The main goal of purchasing a term insurance plan is to make sure that life goals are not derailed and that there is enough money for the family to maintain the standard of living in. case of premature death of the breadwinner.
There are various goals such as buying a house, raising children, getting married, etc. which require considerable funds to achieve them. Buying a term insurance plan that supports future financial obligations should be the approach and not just buying coverage on an ad hoc basis.
Many of us are looking to buy the best term insurance plan with the lowest premium for a sum insured of Rs 1 crore. If you are looking to purchase Rs 1 crore coverage, it is important that you calculate the need correctly. You might need a lower amount or coverage of Rs 1.5 crore or even more. Ideally, one should maintain term insurance coverage of 10 to 15 times one’s net annual income. Once you have purchased a term insurance policy, continue to review the requirements at least once every five years, as needs may change.
Before purchasing a term insurance plan, you can use the term insurance premium calculator available on the websites of most insurers to calculate the premium including or excluding the tax payable on it. Doing an insurance comparison will help you buy great coverage at low cost. You can buy term insurance online or offline with one or more insurers. Online insurance plans are available at a much lower cost than offline plans.
Choose to opt for a period at least equal to your retirement age. You can even buy more than one term insurance plan with similar or variable coverage and later, as financial liabilities decrease, you can abandon one. If you are purchasing a temporary plan from more than one insurer, be sure to disclose details of existing policies while completing the request form.
When purchasing a term insurance plan, an important factor to consider is the premium. For the same amount of life coverage, similar seniority and the same age, the insurance company with the lowest premium may be the best choice as all insurers are regulated by the insurance regulator IRDAI. The solvency margin, a significant parameter indicating the fundamental strength of an insurer, is closely monitored by the regulator and thus puts all insurance companies on an equal footing in terms of risk.
A term insurance plan is the purest form of insurance because it only supports the risk of protection. There is no savings element and is therefore similar to an auto insurance policy. In the event of death during the term of the policy, the insurer pays the death benefit to the nominee, while by surviving the term of the policy, the policyholder receives nothing.
There are different varieties of term insurance plans – increasing coverage plan, decreasing coverage plan, plans with monthly payments or temporary plans with return of premiums, etc. .
After purchasing the term insurance policy, make sure your applicants are aware of the policy document. Now that you’ve taken out the term plan with adequate coverage, go ahead and start investing money for your long term goals without worrying about the risks to life!
Table showing the annual premium including 18% GST for online term insurance plans for a 25 year old non-smoking salaried male for an insured sum of Rs 1 crore for a 35 year term.