Term Insurance – Features & Benefits
Term Insurance is the purest form of life insurance. It is simple: You die, we pay. You live, we pay nothing. This simplicity makes it the most powerful tool in financial planning.
Key Features
- High Cover, Low Premium: A 30-year-old can get ₹1 Crore cover for just ₹800-₹1000 per month.
- Fixed Premium: Once you buy, the premium usually locks in for the entire 30-40 years. It won't increase with age.
- Long Tenure: You can cover yourself till age 60, 70, or even 85.
Why choose Term Insurance?
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Important Riders (Add-ons)
You can attach extra benefits to your base policy:
- Accidental Death Benefit: Pays extra (e.g., +50 Lakhs) if death is due to accident.
- Critical Illness Rider: Pays a lump sum if diagnosed with Cancer, Heart Attack, etc. (Very useful as these diseases increase expenses).
- Waiver of Premium: If you become disabled, future premiums are waived off, but cover continues.
Note
Tip: Always take the Waiver of Premium rider. It is cheap and crucial.
How to Choose a Term Plan?
Don't just look for cheap premiums. Check:
- Claim Settlement Ratio (CSR): % of claims paid. Look for > 97%.
- Amount Settlement Ratio: Are they paying the big claims?
- Brand/Solvency: Choosing a reputed insurer (LIC, HDFC, SBI, ICICI) is safer for a 30-year contract.
- No Lies: Disclose everything in the form (Smoking, Alcohol, Past Surgery). If you lie, the claim will be rejected when your family needs it most.
Summary
- Necessity: If you have dependents, this is non-negotiable.
- Income Replacement: The sum assured should be 10-15 times your annual income.
- Review: As income grows, increase your cover.
- Honesty: Full disclosure in the medical form is the key to a successful claim.
Quiz Time! 🎯
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Next Chapter: Endowment Policies (Why to avoid them)! 📉