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‘How to select the most suitable term insurance plan in India for yourself’

Ravi Kumar thought he had his life sorted. By 2019, his younger sister was married, his parents were settled in Bengaluru, and he was well ensconced in a banking career in Mumbai, happy with his compact family of wife and two young kids.

An apartment in Mumbai, a decent corpus in FDs, some investments in equity and gold were enough to tide him over the future. Till 2020 began and life showed up its uncertainties in full force. Ravi still holds a job, but the shadow of a furlough looms. He needs to bolster the savings he has been putting aside for his kids' education and marriage in view of the 'New Normal' that is emerging. He has never been worried about his own health but the pandemic has upended everyone's beliefs about life and the future.

The pandemic was supposed to peak, plateau and then taper off. However, with no sign of a vaccine or definitive treatment on the horizon, the only weapons against the coronavirus are precautions. Daily precautions apart, Ravi is now thinking seriously of preparing for a future that looks vastly different from the one he envisaged last year. He needs to continue caring for his family and saving up, but he has realised he also needs to be covered in case he is no longer around to take care of his family.

This is where Ravi could use the robust benefits of a sound term insurance plan.

What is term insurance?

A term insurance plan is the purest form of life insurance. It involves the payout of the death benefit in lump sum or in instalments in case of the life assured’s death. This means the family of the life assured can continue maintaining their lifestyle and meet their life goals, even if the life assured is no more.

Term insurance also protects a family’s accumulated wealth, which otherwise may get eroded to meet financial expenses because of loss of income, which can happen in case something unexpected happens to the life assured.

Typically, a term insurance plan provides life cover for lesser premiums as compared to other life insurance products since the term plans cover only risk and do not provide maturity benefits like other life insurance plans.

Reasons why term insurance makes sense

- Life cover at nominal cost:

Because the entire premium is used in covering your life, you get a higher cover by paying a lower premium.

- Income replacement:

Term insurance plans can offer options where beneficiaries can receive the sum assured every month in installments, in case something happens to the life assured. This helps the family meet day-to-day expenses without dipping into savings and meet their life goals without any hiccups.

- Paying off liabilities:

The sum assured in a term insurance plan can be used to cover outstanding loans and liabilities as well, so that family members can be free of any financial hurdles in case the life assured is no longer around to pay these off.

- Available online for purchase:

New age term insurance plans are also available online for purchase, making it convenient not just for buying but also renewing the policy.

-Tax benefits:

Term insurance plans are good for getting tax benefits too. Premiums paid towards term insurance are eligible for deduction up to Rs 1,50,000 under Section 80C of the Income Tax Act, 1961. Further, under Section 10(10D) of the Income Tax Act, 1961, any amount received on policy on death will also be tax-exempt. The above mentioned benefits are subject to fulfilment of provisions contained in Income Tax Act, 1961.

Which term insurance plan is the right one?

Term insurance plans are a good way to cover uncertainties that life throws at us. While most of them offer similar benefits, these are some of the factors to be considered before picking the right one.

Claim settlement ratio

This ratio indicates the percentage of claims the insurer has honoured, so a high claim settlement ratio would make an insurer preferable.

Maximum age of coverage

A policy term that covers you for the length of your earning life span, or your whole life should be preferred. Ideally, the policy tenure should also cover the period of any loans taken so that dependents do not have to worry about repayment later.

Online purchase option

In these times, an online term plan that allows you to purchase or renew a policy over the internet saves a lot of trouble.

Single and joint term insurance plans

Check for options of joint cover for both you and your spouse. You can also include your spouse at a later date if you are single at the time of purchasing the policy as per the terms and conditions mentioned under the term insurance plan.

All this may sound onerous but can actually work out simply if you have an insurance provider who ticks all the boxes! Bajaj Allianz Life offers a range of term insurance plans that are designed for different people. Depending on your life goals, the security of your dependents and your own plans for the future, you can easily pick a plan and secure your family's future online.

The financial security of your family also hinges on the timely payment of the sum assured promised by the insurer. Bajaj Allianz Life Insurance records a claim settlement ratio of 98.02% and have had a claim settlement ratio of over 90 per cent in the last five years. , making it one of the trustworthy partners to ensure the financial stability and security of your loved ones in case life takes an untoward turn.

It's time to take a decisive step towards your own peace of mind and secure your loved ones. You may choose from Bajaj Allianz Life's bouquet of innovative term insurance plans today and get your life goals done.

Source:

[1] Individual Claims Settlement Ratio for FY 2019-2020 (https://www.bajajallianzlife.com/)

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Printable version | Oct 20, 2020 12:25:00 PM | https://www.thehindu.com/brandhub/how-to-select-the-most-suitable-term-insurance-plan-in-india-for-yourself/article32722201.ece

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