Term
Insurance
What is Term Insurance?
A term insurance policy is a simple type of life insurance that provides financial security for a predetermined amount of time. If you pass away within the term of a term insurance policy, the nominee will be compensated financially.
Term life insurance is designed to only pay out money if the policyholder passes away during the term. If you live out the duration of this policy, you will not receive any money back. If you want to receive your premiums back once the policy term expires, you can select term insurance with return of premium.
When you purchase term insurance, you pay recurring premiums in return for a monetary payout to your designated beneficiary in the case of your untimely death.
For instance, 30-year-old Akshay chooses to pay about ₹12,000 a year for a ₹1 crore insurance for 30 years. Akshay’s family will get ₹1 crore if something occurs during those 30 years. Unless there is a return of premium feature, the policy simply expires otherwise.
Why Should You Buy A Term Insurance Plan?
Investing in a term insurance policy helps guarantee your loved ones’ financial stability while you’re away.This is how you can benefit from a term insurance plan.
Financial protection for the family
If the policyholder dies sooner than expected, the term insurance plan somehow helps, because it gives the family a lump sum payout. In practice, it lets them carry on with their day to day living and cover various financial duties.
Affordable premiums
Plans for term insurance are typically affordable. For example, a ₹1 Crore life insurance policy is affordable for people of all income levels, starting as ₹501 per month.
Tax benefits
Term insurance gives financial security too, and yeah it can also help with tax. For the GST part, there is 0% GST on term plans, so they end up more cost-effective. Also, policyholders may take tax deductions9 on the premiums paid, under Section 80C of the Income Tax Act, which supports those long-term savings.
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Coverage against critical illnesses
In order to ensure complete protection, many term insurance plans offer riders10 that offer extra coverage against serious illnesses.
Debt repayment support
The sum promised can be used to settle outstanding debts in the event of the policyholder's death, relieving the family of financial hardship.
Income replacement
The dividend can help sustain the family's standard of life by paying for both short-term and long-term costs.
Long-term financial stability
It becomes a fundamental component of financial planning, providing stability across various phases of life.
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Eligibility criteria for term insurance
The eligibility criteria for purchasing a term insurance policy are basically like this, a bit broadly:
Age
You need to be between 18 and 65 years old to buy a term insurance plan. The age you decide to buy the term insurance at, matters a lot since it influences your premium
Citizenship
You have to be an Indian citizen if you want to buy term insurance in India. Still, your coverage basically stays unaffected if you go overseas later for higher studies or for work, after you already purchased a term plan.
Medical reports
You’ll have to share the required medical reports and also get a few diagnostic tests done, if the insurer asks. Also make sure you give the correct details about your medical history, so that there aren’t any issues during the claim settlement process.
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List Of Documents Required For Term Insurance
Identity Proof
- Aadhar card
- PAN card
- Voter ID
- Passport
- Driving License
- Job Card issued by NREGA duly signed by an officer of the State Government
- Masked Aadhaar Card
- Letter Issued by UIDAI
Address Proof
- Passport
- Driving Licence
- Aadhaar Card
- Voter ID
- Masked Aadhaar Card
- Letter Issued by UIDAI
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What Is The Claim Process For Term Insurance?
Inform the insurer
As soon as the policyholder passes away, the nominee is required to notify the insurer.
Fill the claim form
Accurate information must be entered on a claim form.
Submit required documents
It is necessary to submit documents such as the death certificate and confirmation of identity.
Verification by insurer
All submitted paperwork and claim information are checked by the insurer.
Claim Decision and Settlement
If all the provided information and documents are actually correct, then the claim gets approved, and the amount is disbursed to the nominee. Below is the regulatory mandated turnaround time for claim settlement, kind of like a rough guideline though.
- Death claim (without investigation) : 15 days from the date of intimation of claim.
- Death claim (with investigation): 45 days from the date of intimation of claim.
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