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What is Term Life Insurance?

Term insurance is the most basic type of life insurance, providing the policyholder with coverage for a predetermined amount of time. For a reasonable premium, it provides a good level of coverage. The designated nominee will get the sum assured, or death benefit, in the event that the insured person dies within the duration of the policy.

You can guarantee your family's financial stability in the event of your untimely death by purchasing a term insurance policy. They are able to manage their finances and lead a dignified life thanks to the sum assured.

Benefits of Term Insurance

Term insurance is an essential financial tool that offers complete protection at a reasonable cost. It is an essential addition to your financial portfolio because of its many advantages that go beyond simple protection.

Financial Protection : In the event of your untimely death, term insurance offers your beneficiaries a sizeable death benefit, giving them a safety net to pay bills, debts, and future needs.

Inexpensive Premiums : Term insurance has cheaper premiums than other types of life insurance, so you can afford to purchase larger coverage amounts.

Replacement of Income : Term insurance replaces your income if you are the family's primary provider, helping to pay for living expenses, education, and other financial obligations.

Adaptability and Personalization : You can customize term policies to meet your unique needs by selecting the riders—such as critical illness or accidental death coverage—as well as the length of coverage and sum assured.

Security Borrowing : Term insurance can serve as a safety net for your family if you have outstanding debts or loans, shielding them from financial obligations in the event of your death.

Protective Lifestyle : The significant payout from a term insurance policy can sustain your family's current standard of living even in your absence by preserving their standard of living.

Who Should Buy Term Life Insurance?

Everyone should have term life insurance. It is strongly advised that you obtain term insurance coverage if any family members depend on you for financial support or future needs.

Young Earners : Professionals in their early careers ought to give term insurance serious thought. It provides a safety net, ensuring their families' financial stability in the event that they are unable to earn an income.

Investors : In order to generate wealth, investors make regular payments toward their investments, which may halt in the event of their passing. Term insurance permits an investor to keep making investments while safeguarding the family's future.

Women : An increasing number of women are joining the workforce and making a financial contribution to the family. Women who purchase term insurance protect their families and their financial security.

Retirement Planning : Individuals who are going to retire and have dependents ought to look into term insurance. It facilitates the transition to retirement by providing coverage until dependents achieve financial independence.

Entrepreneurs and Business Owners : Term insurance is a useful tool that business owners can use to protect their family's finances in the event of their death and to ensure the continuation of their enterprise.

Taxpayers : Payment of term insurance premiums can lower total tax obligation. According to Section 80C of the Indian Income Tax Act, the premiums paid are tax deductible.

Features of Term Insurance

Term insurance is a kind of life insurance that offers protection for a predetermined time frame. In the event that the policyholder passes away within the policy's term, it provides the beneficiaries with financial security. These are term insurance's salient characteristics:

Death Benefit: The death benefit is the main characteristic of term insurance. The beneficiaries get a lump sum payment, also known as the sum assured, in the event that the policyholder passes away within the policy's term.

Fixed Premiums : Term insurance premiums are set for the length of the policy's term. Regular premium payments are made by policyholders, and as long as these are made, coverage is maintained.

Family Protection and financial benefit : In the event of the policyholder's untimely death, term insurance offers the policyholder's family financial security by guaranteeing them a safety net. Term insurance is a useful tool for financial planning, particularly when major life events like marriage, having a child, or buying a house come up. In the event of unanticipated circumstances, it helps guarantee dependents' financial security.

Policy Term Options : Depending on their needs, policyholders can select the length of the insurance coverage. Policy terms of 10, 15, 20, 25, or 30 years are typical. Additionally, some term plans provide coverage up to a predetermined age, like 65 or 70.

No Maturity Benefit:Term insurance does not offer a maturity benefit in the event that the policyholder lives out the term, in contrast to other types of life insurance. Its sole purpose is to give beneficiaries a financial safety net in the event that the policyholder passes away.

Sum Assured Flexibility : Depending on their financial obligations and needs, policyholders can select the amount assured. The amount given to the beneficiaries after the policyholder passes away is known as the sum assured.

Rider Options : For expanded coverage, many insurance companies allow extra riders to be added to term insurance. Typical riders include waiver of premium, critical illness, and accidental death benefit riders.

Income Tax Benefits : Section 80C of the Income Tax Act allows for tax benefits on term insurance premiums. Section 10(10D) also exempts beneficiaries' death benefits from taxes.

Term Insurance Eligibility

Age : To purchase a term insurance policy, you have to be between the ages of 18 and 65. The premium for your policy is influenced by the age at which you purchase term insurance.

Citizenship : To purchase term insurance in India, you must be a citizen of India. But, if you buy a term plan and then relocate for employment or further education abroad, your policy coverage is unaffected.

Medical Reports : You have to submit the required medical reports and, if necessary, get tested for diagnostic purposes. Furthermore, accurately disclose your medical history to prevent issues during the claim procedure.

Term Insurance for Women

Term insurance is one of the factors that needs to be properly considered when it comes to women's financial security. A woman may prioritize her future security above that of her dependent family members, including her children. Term insurance for women can be purchased individually or as part of a group policy.

Women who work provide money for their families. Their income makes it possible for their household to function smoothly on a daily basis. Term insurance for women is an essential part of any sensible family financial plan because it helps the family protect their assets. Their family will lose important income in the event of anything happening to them. Even women who opt to stay at home make a substantial contribution.

Term Insurance Riders

Term plan riders are extra benefits or coverage that you can add to your term insurance policy for a higher premium in order to expand or improve the base plan's coverage and provide comprehensive protection against a range of ailments and circumstances.

You have the option to select any type of rider for life insurance, such as premium waiver, critical illness, accidental death, or disability riders. In the event that the policyholder dies in an accident or becomes disabled, an accidental death or disability rider provides a sum assured. Riders based on health, such as those with terminal or serious illnesses

Waiver of premium add-on, one of the most well-liked term insurance riders, will eliminate all future premium payments while maintaining term plan protection in the event that a covered illness is discovered or in any other insured circumstance.

How to Choose the Term Insurance Plan?

Amount of coverage under the policy : It is crucial to ascertain the amount assured your family should receive in the event of your absence before purchasing a term insurance policy and to make sure it meets all of their emergency and financial needs.

Term Insurance Premium : The premium for term insurance is a set, recurring sum. To better organize your budget, you must evaluate and take the same into consideration. Therefore, make sure that the term insurance premium amount you decide to pay for your plan provides adequate coverage.

Comparing policies : Rather than selecting the first term insurance plan you come across, it is usually preferable to compare several options and make an informed decision. You can determine which features and benefits are most appropriate for your needs by comparing term policies.

Eligibility : Although you can buy a policy at any age that meets the eligibility requirements for the product, it is usually a good idea to get a term plan as soon as possible to take advantage of lower term insurance premiums in exchange for greater family insurance coverage.

Options for Payout : You can proceed with this option or opt for a lump sum payout if your loved ones require a consistent income for a predetermined amount of time. If your beneficiaries would benefit from it, you may also decide to combine a lump sum payment with a fixed period of income.

Ratio of Claim Settlement : When assessing an insurance provider's capacity to promptly and efficiently resolve your claims, take into account their claim settlement ratio. Your beneficiaries have a better chance of receiving the claim on time if the claim settlement ratio is higher.

Riders : Select riders that meet your specific needs for tailored protection against a range of situations, such as coverage against critical illnesses, waivers of premium benefits, accidental death and disability, and so forth.

What are Term Life Insurance Payout Options?

You will be asked to designate a policy nominee when you purchase a term insurance plan; this person will receive the policy benefits in the unfortunate event of an accident. For the plan beneficiary, you also need to choose the term insurance payout option that you desire. The different payout options you can select from are as follows:

One-time payment in one lump sum : The one-time lump sum approach is the simplest payout type. In this case, the whole amount guaranteed for a death benefit is paid to your policy nominee all at once.

fixed monthly installments : Your plan beneficiary will receive regular payments from the insurer as the death benefit under this payout option. In this case, your family's regular source of income while you are away is the sum assured.

one-time payment in full plus set monthly installments : This option combines the benefits of both regular and lump sum payments. In this case, the policy nominee gets regular payments for a predetermined tenure and a lump sum payment of some of the assured amount. Here is where you select how the death benefit will be divided between the two payment options.

Frequently Asked Questions

The amount of coverage you choose for your term insurance should take your family's expenses into account, as well as inflation.

One easy way to figure out how much money you need to provide for your family in your absence is to multiply your annual income by up to 25 times.

An option for Return of Premium is provided by a term insurance plan. If you select this option, all of your premium payments—less GST—will be refunded as a survival benefit if the policyholder lives out the policy term.

A type of term life insurance where the policyholder is covered for 99 years is called whole life insurance. With this version, you can ensure that your family has a legacy even after you pass away.

The time frame for which you are protected by your selected policy is known as the policy term. After that time, your policy matures and its benefits are no longer available to you. If the chosen policy allows for a return of premium benefits, all premium payments—minus GST—are reimbursed.

Although add-ons are optional, having them in your main policy can be very helpful in case of unforeseen circumstances. They offer improved life insurance with reasonable premiums. A single policy may include extra benefits such as income upon disability, critical illness benefit, accidental death benefit, and premium waiver.

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