Term life insurance is one of the most popular types of life insurance that comes with a death benefit in case of a sudden demise of the policyholder during the policy term. These are affordable insurance plans that provide full protection and financial stability to your loved ones in case of any unforeseen events.
Benefits of Buying Life Term Insurance
Eligibility Criteria of Term Insurance:
Before anyone can take a life insurance policy, they will have to meet certain eligibility criteria which can be:
- The maximum entry age will depend on the minimum tenure of the policy.
- The minimum age for maturity will be determined based on the minimum age at entry and the minimum tenure offered.
- The sum assured will also be a factor in calculating the eligibility as many policies have a fixed minimum sum assured.
- This may not be mandatory but some insurers may ask you to undergo a medical check-up prior to taking the policy.
Documents Required for Term Insurance
Following is the list of documents you will need to provide when taking a term insurance plan. Document requirements may also differ from insurer to insurer. These are the basic ducuments are required:
- PAN card
- Proof of identity using documents like passport, Voter ID card, Aadhaar card, driving licence, letter from a public servant or authority verifying identity.
- Proof of age with documents like passport, birth certificate, driving licence, PAN card, etc.
- Proof of address with documents like utility bills (electricity, telephone), ration card, bank account statement, Voter ID card, or passport.
- Proof of income with documents like Income tax returns, employer’s certificate, or Income Tax assessment order.
- Some recently clicked passport sized photos.
If your main purpose is to financially protect your family like your wife, children or parents in your absence, then you could opt for a term insurance plan. Term insurance plans give you adequate life insurance cover at a much lower cost. However, if you are looking for insurance as well as savings returns, then you may go for life insurance policies.
You must consider these 4 important points before buying term insurance
I. Added Benefits – Consider the added benefits that come by default or as additional options with a term plan e.g. critical illness cover, terminal illness cover or waiver of premium due to disability.
II. Brand Strength – Understand how strong the insurance brand is and how likely it is to make a payment in case a claim is made. Important parameters here would be the ‘Claim settlement ratio’, time taken to pay the claims and ‘Amount of claims paid’.
III. Right cover and policy term – Choosing the right cover and policy term helps you save money too. You must select these as per your requirements. It is recommended that you should have a term insurance cover of 10-12 times your income. Also, the policy term should ideally be till your retirement age (typically 60 years).
IV. Budget – Choose a term plan that fits in your budget & offers premium pay-out options to suit your needs. E.g. If budget is a problem, one could go for a plan that provides monthly premium payment option over a yearly commitment.
You must buy the insurance plan as soon as possible as this will help you save on premium for the entire policy term. Another important factor is that with age you may catch some lifestyle diseases and at that point in time, you may either not get a policy or you may get it at a very high price.
Nearly all types of death are covered in term insurance, including natural death and death due to accidents or illness. However, there are exceptions. For example, death due to a natural disaster or an ‘act of God’ and death due to terrorist attacks might not be covered and suicidal death as mentioned above in Exclusions list.
It is important to read the fine print of the policy document to know the details. You can also read online or consult an insurance agent to understand the terms and conditions of the policy.