policyidea-blog - Tumblr blog

[policyidea-blog]

What Is Term Life Insurance?

Term life insurance is a simple, traditional, and oldest insurance policy. It provides assured amount on death to the nominee subjected to the condition that the death of the insured occurs within the policy tenure. In case the insured survives till the end of the policy tenure the nominee is not eligible for any after death benefit.

Term insurance is a pure protection plan. It adds on to the expenditure of the policy buyer and never acts as an investment. All one gets is the serenity of mind and risk coverage. Other than this the term life insurance policy has the tax exemption on the premiums paid and the assured sum payment to the nominee after the death of the insured.

The term insurance policy is not an investment and the policy buyer can not participate in the profits of the insurance company because all the premiums paid by the policyholder (almost 100%) are utilized to reach out to the cost of insurance. This is the reason this falls under the non-participatory plans.

There is no concept of surrender value in the term insurance policy. The policyholder can not get any paid-up amount as one gets in the endowment plans and money-back plan of the life insurance policy. The rules for the term insurance policy is entirely different because of its pure form of insurance. The term policies have no say in the profits of the insurer.

Do You Know About Variations In Term Life Insurance Plan?

There are several variations in the term life insurance plan which brings forth its different types. The same has been discussed below:

Level Premium Term Insurance: Generally, under the term life insurance plan, the premiums go on rising every year. But, in case of level premium term insurance, the premiums are fixed beforehand for a policy tenure and do not increase with the time. Generally, it is applicable for periods that range between 5 years to 30 years.

Convertible Term Insurance: Under this type of plan, if a person has initially bought a pure term life insurance plan then he has an option to get it converted into some other plan of his preference; for example whole life insurance plan or money-back plan. A person withholding a term life insurance plan initially for 10 years can get it converted into an endowment plan or money-back plan for the coming years. The premiums are changed after the change in the plans depending on the new plans selected.

Term Insurance With Return Of Premium: The ‘term insurance with return of premium’, charges higher premiums in comparison to the pure term insurance. The reason for the rise in premium is that the policy is functioning both in case of the death and survival of the policyholder.

Under this plan, a ratio of the premium is used as risk cover while others as a saving component by the insurer. It is done by the insurer just to provide benefits to the insured at the end of the policy tenure.

Term Insurance With Guaranteed Renewal: Under this plan, the plan is liable to be renewed (for 5-10 years) at the lapse of the previous policy tenure without any further proof like medical examination, etc.

Decreasing Term Insurance: Decreasing term insurance is applicable to those who have taken heavy loans on their life insurance policy. Here the sum assured amount is equal to the loan amount to be repaid to the insurance company. In this case, the sum assured decreases steadily with every year proportionally to the loan amount. 

This is done to meet the loan amount taken by the insured. As in case of the death of the insured, he won’t be able to pay back the loans he had taken. 

In case the loan installments are paid in time, the sum assured is accordingly adjusted by the insurance company. This type of plan saves the insurance company from heavy loss. 

Term Insurance With Riders: Riders are always welcome in case of the term insurance policy. In case the insured needs an extra cover he can take the riders like accidental death rider, critical illness rider, etc.

This can bring a change in the premiums as they add on riders require extra premium payment. It can affect pocket but, surely provides coverage in case of need.

Term Insurance As A Rider: People who want the insurance policy to act as an investment to them generally opt to buy endowment plans or money-back plans. They can go for term insurance as a rider. In this way, they can do the investment part and can also get the life cover under the term insurance plan as a rider.

For instance, Sanjeev has bought an endowment plan for 15 years. After 5 years he realized that he needs more death coverage as his kids are in growing age and would require higher financial cover for their education. He plans to get pure term insurance for 15 years 

Now, in case of the death of Sanjeev, the nominee would get the benefit of the endowment plan as well as of the term life insurance plan.

E-term Insurance: With the development in the insurance sector, the insurance companies are providing term life insurance policy online. One can buy the policy online and at a lower cost as the involvement of the agents are not there.

Conclusion

The term life insurance is cheaper in comparison to other life insurance policies and can easily provide cover to the family left behind. So, get a life insurance today itself and relieve yourself from responsibilities post demise.

[policyidea-blog]

Why One Must Invest in a Good Life Insurance plan?

Life Insurance is an Investment that can help meeting our various financial goals. It also provides life protection in case of any unforeseen circumstances. As a matter of fact, it can secure your family even after your demise. In short life Insurance policy enables the dual benefit of life coverage as well as returns on maturity.

There are many categories of Life Insurance policies. Premium paid in all varies based on their features.

Some Life Insurance policy types are enlisted below.

Life Insurance Policy Plans

Endowment Plans

Pension Plans

Group Plans

Unit Linked Insurance Plans

Rural Plans

Health Insurance Plans

Term Plans

How Rahul Secured his future & family with Life Insurance plans.

Rahul is 35 years old married marketing professional. His wife is a homemaker, they got 2 kids, 5 years and 2 years old respectively. Rahul is earning Rs. 75,000 monthly. He's having few concerns as follows.

1. What will happen to his family if he dies?

2. How will he arrange huge funds for his children's education?

3. How shall he save his tax?

He wanted to go for a plan that can address all his concerns. One day when he was searching for something online he saw in the advertisement. It was related to some Life Insurance. He never paid attention to such flashy messages earlier. But this time he liked the message. Actually, it covered all his pain areas. It was visible on one of the online policy aggregators websites. He immediately got a solution to all his issues. These details on the website were related to Term Plans; endowment and other related policies. With the help of these products, he could safeguard his family. At the same time could build a corpus of funds for his kid's education after 15-20 years. Both these plans were good to save taxes as well.

The best part was the Investment required was not much. However, was good enough to save taxes. He felt on top of the world. His happiness was as good as winning a jackpot. He immediately brought these plans. One was a traditional plan for Investment. Another was the term plan for life cover.

Initially, it was difficult for him to decide which company to choose from. All of them had different products at different prices.

Some of the leading players, he came across were as follows.

Life Insurance Companies

ICICI Life Insurance

PNP Met Life

Aviva Life Insurance

Max New Your Life Insurance

SBI Life Insurance

Life Insurance Corporation of India

Aditya Birla Capital

Birla Sun Life

Aegon Life Insurance

Bajaj Alliance Life Insurance

HDFC Standard Life Insurance

Exide Life Insurance

IDBI Federal Life Insurance

Bharati Axa Life Insurance

He did a quick comparison of the products and plans of these Insurance companies online. Finally selected the one that had the most suitable features.

Salient Features of Life Insurance Companies

Why people choose these Life Insurance companies is because they offer many benefits because of  their features and benefits as follows.

1. Life Coverage

One of the best advantage of these Insurance policies is Life coverage. That means that at the time of the death of policyholder his family is entitled to get the Insured amount. The premium that needs to be paid is very nominal. Policy terms may vary between 10 to 30 years. Even if the Insured person expires at 3rd year of the policy even than his beneficiary will get the complete amount.

2. Maturity Benefits

Life Insurance is not just covering your life for any uncertainty it is a kind of investment as well. The premium that we paid gets accumulated as a fund. After the completion of the policy term, we get an accumulated amount. It is a great investment as funds that we get after maturity is including interest and other bonuses.

3. Financial Goals.

Life Insurance policies help in meeting many financial goals.A few of them are as follows.

Financial Goals

Child Education

Daughters Marriage

Buying a house

Retirement Benefits

Wealth Maximization

We may have many financial goals. All these can be achieved with ease with the help of these Life Insurance policies. We can get in touch with any distribution network or an agent and address our query. Alternatively, we can also check the comparison sites and take decisions accordingly.

5. Income Tax Benefits.

These Life Insurance policies provide many Income Tax benefits as well. As per section 80c, we can plan our tax savings. While choosing the policy we should select the one that can assist in saving maximum tax.

6. Riders Benefits.

All these policies come with more than one riders. There are many riders available with term plans. They help us in managing many ad-hoc risks. Some of the riders are listed below

Sno. Riders

Terminal Illness

Critical Illness

Additional Disability

Additional Coverage

How to select Life Insurance companies?

Since there are so many companies available in the market. It becomes difficult to decide where should we buy the policy.

We can take the decision based on a few factors as follows.

Amount of premium

We can calculate the amount of premium easily by using online calculators. The premium amount is based on many other factors as well. Some of them are like the amount of Sum Insured, riders, age, etc. If we want to ensure more amount for life than premium will be more and vice versa. Earlier we start investing lesser will be the amount of premium. The rider can increase the amount of our premium too. After adding all these factors such as age, riders we can check the exact amount. We can compare it with different Insurance companies as well. We may select the one that provides the best price.

Financial Targets

Financial goals differ from person to person. Whether our concern is child education or daughter's marriage we will need funds. However, a requirement may be different from person to person. Likewise, we may have many other challenges. Many of them will involve money. Another objective that one may have is wealth maximization. With Life Insurance plans we can solve all our problems and achieve our goals.

Company year of operation

If the company is in operation for a long time than it automatically builds credibility. We must check the year of establishment of the firm. That will give us some idea about their business history.

Kind of Products

Life Insurance Companies have many customized plans. They are designed as per the need of an individual or business. We can choose from any of the categories. Many of them have been listed above.  To summarize they are in the form of various endowments plans, pension plans, specialised health plans, term plans, etc.

Features of the policies

Life insurance policy got numerous products as we know.  Every plan has got different features. For example, If we take Health Plans than they will offer different benefits as compared to Pension. Furthermore, within the same plans, benefits will differ. So first we should decide what plan we want term, endowment or health. Accordingly, compare the features and select the most suitable.

Additional benefits

In this competitive world, every Insurance policy wants to be better than others. To excel they usually offer many benefits better than the competitors. We should consider that before buying any policy. Some of these additional benefits can be in the form of riders or otherwise. There are few policies that offer the benefits of loans against your policy. Whereas others may have the benefit of providing bonuses after locking year. We should analyze and know all these advantages and make our decision accordingly.

With so many variants available, we must select a policy with due diligence. Important is we must make a decision early. As Life Insurance serves as a very good source of Investment.