Term insurance policy – Term insurance plan is a form of life cover, which provides coverage for defined period of time in very low premium amount, and in this if the insured expires during the term of the policy then death benefit is payable to nominee
What is a term insurance plan?
Term insurance plan is a form of life cover, it provides coverage for defined period of time, and on the demise of the insured during the term of the policy the death benefit will be paid to the nominee. Term insurance plans are specifically designed to secure your family needs in case of death or uncertainty. It provides specific amount of coverage for specific period of time.
Why is the premiums charged for taking a Term Insurance Policy very low?
The premium of Term insurance policies are very low as compared to the other traditional life insurance plans. Term plans premiums are very low there is no investment component in it and the entire premium goes for risk cover only. So if the policy holder expires during the insured term, the death benefit i.e. Sum Assured amount will be paid to the nominee. This kind plans covers very high risk in very low premium amount. There is no survival or maturity benefit once the policy term complete.
How to choose a best term plan?
To choose best term plan you should consider important factors like: a) How good is the insurance company
b) How much cover do you need
c) Check the claim settlement ratio
d) The premium and coverage benefits
e) Compare the terms and conditions of various insurance companies
f) You can take two term insurance plans from two different insurance companies, it will save you in case of rejection of claim from one of either two companies
g) Do not just look for the low term insurance plan as they might be an important factor but may have several conditions attached for the time of claim
h) You can also go for an online or offline term plan
Is there much difference in premium across term plans?
The premium in the term plan could vary from one company to another and as the tenure of your policy increases, the premium for the same sum assured increases.
Are there any eligibility criteria for term insurance plan?
The eligibility criterion for term insurance plan varies according to the insurers, the minimum age of entry is 18 years and the maximum age limit is 65 years.
What are the smokers and non-smokers criteria in the term plan?
It includes the smokers or users of any tobacco products, such as chewing tobacco etc. Some smokers who have quit smoking are also eligible for favourable premiums. However the period varies among insurers. It varies insurer to insurer.
Will I get a tax benefit on the insurance premium?
Premiums paid for all life insurance policies are exempted from tax up to a maximum of Rs 1.5 lakh under Section 80C of the Income Tax Act, 1961. The claim amount received by the beneficiaries is also tax free under Section 10 (10D) of the Income Tax Act.
