Term Insurance Guide
- What is Term Insurance?
- Why Do I Need Term Insurance?
- Benefits of Term Insurance Plans MUST READ
- Why Buy Term Insurance Online?
- Aegon Life's Term Insurance Plans
- How To Choose The Best Term Insurance?
- Factors Affecting Term Insurance Premium MUST READ
- What are Term Insurance Riders?
- Aegon Life's Claim Ratio
- Term Insurance FAQs
What is Term Insurance?
Term insurance is a type of life insurance where the insurer provides coverage for a certain 'term' in exchange for a specific premium paid over a period of time. If insured dies during the term period specified in the policy, a death benefit is paid to the family of the insured.
Term Insurance Plan
Term insurance plan or a term insurance policy is a life insurance product which guarantees payout to the nominees upon death of the insured. In return to this guarantee, a fixed amount of premium is deducted at specific intervals. Buying a term insurance plan during the current COVID 19 outbreak is a necessity.
All term insurance plans & companies are regulated under IRDAI, (Insurance Regulatory and Development Authority of India).
Why do I need Term Insurance?
To take care of my family
If you are an earning person of the family, then you must have term insurance. When you buy term insurance, you will get peace of mind in knowing that your income will be replaced if you are no longer there.
To pay off my loans
If you have any big liabilities like home/car/personal loans then you must buy a term plan. A Term Plan will provide financial security to your family by providing lumpsum pay out in your absence
Make provision for uncertainties
In case of your unfortunate demise, the benefits from the term plan can help your loved ones pay for their regular expenses and also achieve their long term goals.
Benefits of a term insurance plan
Term insurance plans are a combination of affordability with simplicity. You get a life cover of 25L at premiums that are easy on your pocket
You can avail tax benefits under section 80C of the Income Tax Act, 1961, for the premium paid and sum assured of your term insurance plan. Visit Income Tax website to know more about all tax deductions.
Easy to Buy
Instead of stepping out of your home, you can now purchase term insurance plans online with a few clicks, as per your convenience. Buy Now
Claim Payouts can be Staggered
Staggered monthly payouts provide an option to claim a lump sum and the rest of the claim as Monthly Income preventing any misuse of the total cover.
Flexibility in Premium Payments
You have the option to pay premiums on a monthly, semi-annual, or annual basis. Also, there are also term insurance plans that offer single pay premium option.
Additional Benefit with AD Rider
You get the option to add extra protection to your life in case of death due to accident with Aegon Life Accidental Death Benefit Rider
Protection Against Liabilities
During our lifetime, we buy a car, house, etc. In case a mishap occurs to you - accident or demise - the term insurance plan replaces your financial role in the family.
Key Features of a Term Insurance Plan
The concept of term insurance is to provide coverage for a family in times of duress, especially when the income generator is absent. The primary intention is to keep the family stable and happy, and ensure they can meet basic expenses and fulfill their dreams. Furthermore, as the head of the household, you can lead a peaceful life knowing your family's future is secure, even in your absence.
Online Term Plan
Online term plan can be defined as a term insurance policy that can be bought digitally without any paperwork or meeting agents. Buying Term insurance Online is the best way to buy term insurance as it is completely hassle-free and lets you compare the pros and cons. Let us know more about why buying a term insurance online is the best option.
Why do I Need to buy Term Insurance Online?
With the advent of internet, buying a term life insurance plan is as simple as placing an order for your favorite dress or dish. Thus, it’s always a wise decision to purchase term insurance plan online. Besides, here’re the following reasons that shows why you need to buy a term plan online –
An online term insurance plan will cost you less as compared to offline plan with the same features and benefits. This is because there’s no mediator involved in the process. Moreover, online term plans as compared to offline plans have lower premium rates.
The online mode gives you the flexibility to compare and choose your plan as per your requirement. Also, there are so many tools and informative articles available online that would help you make an informed decision.
Hassle-free premium payment option
With the online term life insurance premium payment facility, you can make payments online in a fast and secure manner. You can make use of safe premium payment options such as credit cards, debit cards, etc. to pay premiums online.
Term Insurance Plans by Aegon Life
At Aegon Life, we understand the need for a simple solution that covers you in case of life’s unfortunate events; a solution that makes sure your loved ones are well protected in your absence.
Aegon Life Saral Jeevan is a simple & affordable term plan where you can secure your family in the unforeseen event of your absence where you family will receive a fixed amount which is tax-free.
Financial security of your family in case of your absence
Provides financial security to your family by providing lumpsum pay out in your absence
Cost effective plan for your basic insurance need
Covers risks of Accident & other unforeseen health scenarios, and their resulting financial impact
How to choose best term insurance plan
1. Cover Amount
If some of your colleagues have opted for Rs. 1 Crore cover, should you opt for the same amount too?
|25 to 35 years||15-18 times the current annual income, after considering the debts/outstanding loans|
|35 to 45 years||10-15 times the current annual income, after considering the debts/outstanding loans|
|45 to 55 years||5-8 times the current annual income, after considering the debts/outstanding loans|
2. Term Insurance Premium
Based on your age and lifestyle, you would need to pay small premium amounts to build this term life insurance cover.
For example - If you are 32 years old , you would have to pay a monthly premium of only Rs. 693 for a death benefit of Rs. 25,00,000.
The premium for a term plan also differs from insurer to insurer.
As time passes, the premium for the same sum assured also rises.
You also need to look at how often you want to pay the premium, be it monthly, yearly or other.
Want to get a quote for a policy for yourself? Click here to use the Aegon Life Insurance Calculator
3. Eligibility Criteria
The eligibility criteria for term plan ranges depending on the insurance company.
However, the standard minimum age of entry is 18 years while the maximum age limit to apply for a tem plan is 65 years.
4. Payout Options
As the insured, you can decide the pay-out of the sum assured to your nominee depending on the type of option you choose at the time of purchase.
You can opt for a lump sum or a monthly income pay-out, based on your preferences.
Factors Affecting Term Insurance Premium
Life insurance premium is calculated through a process known as underwriting.
The process employs the use of many statistical and mathematical calculations around the details of the person to be insured. Some of the major factors considered while calculating premium are
Young people are at a lower risk of getting life-threatening diseases. A younger person will also end up paying more number of premiums (since the tenure/term of their policy would be longer) than an older person who is likely to make a claim much sooner.
There have been numerous studies that say women tend to live longer than men. Hence, women have a higher probability of paying more number of premiums and thus their premium amounts are comparatively lower.
Medical history of the family
This is an important factor in calculating the term insurance premium. A person whose family has a history of ailments such as heart attack or cancer, has increased chances of contracting these illnesses, which is why more instances of such diseases increase premiums.
Smoking and drinking habits
This is one of the foremost considerations for every employer because there are a lot of health-related concerns that these habits are known to cause.
If you have a job in industries such as transport, shipping, mining oil, gas, etc. your life is perceived to be at higher risk of accidents. Thus, the premium for you in this case would be higher as compared to a professional with a desk job.
If the policy term is longer, you'll end up paying a higher premium as the insurance company will have to cover your life for longer - meaning higher risk. Thus, a small term will have a lower premium as compared to a longer term.
If you have any known illnesses or common diseases like obesity, the underwriters would scale you on a higher risk. Obesity, for example, is well known to elevate the chances of blood pressure and heart problems, even stroke. Therefore, in this case, your term life insurance premium would be a little higher than that of a person who is relatively fit.
Term insurance riders- Must-have Add-ons
What are term insurance riders?
A rider is an add-on or a paid feature to your base term plan. Every rider aims to upgrade the scope of your basic policy coverage. But what benefits do riders bring? Are they worth the additional money? Do they truly provide complementary coverage? If you are staring at a list of riders and wondering whether to consider them, let's look at some essential add-on benefits that can enhance your term plan and help you decide.
Accidental Death Benefit Rider
Indian roads witnessed more than 1.51 lakh accidents during the year 2019. This is a number that cannot be ignored.
You can take precautions but there is not much you can do if the other driver makes a mistake. That's why many people include an accidental death benefit rider in their term policy.
This means that if an insured person passes away due to an accident, the accidental death rider pays a sum above and beyond the basic sum assured to the nominee.
Aegon life's claim ratio
Consistency of Claim Settlements
The consistency of an insurance company in settling claims over the years is also a good indicator of their dependability. Therefore, the historical claim settlement ratio of insurers over the past 3-4 years should be checked and it should be in a small range. For example, a company with the ratio in the range of 95% to 97% is more consistent than one with the claim settlement ratio in the range of 75% to 90%. In the last four years, our claim settlement ratio has been among the best in the industry.
Ease of Processing Claims: In order to ensure that your family does not face any hassles or delays during the term insurance claim process, you must make sure that the whole procedure is as simple as possible. The claim reporting should be easily approachable for.
To know more about Insurance, visit the official Government Insurance Website
Term Insurance FAQs
- 🛡️What is Term Life insurance
Term life insurance is a contract between an insurance company and the insured whereby the company guarantees payment of an agreed amount (called death benefit) to the named nominee if something untoward happens during the policy period or at the end of the policy, termed as maturity. The insured needs to pay regular premiums to the insurance company for the policy to be valid.
- 🛡️ Does Term Life Insurance Cover COVID-19
All our term insurance plans cover COVID death claims. Apart from that, we also have a life insurance plan which covers COVID Hospitalization expenses. Know more about this COVID Insurance Policy
- 🛡️ What is a Term Insurance Plan?
Term Insurance plan is a form of life insurance that provides coverage for a limited time-period. In case the insured person dies while the policy is still active, then a death benefit will be paid to the nominee. It is one of the most cost-effective way of protecting your family due to its affordable premiums and the flexibility of opting out at convenience. You can also change or customize a term plan if you wish. The amount of premium paid for term insurance stands eligible for income tax deduction under section 80C of the Income Tax Act.
- 🛡️ Why is Term Insurance Important??
If you buy term insurance, you are doing it for the financial security of your family, which relies on you, and to get multiple benefits such as tax exemption and planning for your child’s higher education.
- 🛡️ If my age is 30 and annual salary is around Rs 5 lakh, how much term insurance cover should I be looking at?
If you are around 30, you have another 30 years of working life ahead of you. Your current annual salary is around Rs 5 lakh, but you will be getting raise every two years or so. Hence, you could look at a term insurance amount of Rs 1 crore. Remember to consider inflation as well.
- 🛡️ How do I Process a Term Insurance Claim?
In general, beneficiaries and insured persons can make a term life insurance claim in either of the two following cases: (a) if something untoward happens to the person for whom the insurance policy has been taken, and (b) the policy matures. You need to inform the insurer, fill in the relevant forms, and submit the documents requested.
- 🛡️ What if you don’t die within the term period?
In case of survival of the policy term, the insured does not get any return.
- 🛡️ I am an occasional smoker. Do I need to declare myself as a tobacco user?
Yes! In fact, if you have smoked in the last 12 months, then you must declare yourself as a tobacco user. If information is withheld and later revealed to the insurer, it may have severe repercussions such as your policy being considered as null and void or denial of the policy benefits.
- 🛡️ When should I buy term life insurance?
Whether you are in your 20s, 30s, 40s or more – it is always a good idea to get insured.
- 🛡️ Does term insurance not cover any particular type of deaths?
Claims of death due to drunken driving, accidents while inebriated, self-inflicted wounds, murder, death in a war or known violent area, dangerous hobbies like skydiving, and death due to sexually-transmitted diseases are not entertained.
- 🛡️ Does life insurance requirement change as we grow older?
This depends on the policy. In term plans, the basic costs, coverage limits, and requirements remain the same for the duration of the policy. For whole life plans, it may remain unchanged sometimes, but mostly they will have changing terms over that timeframe–the changes occur when you renew the policy.
- 🛡️ What is Term Insurance Premium?
It is the money that the policy buyer pays the insurance company on a regular basis (monthly, twice a year, or annually) in lieu of the guarantee of the death benefit.
- 🛡️ Who Decides What the Term Plan Premium Amount should be?
The insurer does, and the amount depends on several factors that can impact the insured’s life expectancy, such as age, gender, smoking habit, personal medical history, and family medical history (such as heart disease or cancer among immediate family members).
- 🛡️ Is the Gender of the Insured Important?
Yes. The average Indian woman lives longer than the average Indian man, therefore, the term life insurance premium for women is lower than that for men of the same age, everything else remaining the same including smoking habit.
- 🛡️ Why is Nicotine-use a Factor for Determining the Term Insurance Premium?
Nicotine use becomes a factor in determining the premium because a non-smoker is expected to live longer than a smoker–in any country.
- 🛡️ What if the Term Insurance Premium is not Paid?
If premium remains unpaid one month after the due date (that is the ‘grace period’), the policy will lapse. In that case you, as the insured, will have wasted all the premiums you have paid in previous years. Additionally, your beneficiary will also not receive a pay out as the term life insurance policy will be deemed ‘lapsed’.
- 🛡️ What happens if the insured dies before paying the due premium?
If the insured dies during the plan term, before he or she can pay the premium, the due premium will be deducted from the death benefit.
- 🛡️ If the insured pays all premiums and does not die during the term period, do they get the sum assured?
In case of a term life insurance policy, there are no paybacks. So, if you as the insured buy a standard term insurance, and you outlive the plan, you get nothing. But do not forget that your primary objective is to create a protective financial umbrella for your loved ones. For other plans, except term plan, you get the money after the policy matures.
- 🛡️ Are there no monetary benefits from investing in term insurance?
Besides insuring your family, this type of life insurance offers various tax deductions and exemptions. Under Section 80C of the Income Tax Act, you can claim a deduction of up to Rs 1.5 lakh on your policy premium. Even the proceeds that your loved ones get in your absence or the amount you get at the maturity of the term is tax-free. Learn all about tax benefits here.
- 🛡️ Can I create wealth from term insurance?
Absolutely! But for that, look for a policy with maturity benefits. Most people are unaware of the additional benefits apart from the death and disability benefits. So, check out the various types of life protection plans: Here are a few to consider WHOLE LIFE: Regular premiums until death, after which the corpus is paid to beneficiaries; no expiration; ENDOWMENT PLANS: Sum assured is paid under both scenarios – death and maturity; ULIP: Risk cover plus investment options, assured pay out; MONEY-BACK: Insurance-cum-investment with periodic returns as a percentage of the sum assured.
- 🛡️ Is there anything else I can do with my term policy?
Yes, insured persons have the option of taking loans against their policies without upsetting the policy benefits.
- 🛡️ Does Aegon Life have all this?
Aegon Life has all this, and more. Aegon Life offers term plans, whole life, ULIP, money-back, retirement plan, and child plan. Check the website here for more details.
- 🛡️ Can we have 2 term insurance policies?
You can buy as many term insurance plans as you want to fulfill your insurance needs. You can even nominate different beneficiaries for both the insurance plans.
- 🛡️ What are the documents required to buy term insurance plan online?
You would be required to share some combination of age proof, address proof and identity proof, in addition to your bank details to buy an online policy. For identity and age proof you can use Aadhar card, Pan card, Passport, Voter Identification cards, school leaving certificate, birth certificate etc. For address proof, utility bills, Passport, bank a/c statement etc. are acceptable.
- 🛡️ Which term insurance policy should I select?
The one which provides you with the maximum death benefits for your affordability.
- 🛡️ What is the difference between term insurance and whole life insurance?
Term insurance is a life insurance policy that provides coverage for a specific amount of time, say 10, 20 or 30 years, whereas whole life insurance is a type of permanent life insurance that provides a death benefit and accumulates a cash value as long as you are alive.
- 🛡️ How do you know how much term insurance to buy?
It depends on various factors, including the number of dependents you have, your investment needs, affordability, and the lifestyle you wish to provide to your family. You must factor in the living expenses of your dependents, for how long will they need it, your current loans and liabilities and future expenses such as child education when deciding your term insurance cover.
- 🛡️ Can term life insurance claims be rejected?
Yes, the insurer can reject a life insurance claim on grounds of
- Misrepresentation of actual information
- Non-disclosure of correct information
- 🛡️ What are term insurance riders?
A rider is an attachment or amendment that supplements the term plan coverage, helping the insured meet specific needs. There are various types of riders
- Accidental death and dismemberment
- Critical Illness
- Waiver of premium
- Income benefit
- Partial and permanent disability