Term plans: Understanding the essentials

We list the 5 salient points that you need to know about term insurance.

Buying a term plan has become par for the course for those who are sensitive to the current and future needs of their loved ones. Though all the relevant information is freely available, buying a term plan online can become a tricky business if you are not aware of some important facts.

If you are about to buy a term plan, you must be aware of 5 important features of the same:

1. Buying term insurance is very simple. Earlier generations of Indians were used to buying insurance from the insurance provider branch offices, or through brokers. But buying term plans is extremely simple today. You can buy a term plan online in minutes, after entering details in the application form provided on the insurance provider’s website. After selecting the right plan and filling all the details, you can proceed to pay for the policy using Net banking or NEFT. Most insurance companies also do not insist on medical tests to complete the purchase.
2. The tenure is a limited one. Most term policies are structured such that once the tenure is up, the plan is terminated at that point – there cannot be a renewal of the policy or an extension of the tenure at that point. A new policy must be purchased at this point. The premiums paid are not returned to the policy holder, nor is there a plan maturity benefit. It is important to know these features before you buy the term plan.
3. It provides ample coverage. The term insurance plan is extremely useful for the families of those who take these policies. This is because the term plan has a very high sum assured amount. Currently, term insurance has some of the highest sum assured amounts across the insurance spectrum. Thus, the policy corpus allows the family members to enjoy a comfortable life even in the policy holder’s absence.
4. Anyone can buy it. Another important benefit of buying a term plan is that the premium payments are extremely affordable. This makes it an attractive option for those who have recently started working, or those who face many demands on their monthly income. Even as one pays a low premium amount, one can get a high coverage. Meanwhile, one can buy a more expensive plan at a later date.
5. You can decide the mode of pay-out. Not all term plan providers pay a lump sum amount on plan termination. You can decide the mode and frequency of pay-out at the time of buying the term plan. You can opt for a lump sum payment, or you can choose a periodic payment term so that your family members receive regular income.

Term Plan – The best New Year gift for your family

Leave the expensive home appliances and new mobile phones – get your family the greatest gift ever, a term insurance plan.

Whenever we think of celebrating a milestone or gifting a special someone, we often think of buying big, expensive presents. While that is a great thought, the impact of that gift is only short-lived. After all, how long can one revel in the thought of a new mobile phone or a TV set?

But some gifts have a much more enduring value. They have a permanent good effect and they can be veritable life savers. We are referring, of course, to buying a term plan.

The best present this season – a term insurance plan

Your family may initially be puzzled if you whip out a term insurance policy document and say ‘Surprise!’ But a few minutes of explanation will help them realise the value of your decision to buy a term plan. If you are unsure of how to explain it to them, allow us to give you a few pointers:

• A term plan is an insurance policy that has a high sum assured and a low premium payment.
• It pays a substantial amount of money on termination. Hence, even if you are absent from your family’s world in the future, the term plan money can pay all their expenses and also for such things as children’s education, house maintenance costs and also repay loans.
• The term insurance nominees get the entire sum assured on termination of the plan, based on the pay-out option you choose.
• Once the plan tenure ends, the plan is terminated even if the policy holder outlives the plan.

How to buy term plans online

All reputed insurers today encourage prospective clients to buy term plans online. The applicant must fill out an online form, use the term plan premium calculator to find the best combination between sum assured and premium payable, and proceed to pay for the plan. Once the first premium is paid and processed, the term plan is deemed purchased.

Buying a term plan online also results in cheaper premiums. The premiums can be paid online every year and the insurer sends a reminder about due dates.

The premiums paid for the term plans are liable for tax benefits under Sec 80C of the Income Tax Act, 1961.

And so, it makes the best gift this season…

What would you rather choose – a gift that gives your loved ones momentary happiness, or a gift that protects their future with a substantial sum of money? We bet it is the latter option – after all, wouldn’t you want somebody to watch over your family when you are no longer around to protect them?

A term plan is that protector!