Know About Pure Term Insurance Plans Offering High Coverage

The primary objective of a life insurance policy is to provide financial aid to the deceased person’s family members. It is therefore important to ensure that the policyholder chooses a nominee to whom the life insurance amount will be provided to. The individual who purchases the policy has the right to nominate the person who will receive the benefit when a death claim is made.

All about nomination

Policyholders typically nominate their spouses, children, or close relatives as nominees. While unrelated individuals like friends can also be nominated, the insurable interest should be proved in such cases. The insurer may or may not approve the nomination because insurers believe that nominating an unrelated individual may increase the risk of the policy.

The policyholder can also nominate multiple individuals and decide the percentage of the sum assured that each individual would receive on his/her demise. If a nominee is a minor i.e. below the age of 18, an appointee would have to be named to handle the documentation and benefit amount until the nominee becomes a major.

To make a nomination, the policyholder will have to provide complete details of the individual including the name, age, address, and the relationship he/she shares with the policyholder.

The policyholder can change the nominee any number of times during the policy term. All he/she has to do is fill in a form with details of the new nominee and submit it to the insurer along with the form containing details of the previous nominee. The latest nomination will supersede all former nominations. Change of nominee is essential when the nominee dies before the policyholder.

In case the policyholder does not choose a nominee, the insurer will provide the death benefit to the legal heir - spouse, children, or mother.

What is a beneficial nominee?

A beneficial nominee is basically the individual who is authorised to use the benefit provided on death claim. The beneficial nominee mentioned in the policy will receive the benefit as directed by the policyholder. Parents, spouses, or children automatically becoming beneficial nominees of a policy.

Documents required by a nominee to make a claim

On the death of the policyholder, the nominee can claim the death benefit by submitting a few important forms and documents.

• Death claim form
• Physician’s certificate
• Hospital certificate
• Employer or school certificate
• Original document of the policy
• Death certificate
• Cancelled cheque/photocopy of the passbook
• Post-mortem report
• Claimant’s photo ID and address proof

People may envy an IT professional. People working in the IT sector are known to get a hefty package and have a comfortable lifestyle. However, one also needs to understand that an IT professional also leads an extremely stressful life as he/she has deadlines to worry about which means that the person has to spend long hours in the office. All these can take a toll on his/her health and thus a need for term insurance becomes extremely important.

Some of the reasons how term insurance is beneficial for an IT professional are given below:

• The pay factor: People working in the IT sector receive healthy packages. Most of them are young and ambitious, and dream of having a leading a higher standard of life. This leads them to take loans so that they can have their own house or car. People working in IT sector tend to have a very stressful lead which exposes them to the risk of getting diagnosed with a serious health condition. If they are the sole breadwinner in their house, it becomes even more important for them to have a term insurance policy.
• The benefits of availing riders: Most of the term insurance plans also offer riders or add-on plans. These riders offer an extra layer of protection. Since an IT professional spends long hours in the office, he/she is susceptible to be diagnosed with various types of health issues. Riders such as Critical illness riders are helpful as it provides cover for various types of serious health conditions. Thus, it becomes even more important for a person to purchase term insurance.
• Tax benefits: A term insurance policy also helps an IT professional save money as he/she can enjoy tax benefits under Section 80C of the Income Tax Act,1961, and Section 10(10D) of the Income Tax Act, 1961. Hence, it becomes an important reason for a person working in the IT sector to purchase a term insurance policy.

One of the newest additions to mutual funds is the complimentary life insurance cover provided alongside a Systematic Investment Plan (SIP). These schemes have been in the market for a while but did not have a great demand compared to other mutual fund products. In the recent days, they have made a comeback mainly to make mutual fund investments competitive over other schemes in the market. Following the Union Budget 2018, the taxes introduced on long-term capital gains obtained through mutual funds may have made investors unhappy. However, this additional feature is likely to provide them with some more incentives for investing in mutual funds.

Features of mutual funds with term insurance

This type of insurance coverage along with SIP investment is available only with some companies in the market. The success of this model is likely to influence other companies to offer similar products to their customers. The insurance cover provided under this scheme is a term insurance plan that pays for the unexpected death of the insured person. In other words, there is no maturity benefit offered along with this insurance. Some of the notable features of this scheme can be listed as follows:

• This facility is available only for those who have chosen an investment tenure of at least three years.
• If the SIP is discontinued before three years, the cover will cease immediately.
• The premium amount required for providing term insurance coverage will be borne by the company.
• The coverage amount offered under this scheme will be a specific multiple of the SIP amount chosen by the investor. The multiple will vary in the first, second, and third year as the investment progresses.
• The coverage value cannot exceed the maximum coverage limit set forth by the company.
• Most companies provide this coverage for anyone between the age of 18 years and 50 years.
• The coverage will continue till the age limit mentioned in the policy document even if the SIP is completed after a 3-year period.

How it works ?

As mentioned above, the term insurance coverage value is determined by the SIP amount and tenure. In some plans, the maximum sum assured for the complimentary term cover will be 10 times the SIP monthly instalment in the first year, 50 times the SIP monthly instalment in the second year, and 100 times the SIP monthly instalment in the third year. If an investor is investing Rs.10,000 per month in the SIP plan, his/her term insurance coverage will be Rs.1 lakh in the first year, Rs.5 lakh in the second year, and Rs.10 lakh in the third year. The coverage available here will continue till the investor reaches 50 or 55 years (depending upon the age limit mentioned in the policy document) unless the plan has been cancelled by the investor.

Advantages of SIPs with insurance cover

Some of the key advantages of SIPs with insurance coverage are listed as follows:

• They offer free life insurance coverage without the need to pay extra money.
• The investor has the option of stopping the SIP fund midway if it is deemed unnecessary.
• There is no exit load if the investment is made for at least three years continously.
• The extra insurance coverage may come in handy for the family of the insured during unexpected circumstances.

Limitations of SIPs with insurance cover

Some of the limitations of this scheme are listed as follows:

• The term coverage offered here is a group policy, which may not be as efficient as an individual one.
• There may be an initial waiting period of 60 to 90 days for death due to illnesses.
• An exit load up to 2% is applicable if the SIP investment is stopped before a tenure of three years.
• The life insurance cover will cease even after the partial withdrawal of the SIP fund.
• The maximum age of coverage is restricted to 50 years or 60 years depending upon the SIP fund chosen.

The complimentary term insurance plan offered along with a mutual fund investment plan is certainly a welcome addition. However, the main focus here must be on the investment or savings part rather than the insurance coverage. It is always easy to find a comprehensive term insurance plan in the market at an affordable price. Hence, it is not a good idea to choose an SIP just for the sake of insurance coverage. Also, most industry experts suggest people to keep their insurance separate from their investments. However, if the investment plan is up to your expectations and the complimentary term insurance comes as an add-on, there is no reason why you shouldn’t opt for this type of SIP.

At the time of purchasing a life insurance policy, you are required to opt for a sum assured. The sum assured is the minimum amount of money that will be paid to one’s nominee in case of an unfortunate eventuality. While the sum assured is fixed for the duration of the policy for most term insurance plans, certain plans provide policy buyers the option to make enhancements to this sum during certain key milestones in their life. This type of a term insurance policy is called life stage event term insurance plan.

The milestones or events during which you can most commonly increase your sum assured include marriage, birth of the first child, and birth of the second child,legal adoption, etc.. You will have to keep in mind that when you make an enhancement to your sum assured, your insurance provider will also charge you a higher premium.

Thus, in case you purchase a term insurance plan with a certain sum assured and find that the coverage amount is not sufficient for you, you can choose to increase the coverage if you have a life stage event term insurance plan. However, not all term insurance plans come with this option. Thus, if you would like to have the option to increase the sum assured of your insurance plan, make sure to opt for a life stage event term insurance plan.

You may have asked yourself the question that who would take care of your loved ones in case something happened to you? If you are the sole earning member of your family then asking this question to yourself becomes extremely important and hence, you must take adequate steps to ensure that the future of your loved ones is safe and secure even if you are not around with them in the future.

Thus, insurance companies have introduced insurance products called the income protection plan which ensures that your family continues to receive a regular payout even in your absence so that they can continue to live the standard of life provided by you for which you have worked so hard.

So, how does an income protection plan works?

If you have availed a regular term insurance plan, then the nominee appointed by you will receive a lump-sum amount called the death benefit in case of your death and the plan will cease to exist. However, one of the problems that the beneficiary may face is that he/she may not be able to stretch the amount for a long period of time and there is a risk that the amount may get exhausted quickly.

Thus, an income replacement plan is the best way forward as you can decide the amount and also how you would like your beneficiary to receive the amount i.e. on a monthly, quarterly, half-yearly, or on a regular basis.

Thus the aim of an income protection plan is to ensure that your loved ones continue to receive payouts on a regular basis so that they do not face any financial problems and continue to fulfill their needs and live a standard life. These plans cover till the age of 60 years.

Why should you purchase an income protection plan for yourself?

You must purchase an income protection plan if:

• If you the only earning member in your family
• You want to ensure that your loved ones continue to receive a regular sum of money to take care of their financial needs even if you are not around.
• You want to ensure that your loved ones are able to take care of their future needs regardless of the rate of inflation.
• You must purchase an income protection plan if your loved ones are financially dependent on you.
• You must purchase this type of plan if you want to ensure that there is a tool taking care of your family in case of your death or you suffering from any form of disability.

Understanding income protection plan better

Let us take the help of an example in order to have a better understanding of an income protection plan. For example, you are a 30 years old person with an initial monthly income of Rs.75,000. You purchase an income protection plan with a policy term of 30 years and where you have to pay a premium of Rs.1,970 on a monthly basis.

Suppose, you die during your 5th policy term, the insurance company will immediately pay the nominee a lump-sum amount of Rs.11 lakh as a death benefit. Thereafter, the insurance company will pay the nominee a sum of Rs.92,000 on a monthly basis. The monthly benefit will increase by 5% every year keeping in mind the inflation rate.

Similarly, if you meet with an accident in your 5th policy term which hampers your ability to work, the income protection plan then ensures that your family does not have to face any financial problems. You will be first of all be paid 50% of your monthly income as per the plan post the accident. Thereafter, the insurance company will pay you a monthly income of say Rs.45,000 which will increase by 5% every year up to Rs.50,000 for the rest of your policy term. Your future premiums will also be waived by the insurance company.

Of course, it is important to understand that the sum assured, policy term, and the premium payable will depend on various factors such as your age, annual income, financial needs etc.

You can see that under such plans, the income will rise by 5% for a very simple reason that the cost needed to sustain today’s life requirements may not be enough for tomorrow keeping in mind the inflation and thus the insurance company increases the monthly payout by 5% every year.

You may have various dreams that you want to fulfill for which you may take loans and EMIs. In case something happens to you, your family would be under severe pressure and may not be financially adept to repay back the loans and EMIs. An income protection plan is the best way to ensure that the future of your loved ones is safe and secure even in your absence.

We all know that it is extremely important to have an insurance especially during the time when you have various responsibilities to fulfill and many financial goals to achieve. Having an insurance in place ensures that your family is safe and secured monetarily even if you are not around. Life post-retirement means that you are not working anymore. You are also free of your responsibilities and you may have achieved all your goals. Your children are probably independent by now and capable of taking care of themselves. So, do you need an insurance post your retirement? In some cases you do. It is generally recommended that you purchase a term insurance for yourself since it covers you for a specific period of time. But why do you have to be covered at all after you have retired? We discuss the reasons.

• Early retirement-You may not wait till the age of 60 to retire from your job. You may do that at the age of 50 in order to fulfill your other dreams which may not be possible while you are still working. An early retirement does not mean that you are relieved of your responsibilities. You may still have immediate financial liabilities to take care of and you don’t want your family to be burdened with any financial problems in your permanent absence. Hence, it is important that you purchase a health insurance for yourself.
• Spousal support-You may want to ensure that your spouse is financially secured even in your absence and he/she does not have to depend on your children for financial support. You wouldn’t want any financial liabilities to bother your better half in case you are not there. Keeping that in mind, it is always advisable to purchase a term insurance policy for yourself.
• Children still dependant on you-You may have children who might still be still dependant on you even after you have retired. Thus, it becomes important to ensure that their future remains secure and they are able to achieve their dreams regardless of whether you are there or not. A term insurance policy will ensure that your dream of seeing your kids get educated and married do not get disrupted even if you are not around.
• Working after retirement-You may choose to work after you have retired. Various people are self-employed post-retirement. This means you are still a financial contributor to your family and your absence might affect your family from a financial point of view. Hence, it is recommended that you purchase a term insurance policy in order to ensure that your family does not face any problem monetarily.
• Covering the cost of your death-In case you die, your funeral might be an expensive affair. A term insurance policy will ensure that a corpus fund is created that will not only take care of your final rites but also financially support your family and help them achieve their future dreams.

It is generally difficult to purchase a term insurance policy post-retirement as insurance companies are not willing enough to provide one. The premiums that you might have to pay might be expensive and become difficult for you in terms of affordability. Hence, it is important that you have planned well in advance regarding your life. For example, it is rare to have children still being dependant on you after you have retired, but if you are aware that a case like this can arise in the future, it is recommended that you purchase a term insurance well in advance.

The reasons mentioned above are strong enough for you to contemplate whether you need a term insurance post-retirement. If you still have responsibilities to take care of post your retirement then it is advisable that you act and buy a suitable term insurance plan for yourself.

A term insurance policy is a type of life insurance product that provides a risk cover against death to the policy buyer. Thus, in case the policyholder passes away while the policy is still in-force, a death benefit, will be paid to the nominee. Traditionally, the death benefit is paid to the nominee as a lump sum amount.

While the purpose of a lump sum death benefit is to help the policyholder’s dependents pay for immediate financial needs and to save some money for their long-term needs, the fact remains that many people do not know how to best invest this payout for maximum returns, and, as a result, might have to face financial problems a few years down the line.

Keeping this mind, life insurance firms have started to offer income replacement term insurance plans as a part of their product suite. In the case of an income replacement term insurance plan, which is a variant of a regular term life policy, the death benefit or payout will usually be split into two parts – a lump sum payout that is paid to the nominee upon the policyholder’s death and a fixed monthly income which the nominee is eligible to receive for a certain number of years, usually between 10 years and 15 years. Thus, income replacement term insurance plans are ideal if you want to ensure that your dependents are provided a regular and fixed source of income in case of an unfortunate eventuality.

Variants of Income Replacement Term Insurance Plans

Income replacement term insurance plans usually come with a few payout options, from which a policy buyer can choose an option as per the needs of his/her dependents.

• Lump Sum Payout + Fixed Monthly income: In this variant, the nominee will be paid a lump sum benefit, which will amount to a certain percentage of the base sum assured, upon the policyholder’s death to pay for any immediate financial needs that might arise. In addition, the remaining sum amount will be split into equal monthly instalments that will be payable for a certain pre-defined duration of time.
• Lump Sum Payout + Increasing Income: Here, as soon as the policyholder passes away, a percentage of the sum assured will be paid to the nominee to pay for immediate expenses such as funeral expenses, household expenses, etc. In addition to this, whatever is left of the sum assured will be paid to the nominee in instalments that will increase every policy year for a certain number of years. Thus, these increasing payouts will help protect your loved ones against the effects of inflation and rising cost-of-living.
• Fixed Monthly Income: In this case, a fixed amount will be paid to the nominee on a monthly basis for a specific number of policy years. Thus, the entire sum assured that is chosen by the policy buyer while purchasing the policy will be divided into guaranteed monthly payouts.
• Increasing Income: In this variant, the sum assured chosen by the policyholder while purchasing the policy will be paid to the nominee upon the policyholder’s death on a monthly basis. However, the amount that is to be paid might increase by a certain percentage every policy year.

Benefits of Income Replacement Term Insurance Plans

• Financial Security: As the name suggests, the primary purpose of an income replacement term insurance plan is to provide the nominee a steady source of income in case the policyholder succumbs to an untimely death. Thus, this amount, which will act as an income replacement, will provide financial security to one’s dependents.
• Affordable Pricing: In comparison to other life insurance products, term insurance policies are usually more affordable since they don’t acquire a cash value at any time during the policy tenure. Thus, you can provide financial security to your dependents without spending a large sum of money on premium payments.
• Flexibility: In the case of income replacement term insurance plans, insurance providers usually offer a number of payout options to the policy buyer. You can choose a fixed monthly payout, an increasing monthly payout, or a lump sum payout along with monthly payouts. Thus, you can customise the payout as per the needs of your dependents. Further, you can also choose a sum assured amount as per your needs and opt for a suitable policy tenure.
• Riders: Along with your income replacement term insurance plan, you can opt for additional riders if you want a more enhanced coverage from your policy. Some of the riders that you can consider purchasing with your insurance plan are the Accidental Death and Disability Benefit Rider Accidental Death Benefit Rider, Critical Illness Rider, Term Rider, Waiver of Premium Rider, etc. However, you will need to keep in mind the fact that the exact riders offered along with a policy will vary from plan to plan and insurer to insurer.
• Tax Benefits: Life insurance policies offer policyholders and their nominee tax benefits. When you purchase an income replacement term insurance plan, you can claim tax benefits for the premiums that you pay towards your policy under Section 80C of the Income Tax Act. The death benefit payout that your nominee may receive in case of an unfortunate eventuality is also eligible for tax rebates under Section 10(10D) of the Income Tax Act, 1961.

When should you purchase an Income Replacement Term Insurance Plan?

The key benefit of a purchasing an income replacement term insurance policy is that you can ensure that your loved ones have the means to pay for financial expenses that they might incur in your absence. With this mind, you should ideally purchase an income replacement term insurance plan if:

• You are the primary breadwinner of the family, and your family depends on your monthly income to meet their needs.
• You have a number of dependents, including young children, dependent parents, etc.
• Your nominee is not well-versed with the various investment options available and might not be able to get optimum returns from a large sum of money.

An income replacement term insurance plan is a smart choice for any individual who wishes to provide financial security to his/her loved ones for a significant duration of time. However, the decision of which life insurance product to purchase should be based on your needs, liabilities, and future requirements. For example, if you have a number of debts, opting for an income replacement term insurance plan might not be the best choice since the lump sum benefit provided by a regular term insurance policy can help your dependents clear off all the debts at once.

On the other hand, if you are looking for a financial product that will provide guaranteed monthly returns for a number of years, an income replacement term insurance policy is your best bet. Also, before you purchase an insurance plan, make sure to compare at least a few different policies offered by different insurance companies, check the pricing, and read through the policy benefits and features to make an informed decision.

• Research various types of Life Insurance: Life insurance plans come in various types, including term life plans, whole life plans, unit-linked plans, endowment plans, etc. These policies have varied features and benefits, thus making it all the more important that you purchase a policy that is best suited to your needs. Rather than opting for a policy that was recommended to you by a friend or an agent, make sure to do your due research and compare the features and benefits of various policies, and only opt for a policy if you are happy with the terms and conditions of the policy.
• Compare Premiums: When it comes to deciding which life insurance policy to purchase, the premium payments are something you should certainly consider, since life insurance is a long-term contract and your premium payments can add up to a significant amount over time. Thus, it is recommended that you compare the premium quotes for various insurance policies, and select a plan that offers a comprehensive coverage at an affordable price. You can compare premium rates either through a third-party insurance comparison website or by visiting official websites of different insurance providers.
• Ask for Discounts: When you purchase an insurance plan, it is vital that you ask your insurance provider for any discounts that you might be eligible for.Life insurance providers sometimes offer discounts to non-tobacco users, individuals who maintain a healthy lifestyle, policy buyers who opt for a high sum assured, etc.These discounts can reduce your premium payable, thus helping you increase your savings.
• Bundle your insurance policies: There is a good chance that you might purchase more than one insurance plan. Insurance providers usually offer a loyalty discount to customers who purchase several insurance plans from them. Given the fact that most life insurance providers offer both life and health insurance plans as part of their product portfolio, it is advisable to consider purchasing both types of insurance plans from the same insurer.
• Keep your beneficiary informed: When you purchase a life insurance policy, you will have to nominate another individual and provide their correct contact details. If something happens to you during the policy tenure, your nominee will receive the death benefit. In addition to this, it is also essential that you keep your nominee or beneficiary informed of your purchase. Make sure to take them through the claim settlement process and keep the policy document in an easily accessible place.
• Make sure to consider your coverage needs, the needs of your dependents, liabilities, and future financial goals before purchasing any insurance plan.
• Research the various policies available and compare premium quotes of these policies.
• Familiarise yourself with the policy brochure and the policy terms and conditions.
• Check the history, claim settlement ratio of the company, grievance solved ratio, etc.

Term plans can provide you something truly priceless – a sense of security and peace of mind. Thus, make sure to follow the tips mentioned above and invest in a plan that will give you sufficient coverage.

• Read through the policy document: Immediately after receiving the policy document, you should make sure to read through it to ensure that everything is as per your expectations. Ensure to read the fine print, look at the benefits payable, premium amounts, and personal and nominee details that you may have furnished at the time of purchasing the policy. If you have any queries, you will need to call the insurer’s customer service team and get it clarified at the earliest. All insurance policies come with a free-look period, and if you are unsatisfied with the policy terms and conditions, you can still cancel the policy during this period.
• Inform your nominee: The main purpose of a life insurance policy is to ensure that one’s dependents are financially safeguarded in case of an unfortunate eventuality. Thus, it is vital that you inform your nominee and family members as soon as you purchase an insurance policy. Make sure to inform them about the benefits that will be payable and the claim process. Also, ensure that you inform your nominee that the death benefit they receive by way of the policy is eligible for tax rebates, under Section 10(10D) of the Income Tax Act, 1961.
• Consider automating your premium payments: It is essential that you make your premium payments on time, as per your premium payment mode, to keep your policy from lapsing. However, keeping a track of the premium payment schedule and making these payments in a timely manner is not an easy task, especially if you have more than one active policy. Thus, as soon as you purchase an insurance policy, make sure to automate your premium payments. You can set up an ECS or an Electronic Clearance System, by way of which the premium amount will be debited from your savings bank account automatically, provided there is sufficient balance. If your bank offers a Direct Debit facility, you can use this to have your premiums debited automatically.
• Keep the policy document in an easily accessible but safe place: At the time of making a death claim, your nominee will be required to submit a copy of the policy document. In order to ensure that your nominee doesn’t face any hassles when raising a claim, it is vital that you keep your policy document in an easily accessible place and inform your nominee about the same.
• Claim tax benefits: An indirect benefit of purchasing a life insurance policy is that it will help you save on tax. As a policyholder, you can claim tax benefits for the premiums that you pay during a given fiscal year under Section 80C of the Income Tax Act, up to the pre-defined limits. Thus, make sure to list your life insurance policy in your tax declaration form and submit the necessary proof to claim the tax benefit at the end of the financial year.

A Term insurance policy is a must-have at all times, and purchasing it will give you a sense of security and peace of mind. However, to ensure that you can avail the maximum benefits from your policy, make sure to keep the points mentioned above in mind.

Riders or add-ons are offered by life insurance companies to policy buyers at the time of purchasing their base policy. While the coverage offered by the base policy is more or less fixed, riders give policy buyers the option to customise their policy as per their needs. Thus, riders offer the policyholder coverage over and above the life cover offered by the base policy. The key benefit of purchasing an insurance rider is that you can avail an increased protection by paying a nominal premium. Also, since the insurance rider is linked to your main insurance policy, you don’t have to go through the hassles of maintaining two policies.

There are a number of riders available with term insurance plans depending on your choice of the insurance provider. Some of the main riders available with these plans are:

• Waiver of Premium – This rider helps safeguard policyholder against policy lapse if they are unable to pay the insurance premiums. In case of loss of job, income source, or other financial crises, the insured may not be able to pay the premium. In this case, the rider will come into force and ensure that the term plan stays in force and future premiums will be waived.
• Critical Illness – When diagnosed with a critical illness, the financial requirements to treat the illness may skyrocket. With this rider, the life insured will receive a payout upon the diagnosis of a critical illness that is specified in the plan.
• Accidental Death – Accidental deaths can leave family members scrambling for finance as the death maybe sudden and unexpected. High medical costs and funeral expenses may also take a toll on the family’s finances. This rider provides an extra sum assured to meet such costs.
• Partial and Permanent Disability – If the life insured suffers partial or permanent disability due to an accident, then the rider will either pay out a lump sum or staggered payments which are a percentage of the total sum assured of the insurance policy. This will help compensate the loss of regular income that may arise due to partial or permanent disability.
• Income Benefit Rider – In case of the death of the policyholder, this rider offers a regular income source for the family.

A few popular riders that are offered by life insurance companies include the Waiver of Premium Rider, Accidental Disability Benefit Rider, Accidental Death Benefit Rider, Critical Illness Rider, etc. Each of these riders serve a unique purpose and offer varied benefits and features. In this article, we will look at the benefits and importance of a critical illness rider.

What is a Critical Illness Rider?

A critical illness rider is attached to a term insurance policy to protect the life assured from financial expenses that he/she might have to incur in the event of being diagnosed with a critical illness. Thus, a critical illness rider covers a number of pre-specified critical illnesses, and if the life assured were to be diagnosed with any one of those illnesses, a lump sum benefit would be paid out to him/her. Thus, given the increasing number of critical illness cases and rising medical/healthcare costs, it is smart to purchase a critical illness rider along with your base insurance policy.

Reasons why you need to purchase a Critical Illness Rider

• Lump Sum Payout at Diagnosis: Most critical illness insurance plans offer a lump sum benefit to the policyholder when the disease is diagnosed. Thus, this sum of money can be utilised to pay for hospitalisation and medical expenses.
• Extensive Coverage: While the exact number of diseases covered by critical illness riders vary from insurer to insurer, the main diseases covered include cancer, heart attack, coronary artery bypass, renal failure stroke, organ transplant, etc. Typically, most critical illness riders offer coverage to a number of major diseases and surgeries.
• Tax Benefit: As a policyholder, you can avail tax benefits under the Income Tax Act, 1961, when you purchase a critical illness rider.
• Long Rider Tenure: Critical illness riders usually come with a longer tenure than health insurance plans. Certain insurance providers will also give you the option of choosing a rider tenure that is equal to your policy tenure. Thus, you will not have to go through the hassle of renewing your rider on a regular basis.
• Acts as an Income Replacement: A critical illness is not only expensive to treat, but it might also cause the diagnosed individual to become unemployable for a certain period of time. Thus, the payout offered by a critical illness rider can act as an income replacement and will help the policyholder pay for day-to-day expenses.

Things to consider before purchasing a Critical Illness Rider

• While critical illness riders do provide coverage for a number of illnesses, you will need to pay close attention to what diseases have been specified in the policy brochure. Thus, if you have a family history of cancer or are a smoker, make sure to check whether the critical illness rider covers cancer. It is best to opt for a rider that provides coverage as per your requirements.
• For most critical illness plans and riders, the policyholder is required to survive for a certain number of days after diagnosis of the disease to be eligible to receive the lump sum payout. The number of days that you need to survive to receive the benefit is called the survival period. The survival period for critical illness riders usually ranges from 30 days to 90 days. Thus, when looking for a critical illness rider, make sure to opt for one that has a low survival period.
• Almost all critical illness riders come with waiting periods. During the waiting period, the insurance company will not entertain any claims raised by the life assured. Thus, make sure to purchase a rider with a short waiting period.
• All insurance policies and riders come with exclusions. An event or disease that is listed as an exclusion will not be covered by a policy. In the case of a critical illness rider, make sure to check if any particular diseases that you specifically require a cover for are listed as exclusions.
• If you have a pre-existing ailment or condition, it is important that you check whether the rider offers coverage for pre-existing diseases and whether there is a waiting period that is applicable to pre-existing diseases.

Purchasing a critical illness rider along with your term insurance policy will provide you an extensive and comprehensive coverage. Given just how expensive it can be to treat critical illnesses, purchasing a critical illness rider as a precautionary measure is a smart move. Also, even if the rider ceases to exist after the benefit is paid out, your base policy will still continue to remain in force. Thus, you can continue enjoying the life cover provided by your term insurance policy even after the rider coverage ceases.

Term insurance plans are one of the most popular insurance plans in India. A term insurance plan provides the policyholder a risk cover against death, thereby offering financial security to his/her nominee. If the policyholder meets with an untimely death during the policy tenure, a death benefit will be paid to the nominee. That being said, there are certain limitations with regards to the kinds of death that are covered by a term plans.

Types of deaths that are not covered by a Term Insurance Plan

• Suicide: Term insurance plans, in general, do not pay-out a death benefit if the policyholder commits suicide after purchasing the policy.However, certain term insurance plans will return a percentage of the overall premiums paid, during the policy tenure, to the nominee.
• Death due to self-inflicted injuries: Term insurance plans also don’t cover death caused due to self-inflicted injuries. Thus, if the policyholder succumbs to an untimely death as a result of a self-inflicted injury, no death benefit will be paid to the nominee.
• Death due to alcohol/drug abuse: If the policyholder meets with an untimely death as a result of being intoxicated or under the influence of narcotic substances, such a death will not be covered by a term insurance plan.
• Death due to HIV/AIDS: In most cases, death occurring due to HIV/AIDS and other related diseases will not be covered by term insurance plans, unless otherwise mentioned in the policy brochure.
• Death due to homicide: If the life assured passes away as a result of a murder committed by the nominee, no death benefit will be paid out to the nominee. If the homicide results in an investigation, the death claim will be put on-hold by the insurance company until the nominee’s acquittal.
• Death due to participation in criminal/illegal activities: If the life assured succumbs to an untimely death as a result of participating in a criminal or illegal activity or in any activity with a criminal intent, no benefit will be paid out to the nominee.
• Death due to participation in adventure sports: Most term insurance plans do not cover death as a result of the policyholder participating in extremely-risky adventure sports or racing events, such as bungee jumping, water sports, motorbike racing, etc.

Group term insurance schemes or plans are specially designed to provide a risk cover against death to the members of a group. These plans are usually purchased by affinity groups or by employee-employer groups to provide additional benefits to enrolled members. Group term insurance plans are intended to provide financial security to the dependents of the enrolled members in the event of a member’s death.

Eligibility Criteria for Group Term Insurance Plans

• Group term insurance policies can be purchased by employer-employee groups, non-employer-employee groups, affinity groups, banks, etc.
• Enrolled members will need to meet the age range specified by the insurer. Any individual under or over the specified age limits will not be able to avail coverage.
• In order to be eligible to purchase a group term insurance plan, the group will need to meet the minimum group size that is specified by the insurer in the policy brochure.

Features of Group Term Insurance Schemes

Listed below are the general features of group term insurance plans. Please note that the exact features will vary from plan to plan and insurer to insurer.

• In most cases, members of a group do not have to undergo a medical screening before enrolment. However, if the master policyholder is opting for a high sum assured, a medical test may be required.
• In the event of a member’s death, the pre-decided sum assured will be paid to the deceased member’s nominee.
• Certain insurance providers also offer additional riders that can be purchased with the base policy.
• Most group term insurance plans offer a grace period for premium payments.
• In the case of premium payments, most insurers offer multiple options to policy buyers. The premium can be borne entirely by the master policyholder or can be paid by enrolled members. The premium can also be paid by the master policyholder and enrolled members in a certain proportion.
• Group term insurance plans offer a high degree of flexibility, wherein new members can be added at any time during the policy tenure and existing members may be allowed to leave at any time as well.
• The application process is usually timely and hassle-free.
• Certain group insurance plans also come with the option of providing coverage to the life assured’s spouse.
• Most group term plans can be surrendered by the master policyholder. The applicable surrender benefit will be paid to the master policyholder by the insurance provider.
• Group term insurance policies are usually annually renewable, unless otherwise specified.
• Group term insurance plans also offer tax benefits.
• Group insurance plans are also cost-effective since multiple members are covered under one plan.
• Most group insurance policies offer worldwide coverage to enrolled members.
• Premiums can be paid on an annual, bi-annual, quarterly, or monthly basis, as per the terms and conditions specified by the concerned insurance provider.

Benefits of Group Term Plans for Employees

• Group term insurance plans offer financial security to one’s dependents in case of an unfortunate eventuality.
• If additional riders have been chosen, members can avail an enhanced coverage.
• Most times, members enrolled under group term insurance schemes do not have to undergo a pre-policy medical screening.
• The death benefit that is paid to one’s nominee in the event of a member’s death is eligible for tax benefits under Section 10(10D) of the Income Tax Act, 1961.
• Members can avail a comprehensive life cover without having to shell out a hefty premium.

Benefits of Group Term Insurance Policies for Employers

• A group term insurance policy is a hassle-free way to provide life coverage to all members of the group under a single policy.
• It serves as an employee retention tool.
• Premiums paid during a given financial year are eligible for tax rebates as per the Income Tax Act, 1961.
• Employers can opt for a high coverage at a nominal cost.
• Group insurance schemes are both flexible and customisable.
• Employers can opt for additional coverage by purchasing riders offered by the insurance provider.
• Members can be included or removed from the policy in a hassle-free manner.

Joint Term Insurance

The growing popularity of term insurance plans can be credited to the fact that they offer the policy buyer a high sum assured for a low premium rate. Traditionally, term insurance plans were purchased on an individual basis. Thus, one policy could only cover one individual. However, with changing times, life insurance providers have started offer joint term life policies. As the name suggests, a joint term insurance plan provides life cover to two individuals under a single insurance policy or contract.

Features of Joint Term Plans

• Multiple payout options:Claim payout options usually vary from insurer to insurer. However, in most cases, policy buyers can choose between a number of claim payout options, at the time of purchasing their policy. Thus, certain joint term plans offer the surviving policyholder a lump sum benefit in case of one policyholder’s death. In some cases, the death benefit may even be paid out in the form of a regular monthly income to the surviving policyholder.
• Easier to manage: Purchasing and managing a number of insurance policies is not an easy matter, especially since you will have to make it a point to pay your due premiums on a regular basis to the insurer, to keep the policy from lapsing. In comparison, maintaining a joint term insurance plan is easier since you only need to pay a single premium for the joint cover. This way, you get the benefits of two separate policies, without the hassle and effort that goes into maintaining them.
• Affordable pricing: In most cases, the premium rate that you will have to pay for a joint term insurance plan will be lesser than the premium that you would have to pay for two separate insurance policies. However, that being said, make sure to compare premium quotes of various insurance plans before selecting a particular policy.
• Option to purchase riders: Similar to regular term insurance plans, life insurance providers offer policy buyers the option to enhance the protection accorded by their base plan by purchasing add-on riders. While the riders offered will vary from insurer to insurer.
• Tax benefits: All life insurance policies will provide you tax benefits. Thus, even in the case of a joint term insurance plan, you can claim tax benefits under both Section 80C and Section 10(10D) of the Income Tax Act, 1961.

Things to Consider Before Purchasing a Joint Term Life Policies

A joint term insurance plan offers policy buyers a number of advantages over regular term insurance plans. Further, several leading insurance companies are now also offering these policies to business partners and parents who want to assign the child as the co-owner of the policy. Thus, if you are looking to purchase a joint term insurance policy, make sure to compare the various plans available and opt for one that provides you adequate benefits, at a competitive price.

Joint Life Term Plans: A joint life term insurance plan is meant to provide coverage to both spouses under a single policy. Thus, in this case, policyholders will need to pay a single premium in order to maintain the policy. The way the benefit is paid out will usually vary based on the policy’s terms and conditions. In certain cases, if one policyholder passes away, the surviving spouse receives the death benefit payout, after which the policy terminates. In other cases, the policy might continue even after one policyholder’s death. Insurers might also offer a number of payout options, wherein the death benefit can be paid as a lump sum or in the form of instalments.

The main benefit of purchasing a joint life term insurance plan is that it is usually less expensive than purchasing separate individual term insurance policies for yourself and your spouse. Further, you also don’t have to go through the hassle of maintaining two different insurance plans.

Individual Term Insurance Plans: An individual term insurance plan offers coverage to a single policyholder. In the event of the policyholder’s death, a lump sum payout will be offered to the nominee. After the benefit is paid out, the risk cover will cease to exist. In this case, there is no option to extend coverage to your spouse under the same plan. However, you can choose to purchase a separate term insurance policy for your spouse, if the need arises. Purchasing individual term insurance policies might be the better bet if you and your spouse have different coverage needs.

Which should you choose?

Both joint life policies and individual term insurance plans have their own sets of pros and cons. You should decide which type of term insurance policy to purchase only after assessing your coverage needs, the needs of your dependents, your premium payment ability, etc.

Further, before you opt for a particular policy, make sure to visit an online third-party insurance comparison website and compare at least a few different policies. This will give you an idea about the benefits that are typically offered by insurers and the premiums that are charged. In the end, you should always opt for a policy that offers you coverage as per your needs at a premium that is affordable for you.

A convertible term insurance policy is one that allows policyholders to convert their plan into a different life insurance product type during the tenure of the policy. Convertible term insurance policies are ideal for those individuals who are unable to pay a high premium for an endowment or whole life policy at present but wish to increase their coverage in the future. Convertible term insurance policies can be offered as standalone insurance policies or riders by life insurance providers.

Features of Convertible Term Insurance Policies:

• The process of converting your convertible term insurance policy to a different life insurance product is quite simple. As a policyholder, you are only required to submit a written request to your insurance provider to do so.
• Insurance providers will charge a higher premium for convertible term insurance plans when compared to regular term insurance policies due to the built-in conversion option that is provided to you.
• In most cases, the policyholder is not required to undergo a medical screening when converting his/her term insurance policy. However, this is dependent on the insurer’s and the policy’s terms and conditions.
• In order to avail the conversion option at a later time during the policy tenure, the policyholder is required to pay all due premiums and keep the policy active. When purchasing a convertible term insurance policy, make sure to check if there is any stipulated time frame within which you are required to convert the policy.
• If you have purchased a convertible term plan, you will need to keep in mind the fact that for each year that you don’t convert the policy, the resulting conversion rate can increase by a significant percentage. Thus, if you are looking to convert your term insurance plan, it is best to do so during the initial policy years.

Difference between Convertible Term Insurance Plans and Renewable Term Insurance Plans:

There is a key difference between term plans that are labelled “renewable” and the ones that are labelled “convertible”. In the case of renewable term insurance policies, the policyholder can renew or extend the coverage period at maturity of the policy. During renewal, the policyholder might have to pay an increased premium due to his/her age. On the other hand, in the case of convertible term insurance policies, these policies come with an inbuilt option to convert the term insurance plan into another life insurance product, such as a whole life plan or an endowment plan.

The primary purpose of purchasing a life insurance policy is to ensure that your dependents are financially protected in case something unfortunate happens to you. The payout provided by a life insurance policy can act as an income replacement and can go a long way in helping your family maintain their standard of living.

However, purchasing a life insurance policy and nominating a dependent alone does not guarantee the financial security of your loved ones. If you have taken loans or have other liabilities, it is likely that the death benefit payout will be first used to pay off creditors. In this case, your nominee will only receive whatever is left of the benefit amount, if anything. Thus, it is a must to purchase life insurance policies under the Married Women’s Property Act (MWPA), especially if you have dependents.

What is the Married Women’s Property Act?

The Married Women’s Property Act was originally created to protect the financial interests of married women across India. As per Section 6 of the MWPA, if a life insurance policy is purchased under the MWPA by a married man, the sum assured that is payable under the policy upon the policyholder’s death will be the property of his wife/children alone. No creditor or lender will be able to claim any part of this payout.

Further, the MWPA also states that married women can purchase a life insurance policy under the MWPA with her children as the beneficiaries. In this case, the husband will not be able to claim any part of the payout provided by the life insurance firm.

Who can purchase a policy under the Married Women’s Property Act?

Any individual who is a married man and is a resident of India can purchase a life insurance policy under the Married Women’s Property Act. Further, policies under the MWPA can also be purchased by divorcees and widowers. If the policy is being purchased by an individual who is a widower or a divorcee, his children will have to be named as beneficiaries of the policy.

Married women may also purchase life insurance plans under the MWPA and nominate her children as beneficiaries. However, one thing to keep in mind is that this benefit can only be opted for by the policy buyer at the time of purchasing the policy, and only if you purchase the policy for yourself. Any type of life insurance policy can be purchased under the MWPA, regardless of the premium amount, policy tenure, etc.

Whom can you name as a beneficiary when purchasing a policy under the MWPA?

If you purchase a life insurance policy under the MWPA, you can either name only your wife as the beneficiary, only your child/children, or you can name both your wife and children as beneficiaries. Further, you also have the option of dividing the sum assured among your beneficiaries, either equally or in varying percentages.

One thing that you should remember when naming your beneficiaries is that once the beneficiary has been assigned and the policy has been issued, you cannot change the beneficiary at any time during the policy tenure.

How to go about purchasing a policy under the Married Women’s Property Act?

The process of purchasing a life insurance policy under the MWP Act is extremely simple. As a prospective policy buyer, you will need to fill-up an MWPA addendum form along with your life insurance policy application form at the time of purchasing the policy. This addendum will be available with insurance agents and can also be downloaded through the insurer’s official website. You will need to remember that a policy can only be brought under the coverage of the MWPA at the time of purchasing it.

Purchasing an insurance plan under the MWPA is a great way to ensure that your dependents are financially protected under any eventuality. Availing the benefits of the MWPA is all the more important for individuals who have taken loans or don’t have a steady source of income. Given how beneficial it can be to purchase a life insurance policy under the MWPA, it is a must that you don’t overlook this option at the time of buying your policy.

• Natural death: Term insurance plans provide a cover against natural death, i.e., if the policyholder were to pass away in his/her sleep, a death benefit will be paid out to the nominee.
• Death due to a medical condition: If the policyholder happens to get diagnosed with an illness after purchasing an insurance plan and succumbs to an untimely death as a result of the illness, a death benefit will be paid out to the nominee.
• Accidental death: Term insurance plans also provide a cover against accidental death. Accidental death can include death involving vehicles, death due to fire, death from accidentally falling off of a building, death due to a work-related accident, death due to electric shock, etc.
• Death outside the country: In most cases, term insurance plans also cover deaths that occur outside the country. However, if you are planning to travel outside the country, you should make it a point to inform your insurance provider about your travel plans in advance. In certain cases, if you are travelling to a high-risk country or a country known to be unsafe, life insurance coverage can be denied to you during your stay in that particular country.

In conclusion, you will have to keep in mind that the inclusions and exclusions mentioned above are a general list, and may vary from plan to plan. Different life insurance companies may have varied clauses with regard to the exclusion, thus make sure to read through the policy brochure before purchasing a term life insurance policy. Also, make sure to inform your nominee about the coverage offered by your plan in order to avoid any hassles, at the time of filing a claim.

Life insurance offers the much needed financial security to the dependents of a person following his/her unexpected demise. There are different types of life insurance policies including term insurance, permanent life insurance, ULIPs, etc. Term life and permanent life are the two most common forms of life insurance available for customers. When it comes to choosing between these two, the decision must be made based on your personal needs, affordability, financial goals, dependents’ needs, etc. Let’s discuss the pros and cons of these two plans in detail to help you narrow down the choices.

Pros and cons of Term insurance

Term life insurance is simplest form of life insurance. It is also the cheapest type of life insurance you can buy. Term plans can be bought for a specific period, say 5 years or 10 years or even 30 years, depending upon your requirement. The cost of insurance gets higher with your entry age. For instance, a term plan for a 30-year old person is much cheaper than a term plan for a 50-year old person. Once entered, the premium amount for term insurance remains the same as long as the policy is renewed. Hence, it is better to enter a term insurance plan at a very young age.

There are a few limitations associated with term insurance plans. One of the major limitations of term insurance is that it does not offer any maturity benefits at the end of the policy term. If a policyholders outlives the policy term, the plan will come to an end and no payout of any sort will be paid to the insured person. If you need protection for a longer time, you must take a separate over after one expires or you need to convert your term plan into a whole life plan (a form of permanent life insurance plan). Lack of maturity benefit is one of the reasons why term plans are much cheaper than other varieties of life insurance.

Pros and cons of Permanent Life Insurance

Permanent life insurance is a kind of life insurance cover that remains active throughout a person’s life. This comes with an insurance as well as investment component to provide maximum benefit to policyholders. One of the major advantages here is that the death benefit is guaranteed to the dependents as long as the policy remains active. The cash value associated with the investment part grows steadily and matures at a guaranteed rate. Also, the premium amount remains the same throughout the life of the policyholder.

Among the downsides of permanent life insurance, it has been often stated that these plans are a little more complicated than term life insurance plans. Since there is an assured return, permanent life insurance is way more expensive than term plans. The cash value growth in this type of insurance is extremely slow, and it takes more than 10 to 15 years to accumulate a decent amount.

Choosing between Term or Permanent Life Insurance

When it comes to choosing between term or permanent life insurance, various factors such as age, health condition, financial requirements, family needs, retirement plans, debts and liabilities, etc. must be taken into consideration. Also, the cost of insurance determines the choice in many cases. Term plans are ideal for replacing your income and paying for your liabilities. Permanent life plans are most suitable for estate planning. Also, permanent life is ideal if you have to provide for lifelong dependents.

Conclusion

Both term policies and permanent life insurance policies come with their own set of advantages. Choosing between these policies must be done after understanding of your financial situation and determining the type of protection you need for your dependents. There are various life insurance companies in the market that offer both plans to their customers. Make sure that you do a thorough research on the available policies before choosing a life insurance plan that meets your expectations.

A level term insurance policy is a type of term insurance plan that is most commonly offered by Indian life insurance providers. Under a level term insurance plan, the premium payable will be determined before the risk cover commences, and this premium rate will remain constant for the duration of the policy tenure. Policy tenures for level term insurance plans can range between 5 years and 30 or 40 years, in India.

Under this type of policy, the premium rate does not rise with the policyholder’s increasing age since the premium payable for each policy year is averaged by the insurance provider. Thus, if you choose a longer policy tenure, you premium payable will be higher, and vice versa. Most level term insurance policies can be renewed by policyholders, at the completion of the policy tenure. However, at renewal, the insurer may charge you a high premium rate due to your increased age. Also, if the policyholder’s health has deteriorated significantly or if the policyholder has developed certain life-threatening diseases or ailments, the insurer may not allow the policyholder to renew the policy.

Certain insurers also provide policyholders the option to convert their term insurance plan into a whole life policy or an endowment assurance policy. However, this option varies from insurer to insurer, and customers might not always be offered this benefit. Thus, when purchasing a term insurance policy, it is advisable to start young and opt for a long policy tenure, which can provide you adequate coverage during your employment years.

A term insurance plan is one of the most affordable insurance plans that you can purchase for yourself. This type of insurance plan works in a very simple manner. It provides you protection for a period of time. In case something happens to you during the policy term, the nominee receives a lump-sum amount called the death benefit and the policy terminates thereafter.

The cover amount that you choose is of paramount importance. The sum assured should be such that it should be enough to take care of your family’s needs even if you are not around. The inflation is a huge factor, and hence the cover amount which might be sufficient in today’s time may not be enough a few years later. Therefore, you can choose an increasing term insurance plan, where your sum assured increases by a certain percentage. For example, if your sum assured is Rs.1 crore, then the cover amount will increase by 5% from the next policy term and will continue to increase until your policy is no more in force.

We will find out a bit more about increasing term insurance plans and how it can be beneficial for you.

Things to know about increasing term insurance plans

• Premiums: One of the factors that make increasing term insurance plans so brilliant in nature is the fact that the premiums remain constant even if your cover amount continues to increase. The reason is that the insurance company has already calculated the premium amount you would have to pay as your coverage would increase with each passing term. It is also understandable that the premium for an increasing term insurance plan would be slightly higher than a normal term insurance plan. However, the premiums are still cheap and affordable which makes purchasing an increasing term insurance plan a very good option.
• Sum assured: it is understandable that the coverage will increase with each policy term so that even if the economy inflates, your family will be able to take care of their financial needs in your absence. However, some plans may have a limit on the increment and the increment may stop after the maximum limit is reached. Fortunately, this information is relayed beforehand.
• Benefits: When we talk about the benefits that you would receive from your increasing term insurance plan, there are not too many differences if compared to a normal term insurance plan. Just like a normal term insurance plan, if something happens to you, the nominee receives a lump-sum amount called the death benefit.The insurance provider gives the beneficiary or nominee the option to receive the death benefit in a lump sum or a part of it in instalments over a period of time.
• Riders: There are various plans which offer riders. It is always recommended that you purchase a rider for yourself based on your needs, lifestyle, etc. as they provide extra protection to you. Though you may have to pay a slightly higher premium, it is worth purchasing a rider in the long run. Some of the types of riders that you may come across are Critical Illness Rider, Waiver of Premiums Rider, Accidental Death and Permanent Disability Rider, etc.
• Tax benefits: Apart from the death benefit that your nominee would receive in case of your unfortunate demise, you can also avail various tax benefits under Section 80C of the Income Tax Act, 1961.

Advantages of having an increasing term insurance plan

There are certain advantages of availing an increasing term insurance plan such as:

• Affordable in nature: An increasing term insurance plan, like any other insurance plan is extremely affordable. The premium remain constant throughout the policy term which makes purchasing an increasing term insurance plan a brilliant financial decision.
• Helps in taking care of financial requirements: One of the major reasons why you should purchase term insurance for yourself is to help in taking care of your family’s immediate financial liabilities in case you are not around in future. Purchasing an increasing term insurance plan serves the same purpose.
• Ideal product keeping inflation in mind: As mentioned earlier, inflation always play a major role in your decision to choose an appropriate cover amount. However, you may never know how much amount might be sufficient in the near future. The coverage that may be enough to take care of your family’s day-to-day needs at present may not be enough in times to come. Hence, an increasing term insurance plan ensures that your family is able to take care of their financial needs regardless of how the economy is performing and even if you are not around in the future.

Some of the increasing term insurance plans that you can purchase

Below are some of the term insurance plans that you can purchase for yourself:

• SBI Life Smart Shield Plan
• Birla Sun Life Protector Plus Plan
• Aegon Life Increasing Term Plan
• Max Life Super Term Plan

Thus, these are some of the things that you need to know about how an increasing term insurance plan is beneficial for you. However, before purchasing a product, you will have to evaluate your needs and the amount of coverage you will require. You will also have to properly research and compare various other term insurance plans before you decide to purchase a term insurance plan which you feel will be suitable for you. You must only choose a plan based on your financial needs and capabilities.

Term insurance is one of the purest forms of insurance you can purchase for yourself. It provides only a protective cover and in case something happens to you, the nominee appointed by you will receive a lump-sum amount called the death benefit. However, one of the problems that people are not aware of are the types of term insurance policies.

There are various types of term insurance policies which you can avail for yourself based on your needs and other financial requirements. For example, the return of premium term plans, returns your premiums in case you survive the policy term. Similarly, increasing term insurance plans allow you to increase your cover amount as your responsibilities increase over a period of time, especially keeping in mind your other financial requirements, you may have to increase your cover amount. A decreasing term insurance plan is the opposite of an increasing term insurance plan, where you have the option of reducing your cover amount over a period of time.

Why should you purchase a decreasing term insurance plan?

You purchase a term insurance policy since you may have financial liabilities to take care of, and a term insurance plan provides coverage to you and your family. In case something happens to you, the death benefit provided to the nominee can help in paying back the loan and other financial liabilities that you may have. However, a decreasing term insurance plan works in a different manner. As you pay your loan installments on a yearly basis, the outstanding loan balance reduces and so does the requirement for a higher sum assured as well. The cover amount chosen by you helps in clearing off the loan liabilities in case something happens to you, and as these liabilities decrease, so should the cover amount. For example, if you are a 30-year old person and purchase a decreasing term insurance plan with a cover amount of Rs.20 lakh for a period of 20 years. According to your plan, the cover amount at the end of each policy term will decrease by 5%. Hence, your new sum assured after the end of the first policy term will be Rs.19 lakh, Rs.18 lakh for the second year and so on. In case you meet your demise when the term is still in force, the nominee appointed by you will receive the available cover amount post reduction. For example, if you die in the 10th year of your policy, then the nominee will receive a sum assured of Rs.10 lakh, which will allow the beneficiary to pay off the remaining financial liabilities.

Advantages of having a decreasing term insurance plan

There are certain advantages to having a decreasing term insurance plan. They are as follows:

• Cheap and affordable premiums: A decreasing term insurance plan just like any other term insurance policy is cheap and affordable in nature. A decreasing term insurance plan is even cheaper than a normal term insurance plan since the cover amount decreases due to which the premium rates also decrease.
• Provides financial security to your loved ones: Whatever types of term insurance plans you purchase for yourself, the basic idea behind buying an insurance plan is to ensure that the future of your loved ones remain safe and secure even if you are not around in future. A decreasing term insurance plan also provides a financial cover to your loved ones and ensures that even if you are not around in future, your loved ones do not have to face any monetary problems and they are able to take care of their day-to-day needs.
• Tax savings: Just like any other term insurance plan, a decreasing term insurance plan also allows you to enjoy various tax benefits as well. You can enjoy a tax exemption of up to Rs.1.5 lakh on the premiums paid by you under Section 80C of the Income Tax Act, 1961 and on the benefits received under Section 10 (10D) of the Income Tax Act, 1961.

In the end, a decreasing term insurance can be beneficial to you provided you have loans and other financial liabilities which are expected to decrease over a period of time. If you are sure that your loan and other financial liabilities are expected to decrease with time to come, then it is suggested that you purchase a decreasing term insurance plan for yourself. A decreasing term insurance plan not only provides you with a loan protection cover but also provides your loved ones with a protective cover and ensures that the future of your loved ones is safe and secure even in your absence.

The most unique feature about term insurance plans is that there is no return on premiums in the event that the policyholder survives till the end of the term. Many people do not opt for a term plan because if they survive the term, then the money is gone. There is no return on investment with a term plan. However, there are a few insurance companies in the market that offer returns on premiums with their term plans. There are not too many of these plans available, but with research one can find a term plan that provides this benefit. Under these plans, if the life insured is still alive at the end of the plan term, then they will receive the premiums paid minus any fees, administrative charges, and so on. Some of the top Return of Premium Term Plans in India are:

LIC’s Jeevan Mangal Plan

The Jeevan Mangal Plan from Life Insurance Corporation of India is a micro insurance product that returns all premiums paid during the policy tenure, on the date of maturity.

Key Features of LIC’s Jeevan Mangal Plan:

• Any individual between the ages of 18 years and 60 years can purchase this plan.
• The maximum age at maturity under this plan is 70 years.
• One can opt for a policy tenure between 10 and 15 years if it is a Regular Premium policy and a policy term of 10 years for single premium plans.
• Since this is a micro-insurance plan, the premium rates are also extremely affordable. The minimum premium amount for this plan is Rs.15.
• One can opt for a sum assured between Rs.10,000 and Rs.50,000.

Max Life Premium Return Protection Plan

The Premium Return Protection Plan from Max Life Insurance is a policy that guarantees the return of all premiums paid should the policyholder survive till the completion of the plan tenure.

Key Features of the Max Life Premium Return Protection Plan:

• A death benefit is paid as a lump sum amount if the life assured meets with an untimely death.
• One can opt for a policy tenure of 20 years, 25 years, or 30 years.
• The minimum age at entry is 21 years and the maximum maturity age under this plan is 75 years.
• Premiums can be paid on a yearly, semi-yearly, quarterly, or monthly basis.
• The minimum premium payable for this policy is Rs.8,500 p.a.

ICICI Prudential LifeGuard

The ICICI Prudential LifeGuard Plan comes with three plan options – Level Term Assurance, Level Term Assurance with Return of Premium, and Single Premium. Policy buyers can opt for any plan option as per their requirements.

Key Features of ICICI Prudential LifeGuard Plan:

• Policy buyers will have to be between the ages of 18 and 55 years to purchase this plan.
• One can opt for a minimum policy tenure of 10 years and a maximum policy tenure of 30 years.
• The maximum age at maturity for this plan is 65 years.
• The minimum premium amount payable for this plan is Rs.2,400 p.a.

Tata AIA Life Insurance iRaksha TROP

The iRaksha TROP from Tata AIA Life Insurance is an online term insurance plan with a ‘Return of Premium’ feature. Thus, this plan provides a death benefit in the event of the policyholder’s untimely demise or a survival benefit if the policyholder survives till the end of the policy tenure.

Key Features of Tata AIA Life Insurance iRaksha TROP:

• The policy can be purchased by any individual between the ages of 18 years and 65 years. The maximum maturity age for this policy is 75 years.
• The minimum sum assured under this plan is Rs.50 lakh.
• One can opt for a policy tenure between 10 and 30 years, when purchasing this plan.
• Premiums can be paid on an annual or semi-annual basis.
• Policy buyers who opt for a high sum assured are eligible to receive discounts.

MetLife Suraksha TROP

This plan is a non-participating term insurance plan which is offered at a nominal cost by the insurer. Under this plan, upon maturity of the plan, the policyholder will receive the sum of all premiums paid and the Guaranteed Additions.

Key Features of MetLife Suraksha TROP:

• The plan pays a death/maturity benefit to the policyholder/nominee, based on the eventuality.
• The policy can be purchased by any individual between 15 and 50 years of age.
• The minimum sum assured for this plan is Rs.2 lakh.
• One can opt for a policy tenure of 15 years or 20 years, at the time of purchasing the policy.

Purchasing a term insurance plan is a brilliant decision that one can make. A term insurance policy provides your family with a protective cover in case something happens to you; your family will be financially covered and does not have to undergo any monetary turmoil in your absence. This allows you the necessary peace of mind while you go about taking care of any financial liabilities that you may have.

However, having two term insurance plans can be even better. You are provided double cover and in case something happens to you, the nominee gets double cover, which ultimately ensures that he/she is able to take care of all the financial requirements in your absence without the fear of the cover amount getting exhausted anytime soon. So, what are the benefits of having two term insurance plans? We discuss below.

The benefits of having two term insurance plans

The following are the benefits of having two term insurance plans:

• Extra protection: Having two term insurance policies means that you will you will have more protection. In case something happens to you, you can be at peace knowing that your family is getting a double layer of protection.
• Death benefit: In case of your death, the nominee can get not one but two lump-sum amount called the death benefit.
• Hedge against claim-rejection: You may not have to worry if you have provided the insurance company with all the correct and necessary information regarding your health before signing on the dotted line. However, there can be that small percentage of chance where your claim may get rejected which might ultimately put your family under severe financial trauma. Having two term insurance plans ensure that even if the claim for one of your policies gets rejected, you have the cushion of another policy which ensures that the nominee receives the claim amount. It is also important that you also check the claim settlement ratio of the insurance company before deciding to purchase insurance.
• Reaching your milestones: Having two term insurance plans can help you plan for the milestones in your life. You will have the peace of mind and you will be able to take care of your future dreams such as building a home, getting your children educated and married, etc. Having two term insurance policies means that the nominee will be in a better position to take care of your financial liabilities in case of your absence.

Having two term insurance plans will naturally be slightly expensive as compared to having one term insurance plan, but anyone will surely prefer to have that extra layer of protection. Having two term insurance plans means that you will be able to take care of your future goals without having to worry about the financial trauma that your family may undergo in your absence as two term insurance policies mean that the nominee will receive the extra cover amount. It is also perfectly legal to have more than one term insurance policy provided that you have disclosed all the relevant information about your health and lifestyle and the combined sum assured of all policies do not exceed your human life value. Having two term insurance policies also provides you the assurance that in case one of the policies do not work out and the claim amount gets rejected due to whatever reasons concerned, your family has the cushion of having extra insurance and are able to take care of their financial requirements even in your absence. Thus, these are some of the few reasons why you should have two term insurance policies for yourself.