The uncertainty of life is an accepted fact. And as much we know that one cannot foresee what the future holds for us, ensuring the financial stability of one’s family should be the prime responsibility, specially when you are the sole bread winner for the family. It’s true that the loss of a loved one cannot be replaced with any financial gains but ensuring your family faces no roadblocks in financial terms to meet the daily expenses and other financial liabilities an insurance comes to their and your rescue! And what better than a term insurance to ensure that your family can meet the financial liabilities that comes up on them in your absence.
Here are few reasons to buy the term insurance policy
- Low Premium: Since a basic term insurance policy covers the death risk only, the premiums are comparatively low than other available endowment plans. The premium is determined by various factors like lifestyle, age, gender, genetic factors etcetera. So, the earlier one purchases a term insurance plan, lower is the premium.
- Ensures Financial Security: By financial security we mean a term insurance plan is not an investment option to gain financial returns for the sum insured. A term insurance is an investment to ensure the financial stability of your family and loved ones in your unfortunate demise. For ensuring the financial stability of your family to be able to meet the lifestyle needs in your absence, you must carefully ascertain the amount they would need to meet the lifestyle expenses, meet any financial liabilities like an ongoing housing loan or a vehicle loan, education of the children and the like.
- Flexibility: The financial needs of the family may change from time to time. At your prime, you might earn sufficient to accumulate a fortune and may not even need a term insurance for your family can do with your savings. One needs to understand the financial needs of the family and determine the sum to be insured keeping in mind the inflation situation as well. While one cannot change the sum insured during the renewal process of the term insurance, one can always opt for a new plan with a higher sum assured as and when the need arises.
- Additional Riders: With term insurance one can avail additional benefits to the existing plan with some nominal charges. Riders like critical illness rider, waiver of premium rider, accidental death rider, disability rider and woman critical illness riders extend that much needed support in case of any unfortunate event during the policy period and not just death!
- Tax Benefits: Although the premium paid for a term insurance plan is low, one can avail tax benefits for premium paid for a term insurance under Section 80C of the Income Tax Act, 1961.
Elements to Be Noticed Before Buying Term Insurance
While a term insurance plan extends innumerable benefits to the policy holder, one must consider the following few elements while purchasing a term insurance plan to reap the most benefits.
- The Sum insured Amount- It is advisable to buy a term insurance plan at the beginning of your career, so you pay lesser premium. Consider the dynamic parameters like lifestyle, inflation, family’s future needs, financial liabilities and basic needs of your family and ascertain the sum insured amount. You should not be over insured or under insured at any point of time.
- Policy Period- The lower your age, the higher should be the policy period. If you are purchasing the term insurance plan at the age of 28, the term should be of 40 years compared to a term of 20 years if you buy it at the age of 45!
- The Right Insurer- There are plenty of options available in the market, choose an insurer with the highest claim settlement and solvency ratio. Do your homework and find out more about the market reputation and financial background of the insurer before you choose one.
Some of the Best Term Insurance Providers in India
- LIC- The oldest insurance company in India with 756399 claims settled of 769386 policies sold as per the IRDA Claim Settlement Report 2016-2017 with 98.31% claims settled.
- ICICI Pru Life- ICICI Pru Life ranks among the best term insurance providers with a claim settlement percentage of 96.68%.
- Max Life- Has settled 9606 claims of 9821 policies sold with a claims settlement percentage of 97.81%
- HDFC Life and SBI Life are equally one of the best insurance providers with a claims settlement percentage of 97.62 and 96.69 respectively.
Most of the term insurance providers offer similar benefits with competitive prices. One might argue the benefits of buying a life Insurance Plan with a Term Insurance Plan, but with the given benefits of a term insurance plan of additional riders, tax benefits and most importantly the benefit of paying low premiums make it one of the most sought after Insurance Plans.