Term Insurance


Why life insurance?

Insurance, be it for health, vehicle, life or home, is essential to cover the financial implications of unexpected events. Life has no guarantees is a statement that is clichéd but true. Obviously, no monetary valuation can do justice to human life, but life insurance does not aim to do that! It simply aims to provide financial protection in case of a potential loss of income in the future, which could arise from multiple factors like death, disability, or retirement.

Term insurance, a type of life insurance, provides coverage for a certain period of time or years. If the insured dies over the policy tenure a death benefit (or sum assured) is paid out. No payout is made if the insured survives the tenure. The purpose of taking life insurance is to provide life cover to the policyholder and financial security to his family. There are two ways the individual can take life insurance:1. By opting for a pure life cover, also known as term insurance 2. By taking life cover with a savings component built-in, also called endowment insurance.
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Why term insurance is better
Term plans provide pure life cover. This means there is no savings/profits component. They are basic plans which make life insurance more affordable vis-à-vis other options. It is possible for the policyholder to opt for a larger life cover at a lower premium when compared to a similar endowment plan.

5 Reasons Why You Need Life Insurance

In the prime of life, with age and good health on our side, most of us do not worry about the uncertainties of life. Financially secure and physically fit, any future mishap and its consequences are the last things on our minds. However, contrary to what we might feel, this is exactly when we need to plan for the future, a future where we may not be as secure and fit as we are now.
You need the security blanket of life insurance if any of the following reasons hold good for you.

Provide for your family in case of death or disability
If your family is wholly or partly dependent on your income or your contribution in any other way, then they will be left in a very difficult situation in case of any unfortunate accidents. Life insurance comes to the rescue here by offering a lump sum or a steady income. Explore term life insurance by visiting our site.

Finance your expenses and obligations
In case of the loss of income, your regular expenses and other obligations in terms of outstanding bills, loans or mortgages will be tough to manage. An insurance cover will help pay for all this, removing a big load off your shoulders.

Having an additional source of income in the later years of one’s life
Life insurance is not just for death anymore; there are child plans, retirement plans, whole life plans, etc. These are all good investment instruments. So, if you are looking for a long-term investment and do not want to put your money in traditional instruments like FD/NSC/PPF etc, life insurance is the way to go.

Leave an inheritance for your children/dependents
Even if your children or dependents do not need financial support after your death, insurance is your way of leaving them an inheritance that is large enough for them to lead a life of luxury.

Avail of Tax benefits
Premium paid for life insurance is eligible for tax benefit under section 80C. That, in itself, is a good enough reason to buy life insurance. Check How Much you need to Save monthly for Health and Life insurance Premium Annually

Some of the key features that make term plans indispensable include

1. Larger life cover Since term life insurance plans are more affordable it is possible for an individual to opt for a higher life cover for the same premium as an endowment plan. For e.g., a 30-year-old can get a term plan with a cover of Rs.1 crore for a 30-year term by paying a premium.
The Rs.1 crore endowment plan will most likely be out of bounds for most 30-year-olds. However, taking a term plan for a similar cover is relatively more feasible.

2. Riders
The policyholder can attach riders to the term plan, thereby enhancing the utility of the policy. So, by opting for a critical illness rider or a critical illness plan, for instance, he is entitled to receive the sum assured on being diagnosed with the critical illness. This is in addition to the death benefit of an equal amount on death over the term of the policy. There are other riders to choose from like – loss of employment cover, disability cover, and waiver of premium cover, among others. The policyholder should select riders based on his specific needs to make life cover more suitable and meaningful.

3. Enhanced cover
Certain insurance companies offer the flexibility to enhance the life cover during critical stages of the policyholder’s life. For instance, the policyholder may be permitted to enhance life cover by 50% at the time of marriage and by 25% at the time of turning into a parent. This makes it possible for him to start with a modest cover and then enhance it as responsibilities increase as also the ability to pay a higher premium.

4. Innovative features
While insurance companies have been quick to innovate in general, they have been most innovative with regard to term plans. For instance, companies have been quick and proactive in cutting premium rates, even offering extra discounts to certain categories like non-smokers, for instance. Buying term plans is now quite convenient thanks to the internet. It is possible for a healthy individual, as defined by the insurer, to buy a term plan over the internet without taking a medical test.
Frequently Asked Questions & Answers on Term Insurance


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