New Insurance Care

WHAT IS TERM LIFE INSURANCE?
Term insurance is a type of life insurance that provides coverage for a specific period of time or years, i.e., a term. This type of life insurance provides a financial benefit to the nominee in case of the unfortunate demise of the insured during the policy term. Term Insurance policies provide high life cover at lower premiums. For e.g.: Premium for ₹ 1 Crore Term Insurance cover could be as low as ₹ 485* p.m. These fixed premiums can be paid at once or at regular intervals for the entire policy term or for a limited period. Premium amount varies basis the type of the premium payment method opted by the buyer.

WHO SHOULD BUY A TERM INSURANCE POLICY?
Anyone with financial dependents should buy a Term Insurance Policy. This includes married couples, parents, business people and self-employed, SIP investors, young professionals with dependent parents, and in some cases, even retirees.

Life insurance premiums paid are deductible from taxable income under Section 80C and hence carry a double benefit for taxpayers – protection and tax-saving. The amount (maturity value) received under a term insurance policy is also tax-exempt subject to conditions under Section 10(10D) of the Income Tax Act, 1961. Term Insurance also has among the lowest premiums compared to the different types of insurance policies.

Hence, individuals who derive any of the three significant benefits associated with term insurance should consider buying such policies. The three significant benefits are – life protection, tax-saving and affordable premiums.

Parents:
Parents are generally the sole source of financial support for their children. The needs of children extend from school fees and living expenses to hefty university fees, later on in life. An unfortunate event with a parent can jeopardize their future and deprive children of life’s opportunities. Parents must ensure that this scenario does not come to pass, by purchasing a term insurance policy. This policy will pay out a lump sum and/or income to satisfy their children’s expenses, in the event of any mishap of the parent(s).
Newly-married couple:
Roses, chocolates and movie tickets are great, but here’s a truly long-lasting gift for your spouse – term insurance. This gift will give your spouse more than momentary joy, and it will secure their future. Term Insurance assures the spouse of financial support in case of a mishap with the insured person and should be purchased as soon as possible by married couples.
Working Women:
The women of today are on an equal footing with men, whether it be managing their finances or providing for their family. Today, a family is as dependent on the woman’s income as it is on the man’s. This dependency brings with it the need to financially secure your loved ones in case something happens to you. A Term Insurance plan assures that your parents/spouse/children are financially secured even in your absence. It ensures that your family does not have to compromise on their lifestyle and can continue with the goals you set for them. The term insurance cover amount also helps to take care of any outstanding liabilities like home loan, auto loan, education loan, and more. Not only this, but some term insurance plans also come with the added benefit of a critical illness^ cover that provides a payout if you are diagnosed with a serious illness like breast or cervical cancer.
Young Professionals:
Young professionals are just starting their careers. Many of them are not yet married and have no financial dependents. However this is likely to change in the future as they get married or support their parents/relatives. Such individuals should buy term insurance now rather than wait. This is because once a policy is purchased, the premiums stay the same throughout an individual’s life. On the other hand waiting to buy term insurance in the future can force customers to pay higher premiums because term insurance premiums increase with age.
Taxpayers:
Term Insurance premiums paid are allowed as a deduction from taxable income under Section 80C of the Income Tax Act, 1961. The term insurance payouts on maturity are also exempt from tax subject to conditions under Section 10(10D). Hence taxpayers can use term insurance to reduce their tax burden significantly.
Self Employed:
As a self-employed person, you face many challenges. Unlike salaried individuals, you do not earn a fixed monthly income; you have an uneven source of income that depends on the ups and downs of the market. Plus, you may have also taken a business or personal loan from creditors, banks, or even your family and friends. Hence, buying a term insurance plan to secure your family becomes even more important for you. A term life insurance policy can ensure that your family remains financially secure even in your absence.
SIP Investors:
Investors in mutual fund SIPs (Systematic Investment Plan) invest a fixed amount every month in a mutual fund. The wealth creation in an SIP is driven by a stream of regular instalments which compound over time. However, an unfortunate event of the investor can stop the flow of instalments. Term Insurance can protect the SIP by providing the nominees of the insured person with funds to continue the SIP.
Retirees:
Retired persons need to have term insurance if they have dependent spouses or families. Buying term life insurance can also be a way of leaving an inheritance for their families. This is because, Term Insurance is paid out to nominees in case of any mishap with the insured person. The payment of Term Insurance is also tax-free subject to conditions under Section 10(10D) of the Income Tax Act,1961.
TERMS RELATED TO TERM INSURANCE
Here are some terms you must know:

Claim Settlement Ratio:
The Claim Settlement Ratio (CSR) is the ratio of the total number of claims raised in a year and the number of claims settled in a year by an insurer. The higher the number, the more reliable the insurance company is, as the chances of your family’s claim being rejected are low
Term insurance premium:
This is the money you pay to the insurance company in return for financial protection. Premiums can be made in monthly, half-yearly, and annual instalments. Premiums tend to increase as you age
Add-on benefits (riders):
To enhance the coverage of your plan, you can add benefits to your plan, such as a critical illness rider, an accidental death rider, or a permanent disability rider. Riders come at a nominal cost over the premium
Sum assured:
This is the amount of money that your nominee will receive in case of an unfortunate event. This also determines the premium amount for the term plan
Death benefit:
This is the same as a sum assured and is given to the nominee in case of an unfortunate eventuality
FEATURES OF TERM INSURANCE
Here are some features of term insurance plans:

Low entry age:
Term insurance plans have a minimum entry age of 18 years only. You can buy a term plan and secure your loved ones as soon as you reach adulthood
Long term protection:
The term plan offers long policy tenures of up to 40 years that allow you to protect your family members for a long time
Easy to buy:
Term insurance can be purchased online in minimal steps. You can compare different plans and features with a few clicks and pick a plan that suits your needs the best. The submission of documents, premium payment, and all other customer queries can be submitted online from the comfort of your home or office
Easy premium payment options:
Term insurance plans offer flexible premium payment options like monthly, quarterly or yearly payment
Adjustable cover:
The term plan is flexible and allows you to increase or decrease the sum assured basis your financial condition
Liability protection:
The sum assured of a term insurance plan can be used to ensure your family’s financial security and protect them from debt liabilities like a loan repayment

TERM INSURANCE – BENEFITS

High Life Insurance Amount at affordable premiums:
Term Insurance plans provide a large amount of life insurance cover at an affordable premium. This cover can compensate for several years of lost earnings
Cover Against Critical Illnesses:
Along with providing life cover, a new-age term plan also provides protection against critical illnesses. For a small additional premium, Critical Illness Cover provides lump sum payments when a critical illness like a heart attack, cancer, kidney failure, or any other critical illness .
Support in Case of Disability:
In new-age Term Plans  the insurance company pays your future premiums in case of total and permanent disability. As a result, your life insurance cover continues even if you are unable to pay premiums
Additional Financial Security:
To increase the security of your family, a Term Policy provides additional payout (up to 2 crore) in case of an accidental death+. For example, if your life cover is 1 crore, a Term Insurance Plan with Accident Death Cover pays 2 crore to your family in case of an accidental death+
Tax Benefits:
Term Insurance plans offer tax benefits on premiums paid  under Section 80C. New-age Term Plans with critical illness cover also offer additional tax benefits on premiums paid  under Section 80D. You also get tax benefits subject to conditions under Section 10(10D) on the money that your family receives in case of an unfortunate event
Death benefits:
In the unfortunate event of death during the policy term, your family receives the death benefit from term insurance. Your nominee can choose to receive a regular income along with a lump sum benefit in your absence
Survival benefits:
Standard term insurance does not offer any benefits if you survive the term. However, a return of premium term plan also provides you with a lump sum or regular income as guaranteed benefits to help you fulfil varied financial goals. The term plan pays back an amount that is at least equal to the total premium paid. You receive these guaranteed benefits at the end of the tenure

WHEN IS THE RIGHT TIME TO BUY A TERM INSURANCE PLAN?
The right time to buy a term insurance plan is as soon as you can. The chances of getting lifestyle diseases increase as you age, and so do insurance costs. When you invest in a term plan at a young age, you get an insurance policy at an affordable premium. Hence, it may be advised to invest in term life insurance when you are young. This will save a lot of money in the long run. Moreover, it will also provide you and your loved ones with extended coverage and financial security from an early age.

HOW MUCH TERM INSURANCE COVER DO YOU NEED?
You can get a simple, quick and clear answer to this question by calculating your Human Life Value or HLV. HLV is an easy-to-use numeric method of calculating the amount of life cover that you may need.

WHAT ARE THE PAYOUT OPTIONS IN TERM LIFE INSURANCE?
A term insurance plan is a pure protection plan that offers a life cover to the policyholder in return for timely premium payments. If you buy a term policy, you will be asked to name a nominee. This could be a child, spouse, parent, sibling, or any other loved one. In case of an unfortunate event, the chosen sum assured will be paid to this nominee, depending on the payout method you opt for. Here’s how this works:

Lump sum:
Under this method, a single payment will be made to the nominee in case of an unfortunate event. This money can be used as per the discretion of the nominee
Income:
Under this, the nominee will receive equal monthly income payments in the event of any mishap. This can act as a substitute for your income in your absence
A combination of both:
Under this, a part of the sum assured will be paid as a lump sum and the remaining will be given as equal monthly income payments. This can help families who may have varied financial needs
Increasing income:
With this option, your nominee will receive increasing monthly instalments for 10 years. The income will increase by 10% simple interest every year until the entire sum assured is paid

WHAT IS A TERM INSURANCE RIDER?
A term insurance rider is an add-on cover that can be bought over the base plan. Riders are added at an additional price over and above the premium and can be chosen as per your needs. There are different types of riders, such as a terminal illness rider a critical illness^ benefit, an accidental death+ benefit, and a permanent disability rider.

So, what are the different life insurance riders?

Terminal illness rider:
Terminal Illness refers to the high likeliness of death within the next six months as diagnosed by medical practitioners that specialize in the same. Terminal illnesses are not only life-threatening but can also affect your finances significantly. The terminal illnesses benefit is available with all plan options and it covers AIDS too. In case of diagnosis of a terminal illness, the full death benefit is paid out.
Waiver of premium due to permanent disability:
It ensures that your life insurance policy stays active even if you are unable to pay your premiums. The effect of this policy would be waiving off all future premiums in case of a permanent disability##, but the policy benefits continue for the entire policy duration
Critical illness cover:
Under this rider, you pay an extra amount to get yourself covered in case you are diagnosed with any of the critical ailments mentioned in the policy document. Acting like an income replacement plan, the amount received under the benefit can be used to meet both medical and household expenses. Though the critical illnesses covered under the policy may vary from one insurer to another, some ailments like cancer, heart attack, brain tumor, and others are covered under the rider
Accidental death benefit+:
Under this benefit, you pay an extra amount to get your family covered in case of accidental death. When you buy an accidental death benefit cover, the insurer pays up to double the sum assured to your nominee
IMPORTANCE OF TERM INSURANCE IN THE TIMES OF COVID-19
The COVID-19 pandemic has brought in a lot of uncertainty. Many people have lost their lives, and several families have been shattered. While no one can replace the loss of a loved one, a term insurance plan that covers COVID-19 life claims can offer grieving families financial security and protection.

Term insurance is especially important at a time like this as it can help your loved ones move on with their lives with dignity.