A term plan is a type of life insurance that provides coverage for a specific period, offering a death benefit to the nominee if the policyholder dies during the policy term. Here are the key details about buying a term plan:
How It Works:
You enter an agreement with an insurer, paying regular premiums for life coverage.
You fill out a proposal form with personal details, lifestyle, medical history, etc.
Assess your and your family’s financial needs to decide coverage amount, policy term, premium frequency, and any riders.
Pay premiums (monthly, quarterly, or annually) as per the plan.
Name a nominee who will receive the payout in case of your death during the term.
Types and Add-ons:
Basic Term Plan: Life coverage for the chosen term.
Term Insurance with Critical Illness cover.
Term Insurance with Accidental Death cover.
Term Insurance with Limited Pay options.
Plans with additional benefits like monthly income or return of premium.
Riders for critical illness, accidental death, disability, terminal illness, etc.
Choosing a Policy:
Coverage amount typically ranges from 10 to 20 times your annual income.
Policy term should ideally cover you till retirement or major financial responsibilities end.
Premium depends on age, health, lifestyle, and coverage.
Nominees should be close family members or others designated to receive benefits.
Some plans offer premium discounts and claim settlement guarantees.
Process to Buy:
Calculate your desired sum assured based on financial goals.
Select benefits and riders as needed.
Fill application form accurately and upload necessary documents.
Pay the premium to activate the policy.
Benefits:
Provides financial security and peace of mind for your family.
Some plans offer lump sum or periodic payouts to nominees.
Premiums are generally affordable compared to the coverage offered.
For example, ICICI Prudential, Axis Max Life, Bajaj Finserv, and other insurers offer term plans with various options and discounts, such as ₹1 crore cover starting at around ₹400-₹578 per month with add-on covers available.
This brief guide covers essential aspects you should know before buying a term plan. Specific plan features and premiums vary by insurer and personal factors.