Term Insurance – No Longer a Choice, A Necessity!

Did You Know? The number of urban Indians buying term insurance grew up by 7 percentage points in the past year with an all-time penetration at 28 per cent, as per a recent report by The Economic Times. Roughly, this translates to 3 out of every 10 Indians are buying term insurance as compared to 70 per cent buying life insurance, in general.

With the pandemic reminding us of the uncertainties of life, the need for term insurance has gone up manifold. There are a few major benefits to getting a term insurance plan. In this article, we’ll explore what term insurance is, how it works, why you may want to consider getting one, and how you can get the most value for your money. In India, private insurers offer these policies ranging from 3 years to 15 years or more, and there are some plans like Edelweiss Tokio Life’s Total Protect Plus plan, which offers term insurance that provides life cover for 100 years.

What is Term Insurance?

A term insurance plan is an insurance policy that provides you coverage upon regular payment of a certain amount as a premium for a set term, usually until the age of retirement or until a specified event. Premiums are calculated keeping in mind the parameters of age, gender, life expectancy, and general health conditions.

How Does Term Insurance Work?

As a rule of thumb, it is prudent to buy term insurance early on in life to get a good premium account for lesser price. If you buy term insurance at an older/later age, you pay a higher premium and do keep in mind this premium is fixed for the entire term until the expiry. Term insurance exists as a guaranteed cash payout in the form of a sum assured by the insurer to take care of the needs of your loved ones comfortably should the unfortunate happen.

When you buy term insurance, you pay a higher cost than other kinds of insurance, but they provide you with more coverage for your money. Term policies are not renewable and do not guarantee a return on your investment and there is no payout after the completion of the policy term. Do read about policy inclusions and exclusions at the time of policy purchase to avoid any nasty surprise. You can compare quotes online using the free premium calculator and choose the best term insurance which meets your financial requirements.

Some term insurance plans like Edelweiss Tokio Life’s Total Protect Plus also offer a number of optional riders like Critical Illness Rider, Hospital Cash Benefit Rider, Waiver Of Premium Rider and more, so you can customise your plan further to suit your needs. This plan provides cover till the age of 100 years, has a Child’s Future Protect Benefit option and covers your partner besides a 6 per cent discount on the first Premium on fulfilment of medical examination within 7 days of policy purchase. With these additional benefits, you can also get financial assistance during hospitalisation or have your premium payments deferred in case of unforeseen accidents.

Furthermore, in the case of plans like Saral Jeevan Bima you can also complete your premium payments before your policy term ends, so you can rest easy knowing you are secured against any unfortunate situations.

How Much Term Insurance Is Enough?

It’s important to understand your financial needs and goals before you buy a term insurance plan. What are your retirement dates? Do you need coverage that will cover you until the age of retirement, or do you need it for a specific event such as disability or death? If you answer “yes” to any of these questions, then a term insurance plan may be right for you. Also, are you the sole earning member of the family, and is your family dependent on you for all their financial needs? Then, a term insurance plan is something you must bake into your financial planning. Term insurance will give you peace of mind, knowing that if something were to happen to you and your family, your loved ones would be taken care of financially. If you’re unsure how much term insurance is enough, consider buying as much as you can afford. The generally recommended amount is 20 times your current income. There are free premium calculators available online to check coverage for the period of insurance under consideration.

The Bottom Line

At whatever stage of life one may be, it is only advisable to have adequate life cover based on the financial capabilities and liabilities, if any, and choose appropriate add-ons depending on the kind of coverage one is seeking. To learn more about securing yourself and your loved ones, contact the experts at Edelweiss Tokio Life. They will help you understand your needs and customize relevant plans accordingly.