It is a prudent decision indeed to invest in one of the best term insurance plans in India, since it is a pure investment vehicle, which provides maximum cover at a low price. It will secure your family in case of your untimely demise or an unfortunate incident that leaves you incapacitated permanently. However, it is essential to choose the cover carefully, so as to ensure that you are not under-insured. If the cover does not meet the basic necessities of your dependents, it defeats the entire point of insurance. This is one of the main factors to be considered according to Ramalingam K, the Chief Financial Planner at Holisticinvestment.in. Be sure to factor in the rate of inflation in your calculations when you determine the cover. Some of the other things to keep in mind are as follows.

Most Important Factors of Term Insurance Plans

1.      Affordable premium: Term insurance is known to be the easiest on the pocket when it comes to premiums. However, you need to achieve the right balance of being able to afford the premium and getting sufficient cover out of the investment.

2.      Ease of buying term insurance online: As per the IRDA guidelines, there might be a reduction of 10-15% in the premium in coming years. This, coupled with the fact that the process of purchasing online term insurance is very simple, makes it desirable. Be sure to assess the plan carefully and be sure that you understand the terms clearly.

3.      Claim settlement ratio: It is a well-known fact that your family's insurance claim may be rejected if the insurance company deems the context as outside of its terms. It is important to find a company that has a high claim settlement ratio, along with ensuring that you are honest about your health habits at the time of the purchase.

4.      A plan that is right for you: It is advisable to choose a company that provides a wide range of term insurance plans so as to find one that suits your financial needs as closely as possible.

5.      Accidental death benefit and exceptional cases: Be sure to choose a plan that will honour the claim in case of an accidental death and be sure to know the exceptions. If the insured person commits suicide within a year of purchasing the policy, it is likely that it will not be covered.

6.      Tax benefits under sections 80C and 10(10D) of the Income Tax Act, 1961: Policyholders can enjoy tax deductions up to Rs 1.5 lakhs on annual premiums paid towards their term insurance plans in India.

How Insurance Needs Change for Every Life Stage

Term Plans (advisorkhoj)

I am 30 years old and just married, so do I need a term insurance plan? You are faced with different priorities at every stage in your life. You need to change with it, in all aspects, whether it is career goals or finances, especially insurance. For instance, a cover that is sufficient when you are 25 will never hold good when you are 60. So, it is important to consider what insurance needs you would have as your life progresses.

What Do I Need?

When you begin your career and acquire financial assets, you need to build a strong foundation. In an event of injury, death or disability, your family needs financial security as well. So, it is imperative to always protect your most valuable assets – Income and Life.

1. Would Income Disability Insurance be Sufficient?

When your employer provides disability insurance, you must ensure that you are adequately covered. In most cases, the cover is insufficient and might also end if you happen to leave your job. With the volatile job market, you need something more permanent. An alternative would be to go in for an individual plan, apart from what the employer provides.

2. What could Short-Term Insurance do for me?

Short-term insurance is the best policy you could start with when you are young. It protects the financial foundation you lay. Later, it can be converted to permanent insurance. Term insurance plans offer you the option of inexpensive coverage when you have major financial commitments, such as home loans.

3. Growing Assets and Middle Age

Once you are financially stable, you can go in for whole life covers and also include add-ons to your term insurance policy. Financial growth of assets requires constant attention.  Insurance can be a valuable investment to ensure that your financial goals are met. Your family might depend on the salaries of both you and your spouse to build your child’s college funds, buy a house, or even setup a retirement fund. At this stage life, you might want to consider converting your term insurance plan to a permanent one.

This will help accumulate savings and also provide tax free benefits for your family in case of your unforeseen demise or disability.

If you and your spouse survive your policy’s tenure, your maturity benefit will also give you a major source of income. This will take care for your medical needs, retirement plans and goals, lifestyle maintenance and much more.