Term Insurance – Best Term Insurance Plan & Term Policy Online in India 2022
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WHAT IS TERM LIFE INSURANCE?
Term insurance is a type of life insurance that provides coverage for a specific period of time or years, i.e., a term. This type of life insurance provides a financial benefit to the nominee in case of the unfortunate demise of the insured during the policy term. Term Insurance policies provide high life cover at lower premiums. For e.g.: Premium for ₹ 1 Crore Term Insurance cover could be as low as ₹ 485* p.m. These fixed premiums can be paid at once or at regular intervals for the entire policy term or for a limited period. Premium amount varies basis the type of the premium payment method opted by the buyer.
REASONS TO BUY TERM INSURANCE ONLINE
WHO SHOULD BUY A TERM INSURANCE POLICY?
Anyone with financial dependents should buy a Term Insurance Policy. This includes married couples, parents, business people and self-employed, SIP investors, young professionals with dependent parents, and in some cases, even retirees.
Life insurance premiums paid are deductible from taxable income under Section 80C^^ and hence carry a double benefit for taxpayers – protection and tax-saving. The amount (maturity value) received under a term insurance policy is also tax-exempt subject to conditions under Section 10(10D)^^ of the Income Tax Act, 1961^^. Term Insurance also has among the lowest premiums compared to the different types of insurance policies.
Hence, individuals who derive any of the three significant benefits associated with term insurance should consider buying such policies. The three significant benefits are – life protection, tax-saving and affordable premiums.
- Parents are generally the sole source of financial support for their children. The needs of children extend from school fees and living expenses to hefty university fees, later on in life. An unfortunate event with a parent can jeopardise their future and deprive children of life’s opportunities. Parents must ensure that this scenario does not come to pass, by purchasing a term insurance policy. This policy will pay out a lump sum and/or income to satisfy their children’s expenses, in the event of any mishap of the parent(s).
- Newly-married couple:
- Roses, chocolates and movie tickets are great, but here’s a truly long-lasting gift for your spouse – term insurance. This gift will give your spouse more than momentary joy, and it will secure their future. Term Insurance assures the spouse of financial support in case of a mishap with the insured person and should be purchased as soon as possible by married couples.
- Working Women:
- The women of today are on an equal footing with men, whether it be managing their finances or providing for their family. Today, a family is as dependent on the woman’s income as it is on the man’s. This dependency brings with it the need to financially secure your loved ones in case something happens to you. A Term Insurance plan assures that your parents/spouse/children are financially secured even in your absence. It ensures that your family does not have to compromise on their lifestyle and can continue with the goals you set for them. The term insurance cover amount also helps to take care of any outstanding liabilities like home loan, auto loan, education loan, and more. Not only this, but some term insurance plans also come with the added benefit of a critical illness^ cover that provides a payout if you are diagnosed with a serious illness like breast or cervical cancer.
- Young Professionals:
- Young professionals are just starting their careers. Many of them are not yet married and have no financial dependents. However this is likely to change in the future as they get married or support their parents/relatives. Such individuals should buy term insurance now rather than wait. This is because once a policy is purchased, the premiums stay the same throughout an individual’s life. On the other hand waiting to buy term insurance in the future can force customers to pay higher premiums because term insurance premiums incease with age.
- Term Insurance premiums paid are allowed as a deduction from taxable income under Section 80C^^ of the Income Tax Act, 1961^^. The term insurance payouts on maturity are also exempt from tax subject to conditions under Section 10(10D)^^. Hence taxpayers can use term insurance to reduce their tax burden significantly.
- Self Employed:
- As a self-employed person, you face many challenges. Unlike salaried individuals, you do not earn a fixed monthly income; you have an uneven source of income that depends on the ups and downs of the market. Plus, you may have also taken a business or personal loan from creditors, banks, or even your family and friends. Hence, buying a term insurance plan to secure your family becomes even more important for you. A term life insurance policy can ensure that your family remains financially secure even in your absence.
- SIP Investors:
- Investors in mutual fund SIPs (Systematic Investment Plan) invest a fixed amount every month in a mutual fund. The wealth creation in an SIP is driven by a stream of regular instalments which compound over time. However, an unfortunate event of the investor can stop the flow of instalments. Term Insurance can protect the SIP by providing the nominees of the insured person with funds to continue the SIP.
- Retired persons need to have term insurance if they have dependant spouses or families. Buying term life insurance can also be a way of leaving an inheritance for their families. This is because, Term Insurance is paid out to nominees in case of any mishap with the insured person. The payment of Term Insurance is also tax-free subject to conditions under Section 10(10D)^^ of the Income Tax Act,1961^^.
TERMS RELATED TO TERM INSURANCE?
Here are some terms you must know:
- Claim Settlement Ratio:
- The Claim Settlement Ratio (CSR) is the ratio of the total number of claims raised in a year and the number of claims settled in a year by an insurer. The higher the number, the more reliable is the insurance company, as the chances of your family’s claim being rejected are low.
- Term insurance premium:
- This is the money you pay to the insurance company in return for financial protection. Premiums can be made in monthly, half-yearly, and annual installments. Premiums tend to increase as you age.
- Add-on benefits (riders):
- To enhance the coverage of your plan, you can add benefits to your plan, such as a critical illness rider, an accidental death rider, or a permanent disability rider. Riders come at a nominal cost over the premium.
- Sum assured:
- This is the amount of money that your nominee will receive in case of an unfortunate event. This also determines the premium amount for the term plan.
- Death benefit:
- This is the same as a sum assured and is given to the nominee in case of an unfortunate eventuality.
FEATURES OF TERM INSURANCE
Here are some features of term insurance plans:
- Low entry age:
- Term insurance plans have a minimum entry age of 18 years only. You can buy a term plan and secure your loved ones as soon as you reach adulthood
- Long term protection:
- The term plan offers long policy tenures of up to 40 years that allow you to protect your family members for a long time
- Easy to buy:
- Term insurance can be purchased online in minimal steps. You can compare different plans and features with a few clicks and pick a plan that suits your needs the best. The submission of documents, premium payment, and all other customer queries can be submitted online from the comfort of your home or office
- Easy premium payment options:
- Term insurance plans offer flexible premium payment options like monthly, quarterly or yearly payment
- Adjustable cover:
- The term plan is flexible and allows you to increase or decrease the sum assured basis your financial condition
- Liability protection:
- The sum assured of a term insurance plan can be used to ensure your family’s financial security and protect them from debt liabilities like a loan repayment
TERM INSURANCE – BENEFITS
- High Life Insurance Amount at affordable premiums:
- Term Insurance plans provide a large amount of life insurance cover at an affordable premium. This cover can compensate for several years of lost earnings.
- Cover Against Critical Illnesses^:
- Along with providing life cover, a new-age term plan like ICICI Pru iProtect Smart also provides protection against critical illnesses. For a small additional premium, Critical Illness Cover provides lump sum payments when a critical illness like a heart attack, cancer, kidney failure, or any other critical illness^ is first diagnosed.
- Support In Case Of Disability##:
- In new-age Term Plans such as ICICI Pru iProtect Smart, the insurance company pays your future premiums in case of total and permanent disability. As a result, your life insurance cover continues even if you are unable to pay premiums.
- Additional Security:
- To increase the security of your family, a Term Policy provides additional payout (up to `2 crore) in case of an accidental death+. For example, if your life cover is `1 crore, a Term Insurance Plan with Accident Death Cover pays `2 crore to your family in case of an accidental death+.
- Tax Benefits:
- Term Insurance plans offer tax benefits^^ on premiums paid up to `46,800 under Section 80C^^. New-age Term Plans with critical illness cover also offer additional tax benefits on premiums paid up to `7,800 under Section 80D^^. You also get tax benefits^^ subject to conditions under Section 10(10D)^^ on the money that your family receives in case of an unfortunate event.
- Death benefits:
- In the unfortunate event of death during the policy term, your family receives the death benefit from term insurance. Your nominee can choose to receive a regular income along with a lump sum benefit in your absence
- Survival benefits:
- Standard term insurance does not offer any benefits if you survive the term. However, a return of premium term plan also provides you with a lump sum or regular income as guaranteed benefits to help you fulfil varied financial goals. The term plan pays back an amount that is at least equal to the total premium paid. You receive these guaranteed benefits at the end of the tenure
WHEN IS THE RIGHT TIME TO BUY A TERM INSURANCE PLAN?
The right time to buy a term insurance plan is as soon as you can. The chances of getting lifestyle diseases increase as you age, and so do insurance costs. When you invest in a term plan at a young age, you get an insurance policy at an affordable premium. Hence, it may be advised to invest in term life insurance when you are young. This will save a lot of money in the long run. Moreover, it will also provide you and your loved ones with extended coverage and financial security from an early age.
BUY TERM INSURANCE ONLINE IN 3 STEPS
HOW MUCH TERM INSURANCE COVER DO YOU NEED?
You can get a simple, quick and clear answer to this question by calculating your Human Life Value or HLV. HLV is an easy-to-use numeric method of calculating the amount of life cover that you may need.
WHAT ARE THE PAYOUT OPTIONS IN TERM LIFE INSURANCE?
A term insurance plan is a pure protection plan that offers a life cover to the policyholder in return for timely premium payments. If you buy a term policy, you will be asked to name a nominee. This could be a child, spouse, parent, sibling, or any other loved one. In case of an unfortunate event, the chosen sum assured will be paid to this nominee, depending on the payout method you opt for. Here’s how this works:
- Lump sum:
- Under this method, a single payment will be made to the nominee in case of an unfortunate event. This money can be used as per the discretion of the nominee.
- Under this, the nominee will receive equal monthly income payments in the event of any mishap. This can act as a substitute for your income in your absence.
- A combination of both:
- Under this, a part of the sum assured will be paid as a lump sum and the remaining will be given as equal monthly payments. This can help families who may have varied financial needs.
- Increasing income:
- With this option, your nominee will receive increasing monthly installments for 10 years. The income will increase by 10% simple interest every year until the entire sum assured is paid.
WHY DO YOU NEED TERM INSURANCE ?
Your family depends on you:
The term insurance money can be used to meet your family’s monthly expenses and important goals like your child’s education.
Your assets need protection:
You may take loans for assets like a house or a car. However, if something happens to you, your loved ones might be burdened with loan repayments. In such a situation, the term insurance payout which your family will receive can be utilised in paying off outstanding loans.
Modern day lifestyle problems can lead to a host of ailments. Some term insurance plans don’t just protect your family financially in case of a mishap but also during your lifetime by offering critical illness ^ protection. This feature pays out on the diagnosis of certain critical ailments like cancer or heart attack
HOW TO CHOOSE RIGHT TERM INSURANCE PLAN?
While buying a Term Plan, we always have questions like which Term Plan is best and how to compare the best Term Life Insurance Plan. Here are some parameters which may help you choose the best Term Plan for yourself:
- Claim Settlement Ratio:
- This ratio tells you how many claims for life insurance have been paid out as a proportion of claims made. The higher this ratio is, the better.
- Fact: ICICI Pru Life has a claim settlement ratio~ of 97.9%
- Solvency Ratio:
- Solvency ratio tells you whether the insurer you choose will be financially capable of settling your claim if the need arises. IRDAI mandates that every life insurer should maintain a solvency ratio of at least 1.5.
- Fact ICICI Pru Life has a solvency ratio$ of 1.93
- Option to add Critical Illness Benefit^:
- A critical illness like cancer or brain surgery can cost a lot of money and cripple the family’s finances. Critical illness protects your family from this risk. It pays out immediately on diagnosis, and only medical documents confirming diagnosis are to be submitted3.
- Fact: Critical illness covers with Term Insurance plans are very popular. One in three of our customers also attach a critical illness cover to their Term Plan`.
- Option to add Accidental Death Benefit+:
- If you have opted for Accidental Death cover, your family will get additional payout in case of death due to an accident, subject to a maximum of`2 crore.
- Waiver of Premium on Terminal Illness###:
- In case the person covered by the policy gets affected by a terminal illness, his/her future term plan premiums will need not to be paid.
WHY CHOOSE OUR TOP SELLING TERM PLAN~~ – ICICI PRU IPROTECT SMART?
👉It fits in your tight budget: After paying your monthly rent, phone and electricity bills, paying a term insurance premium can be difficult. ICICI Pru iProtect Smart’s affordable premiums make sure they fit in your budget
👉It gives you longer cover: The best time to buy life insurance is now. Buying now will ensure that you get life cover at low premiums for the desired term. ICICI Pru iProtect Smart can cover you till the age of 85, and you also have the option to get whole life insurance till the age of 99
👉It gives you option to cover 34 critical illnesses^: ICICI Pru iProtect Smart Term Insurance Plan pays on the diagnosis of any one of 34 critical illnesses. No hospital bills are required3.
👉It provides you option of lump sum or periodic payouts: ICICI Pru iProtect Smart allows your family to get their life insurance payout as a lump sum, income or a combination of both. A lump sum payment is a single payment made to the nominee in case of an unfortunate event of the insured person. A periodic payment is a series of annual or monthly payments, made to the nominee in case of a mishap with the insured person. The latter option can save your family from the hassle of managing and investing a large sum of money
👉It gives you accelerated pay out in case of terminal illness###: ICICI Pru iProtect Smart pays out your term insurance cover even before death, if you are affected by a terminal illness
👉 It provides you protection against other claims:You can buy the term insurance policy under the Married Woman’s Property Act++. This protects the money paid under the policy from other claims. It thus provides an additional layer of protection to your family
WHEN SHOULD YOU BUY TERM INSURANCE?
When it comes to buying Term Insurance, it is best to begin as early as possible. The premium of your term insurance increases with your age. Hence, to make the most of your term plan, it is advisable to buy a term plan at an early age. The below table will help you understand how your term insurance premium increases as per your age. The examples are in relation to a non-smoker.
|Age||Base Policy Premium (Life Cover ₹ 1 Crore)||With Critical Illness Benefit (₹ 10 Lakh)||With Accidental Death Benefit (₹ 50 Lakh)||With Critical Illness (₹ 10 Lakh) + Accidental Death Benefit (₹ 50 Lakh)|
|25 years||₹ 629||₹ 755||₹ 916||₹ 1,042|
|35 years||₹ 905||₹ 1,233||₹ 1,192||₹ 1,520|
|45 years||₹ 1,968||₹ 2,874||₹ 2,255||₹ 3,161|
|55 years||₹ 4,223||₹ 6,321||₹ 4,510||₹ 6,608|
The given premiums are applicable for a healthy non-smoker male with a monthly mode of payment and premiums paid regularly for the policy term of 15 years with income payout option with Life Cover of ₹ 1 crore and optional add-on benefits respectively.
DOCUMENTS REQUIRED FOR TERM INSURANCE
The documents required to complete the application of a Term policy are:
- A recent photograph of the policyholder
- Copy of PAN
- Address proof – This can be any of the following: Aadhaar – front & back/ Driving License/ Passport – front & back
- Income proof – Do note, your income proof should match with your declared annual income. Also for salaried applicants: Last 3 month’s salary slip/ Form 16/ Last 3 years ITR/ Last 6 months’ bank statement where salary gets credited. For non-salaried applicants: Last 3 years ITR with computation of income
TERM INSURANCE – FAQs
Q.1 Are deaths due to Coronavirus covered by ICICI Pru Term Plan?
Ans. Life insurance plans including Term Life insurance cover death caused due to health issues. This stands true for death caused due to Coronavirus as well. If an unfortunate event occurs with a person who has purchased ICICI Pru iProtect smart policy due to COVID-19, his/her nominee will be paid the sum assured.
Q.2 Why should you buy term insurance?
Ans. A term life insurance policy can offer you many benefits. As the sole breadwinner of your family, the money from a term insurance plan can act as income replacement and help your family lead a comfortable and dignified life. Term insurance is the most inexpensive form of life insurance as the premiums are quite affordable. In return, you get a high life cover and many other benefits, such as a critical illness^ benefit, waiver premium in case of permanent disability## benefit, an accidental death benefit+, and others.
The critical illness benefit^(optional) covers you against expensive and life-threatening ailments. The accidental death benefit+ (optional) offers your family a sum of money in case of death due to an accident. The premium waiver in case of permanent disability benefit## waives off all future premiums if you suffer from a permanent disability.
Q.3 Should I buy a Term Plan or traditional life insurance plan?
Ans. If your main purpose is to financially protect your family like your partner, children or parents in your absence, then you could opt for a Term Insurance Plan. Term Insurance plans give you adequate life insurance cover at a much lower cost. However, if you are looking for insurance as well as savings returns, then you may go for traditional life insurance policies like endowment plans or ULIPs.