insured.

•   This may not be mandatory, but some insurers may ask you to have a medical examination before taking a policy. 

Documents required for term insurance:

All insurance companies ensure that you submit a set of related documents when applying for term insurance. The following is a list of documents that you will need to provide while taking a term insurance plan. Document requirements may also vary from insurer to insurer.

• Pan Card
• Proof of identity using documents such as passport, voter ID card, Aadhaar card, driving license, letter from a public servant or authority to verify identity.
• Proof of age along with documents like passport, birth certificate, driving license, PAN card etc.
• Proof of address along with documents such as utility bill (electricity, telephone), ration card, bank account details, voter ID card, or passport.
• Proof of income with documents such as income tax returns, employer certificates, or income tax assessment orders.
• Some have recently clicked passport size photographs.

Term Insurance Premium Calculator:

Insurance companies providing term insurance are often paired with questions about the premiums to be paid for a particular policy. As the premium amount is integral to selecting a policy, many companies have placed a premium calculator on their websites that allows policyholders to calculate the premium they will pay for particular policies. The premium calculator facility is available to all individuals who wish to calculate the estimate of premium to be paid.

The premium calculator for most insurance companies requires you to input your gender, date of birth and details if you are a non-smoker or non-smoker. The required coverage amount (depending on your needs) also has to be entered.

When doing so, the premium amount to be paid will be displayed on the screen. The premium amount will be calculated based on the maximum policy term offered by the insurer.

Any additional benefits included as part of the policy will be displayed below the premium amount payable. Some insurers provide an estimate based on the insurance plan selected, and it will provide a premium amount based on the type of plan and coverage it provides. The premium calculator is a great way for individuals to check their premium contribution if they want to opt for a particular term insurance policy.
Exclusions for Term Insurance Plan:

Term insurance plans cover a list of specific events and circumstances. Depending on the type of scheme selected, this may be a complete list. However, there are some exclusions that do not provide coverage for insurance policies. Given below is a list of exclusions:

• Suicide: Suicide is an exclusion in all term insurance policies. The insured will not pay the dependents in the event of the policyholder committing suicide within one year of purchasing the policy. In the case of group insurance, suicide will also not be liable for compensation.
• Death due to war, terrorism drought: Death due to natural calamities and the actions of war are not covered under an insurance scheme.
• Death due to actions taken by the insured: Accidental death by the policyholder (eg extreme sports etc.) is not covered as these are seen as self-imposed risks by the policyholder.
• Death due to intoxication or intoxicants: If the policyholder died as a result of or about the consumption of alcohol or drugs, the insurance company is not liable to compensate the dependents. 
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