A term plan covers unpredicted circumstances of suffering a premature death and of living too long. It can be defined as kind of a financial shelter which secures the insured from facing financial instability. Hence, to ensure that your family doesn’t underpass a financial crisis in such a situation, you should buy a life insurance plan, specially a Term Insurance plan. It will assist your family during hard times without leading them towards any financial strain. Following are the significance of life insurance policy plans:
- Protection against unpredictability- An individual cannot predict untimely things like death or demise of a person. Hence, in order to secure one’s family future in an unfortunate circumstance of death, one must plan to buy a life insurance policy to fulfil the monetary needs and requirements of their family when they themselves are absent to do so.
- Financial Support- A life insurance policy indemnifies a certain amount of coverage for the financial damage endured by the family members during an unfortunate loss of the income provider of the family. This is known as financial support under life insurance plans.
- Savings Tool-A policyholder can generate savings as well as seek benefits of the insurance coverage at the same time by opting to invest in a unit-linked insurance plan or any other investment oriented life insurance policy. Such life insurance plans offer you to accumulate a financial corpus during the policy’s period which assists you in acquiring your financial goals in a better way.
- Attaining Retirement Goals- It is an amazing option to achieve effective long term and retirement plans by investing in a life insurance policy. Retirement directed life insurance plans assist in generating finance for one’s retirement. Leadingly, such policies provide you income subsequently after your retirement and besides the stoppage of your self-earned income to enable you to continue the same lifestyle.
- Debt-Free Future- An unpredictable death of the income provider of its family can come out to be completely devastating for the family. It leads towards both, emotional damage as well as financial crisis. The financial support acquired from a life insurance policy in such a plight can prove to be advantageous. With the support from the proceeds received from your life insurance policy, your family will also be able to repay any outstanding debt like a motor loan, home loan, personal loan, etc.
- Saving Children Future- Major future expenses like your child’s education, wedding etc are secured under the child life insurance plan, aimed to provide your child with a fulfilled future. The life insurance policy confirms that your children do not have to make any compromises for education or any personal needs as even in the absence of the parent, such plans assure an efficient coverage maturity amount.
- Mental Peace- By assuring to provide a financial shelter to the insured’s family, the Life insurance policies grant the longed peace of mind to the policyholder. Even a general life insurance policy ensures a corpus to effectively look after the procuring financial requirements in the future for the family of the insured. An insurance policy which meets the needs of its policyholder can be stated as the best insurance policy to invest in.
- Business Security- There are many life insurance plans obtainable in the market which provide coverage to the business of its insured, similar to how life plans fulfils the requirements of the insured’s financial needs. If a joint life insurance policy is purchased by a partnership firm, the demise of any partner does not impact the business and its functions as the plan benefits promise to pay for the funds contributed after the death of a partner.
- Reliable source of Income- By providing a dependable and steady means of income to your family, a life insurance policy ensures that you family is financial comfortable to meet the basic requirements such as child’s education, unpaid bank loans or loans, daily expenses, etc.
- Extra Coverage- A ranges of riders are also available under a life insurance plan. These riders assist you in expanding your coverage level by picking accidental or critical illness cover. Not just for death, life insurance policies offer add-on coverage for various other contingencies also.
Top 10 Term Plans in India
There are above 10 companies functioning under the life insurance segment across India under IRDAI. Hence, if you are searching for the topmost and efficient companies to purchase a life insurance policy from, enlisted below are the top 10 life insurance companies to consider as a great option –
ICICI Prudential Life Insurance Company Limited
Formed as a joint venture amongst ICICI Bank and Prudential Corporation Holdings Limited, ICICI Prudential is one of the top-tier life insurance providers in the market. The company provides a vast variety of life insurance plans and its Assets under Management as at the end of the financial year 2019-20 stood at INR 1604.10 billion
HDFC Life Insurance Company Limited
HDFC Life is another eminent life insurance company in the market. Since its birth, from the year 2000, the company has added various awards under its belt. The company acquires a high claim settlement ratio having honoured 99.01% of its claims in the financial year 2019-20.
Max Life Insurance Company Limited
Available at both, the online and offline portals, Max Life offer various kinds of life insurance policies. The company has an huge existence all across India, having 239 offices in different cities. Max life attains a high claim settlement ratio of 98.74% as per the financial year 2017-18, clearly stating that it settles most of its claims and has a strong financial standing with an AUM of INR 62,798 crores as of financial year 2019-20.
Kotak Mahindra Life Insurance Company Limited
Standing amongst one of the fastest growing life insurance companies across India, Kotak Mahindra Life Insurance Company Limited has sheltered more than 20 million lives in India as on 31st March 2018. The company provides attractive coverage benefits and competitive premium rates under a vast range of life insurance products it has to offer.
TATA AIA Life Insurance Company Limited
Formed as a joint venture amongst TATA Sons Private Limited and AIA Group Limited and having both companies as highly renowned in their respective fields, provided a powerful and well built foundation to TATA AIA Life. The company has a large customer base and is also expanding at a rapid speed. The company received a sum premium of 2232 crores in the financial year 2018-18 and also attained the claim settlement ratio of 99.07% which clearly display that the company settles maximum of its claims.
Edelweiss Tokio Life Insurance Company Limited
An achiever of various awards and winnings, the Edelweiss Tokio Life is a renowned name in the life insurance industry. It won the National Award for Marketing Excellence in the year 2018 among others. Allowing its customers to access the company wherever needed, the company has built a vast reach with 121 branches in 91 cities all across India.
AEGON Life Insurance Company Limited
Founded in the year 2008, Aegon Life has been expanding by taking enormous leaps and bounds. The company has also added to its winnings various different awards like one of The Best BFSI Brands in India Award in 2019, Most Recommended Life Insurance Brand in 2018, etc. To ensure that various types of different requirements of its customers are met, AEGON presents a plethora of insurance products in its offerings for individuals to choose from.
Bharti AXA Life Insurance Company Limited
The company has been offering some of the topmost insurance products to the market since the time of its formation by 2006,. Bharti AXA is promoted by Bharti Group holding 51% stake and AXA having a stake of 49%. The company ensures the topmost customer service amongst the insurance industry and offers various kinds of life insurance plans for its buyers.
Bajaj Allianz Life Insurance Company Limited
One of the foremost life insurance providers that presented distinct and unique insurance policies, Bajaj Allianz is a joint venture between Bajaj Finserv Limited and Allianz SE and was formed in the year 2001. The company is working effectively towards making it a prominent name in the insurance industry. With agent strength of more than 80,000, Bajaj Allianz has escalated over 582 branches across India, as of the year ending 31st December 2019.
- Canara HSBC OBC Life Insurance Company Limited
Canara HSBC OBC was founded in the year 2008 as a venture between Canara Bank, Oriental Bank of Commerce and HSBC Insurance (Asia Pacific) Holdings Limited. Ever since it’s establishment, the company has escalated considerably, surpassing specific premium collection milestones as the fastest in the industry. Canara HSBC OBC has a well built financial foundation considering that its capital base of the insurance company stood at INR 950 crores at the beginning of the year 2016.
Factors to consider before buying Life Insurance Plans
One should consider the following key points before planning to buy a Term Plan:
- Sum Assured – The most primary and foremost factor which should be considered while investing in a life insurance policy is your coverage need. The total amount assured should be efficient and well-suited according to your requirements. You need to identify what exactly the life insurance policy is intended to pay for. For example, it can be your child’s education, for paying off loans or debts, for your dependents, or for your post-retirement plan. Therefore, you must review and make sure that the policy you are selecting provides optimal sum assured and adequately matches your needs and requirements. Even after your death, a life insurance should be sufficient enough for reaching your family’s expenses.
- Premiums – Furthermore, it is vital to figure out and calculate how much premium you can smoothly manage to pay every year while opting to purchase a life insurance policy. You should also determine if you can afford premiums payments for the complete policy term. In case if your insurance needs are considerable, a term insurance policy will be a comparatively be an efficient option as it is inexpensive and has offers nominal premiums. It is also recommended to consider your financial abilities to pay insurance premiums.
- Type of policy that adequately fits your needs- You should shuffle and compare from a variety of available life policies in the market to identify which policy will sufficiently fulfil your requirements. If you have a child whose future you wish to protect, you can opt for a child plan. Whereas, if you want to secure your future post retirement, pension plan will suitable fit you. Additionally, if you want to pay low premiums but generate an adequate financial security for your family in case of your death, choose for a term plan. Hence, to ensure that the sum assured under your life insurance plan looks after your financial goals, select the kind of policy which appropriately matches your needs.
- Tenure of the life insurance policy-While planning to buy the policy, it is also important to review the tenure of your Life Insurance Policy. The tenure of the policy should be generated as per your financial goals and it is vital to determine the period you require insurance protection for to make a better decision regarding which type of life insurance policy you should buy. Insurance policies can be for a specific term or even for the whole life.
- Understand the claim aspects- It is recommended to scrutinize and comprehend the company’s claim- settlement ratio before buying a Life Insurance Policy. This ratio is an indication of claims settled by the company as compared to the number of claims obtained by the company. To get your claims settled at the earliest, it is advisable to select a company with a higher Claim Settlement Ratio.
How to choose the Best Term Plan as per your requirement?
A plan which most appropriately suits your necessities and requirements is defined as the best fit Life Insurance policy. As an individual, people attain various kinds of financial goals and there is a life insurance policy to match each type of financial aim that you have. Hence, it is significant to examine the monetary needs that you have while choosing to purchase a life insurance policy that would fulfill your requirements efficiently. Given below are few of the financial goals that an individual might aspire of –
- Buying a car
- Buying a home
- Planning for your child’s future, involving higher education and marriage
- Wealth creation
- Planning for retirement
Consequently, keeping these financial goals in mind, let’s lead towards how to choose the best fit life insurance policy –
Term Insurance plan
Term Insurance plan can prove out to be the best fit life insurance policy if you want to attain a high sum assured under low premium payments and yet generate an adequate amount for your family in case of your death. A term insurance plan is invariably required to secure the future of the people dependent on you. The policy promises payment of a benefit in a circumstance of your premature demise, easing your family by safeguarding them from the financial strain they might have suffered otherwise. Hence, having a term plan is necessary and should not be avoided.
Whole Life Plan
Whole life plan is a best fit life insurance for individuals who wish to have a whole life coverage or coverage for longer period, i.e. till the insured reaches up to 99 or 100 years of age. Hence, while term insurance plans are limited to a specific tenure and provide coverage for a particular period of time, on the other hand, whole life plans run life-long. Therefore, if you are searching for a lifelong coverage, you should choose whole life insurance plans. Moreover, there are endowment oriented whole life plans too. Such plans offer a maturity benefit at an earlier age but the insurance coverage tends to run life-long. Hence, whole life endowment plans would be a great fit in case if you are looking to generate savings as well as acquiring comprehensive life insurance coverage.
Pension plans are the most suitable for individuals who are looking forward towards planning their retirement, and to ensure attaining life-long income in their older days to continue living their lifestyle. Pension plans are especially created for retirement planning and are most appropriate for people in their late 30s or early 40s. For such people, it becomes vital to conduct retirement planning and hence, they can invest in deferred pension plans to generate a substantial retirement corpus. A deferred annuity plan can be adopted for longer durations and you should select the tenure of your policy according to your retirement age. Therefore, you can deposit premium over the chosen time period to build a desired corpus. Leadingly, when the plan matures, it would guarantee you lifelong income post your retirement.
Besides that, if you are reaching close to retirement and are searching for a steady source of income post that, an immediate annuity pension plan would be the most suitable option, in the given case. This plan demands you to pay an estimated amount and then the annuity payments commence immediately. There are various types of annuity payment modes to choose from. Payments for such plans continue for as long as you live.
Child plan is the best fit life insurance plan if an individual is looking to safeguard their child’s future by generating an adequate financial corpus. A child insurance plan assures a predetermined financial corpus for your child even in your absence under situation like death of the parent. The inbuilt premium waiver advantage ensures that the plan formulates the corpus which you desire for your child’s future. Hence, you should select child insurance plan if you have a minor child and wish to secure their financial future.
Endowment plans should be acquired if a person wishes to obtain dual benefits of generating savings along with taking use of the benefits of insurance, as well as achieve confirmed returns on premium payments. For such requirements, endowment plan is the best fit life insurance plan as it serves dual purpose of savings along with insurance and grants assured returns on your investment. Endowment plans help you attain wealth which you can put to fund your dream home or for wealth creation. These plans are amazing for people who don’t like taking risks as these plans do not invest in the market and offer you guaranteed returns either on death or maturity.
Money Back Plan
For an individual who is searching for a policy which involves creation of savings and liquidity along with sum coverage and also want to receive instalment pay-in during the tenure of the plan then Money-back plan is the best fit life insurance policy in such a case. Money back plan are for people who want the advantage of assured money backs during the policy’s period. If wealth creation is on your mind and when you also need funds at frequent intervals for meeting your financial needs, invest in a money back plan. Your corpus would not be subjected to market risk as this plan offers assured returns along with providing liquidity as survival benefits.
Unit Linked Insurance Plans are the best fit life insurance plan is case if a person aspires to generates wealth as well as receive insurance coverage to enjoy the doubled benefits from investment and insurance protection. ULIPs are flexible life insurance plans which not only provide you market linked returns but they also guarantee monetary coverage. Additionally, ULIPs can be acquired along with a short term investment horizon also. If you can undergo market-linked risks and wish to enhance your wealth, invest in ULIPs. ULIPs come in various types and so you can select a ULIP for fulfilling different types of financial goals also. As per the change in your investment strategy, the advantage of making partial withdrawals allow liquidity in situations when you need money and switching helps you manage your investments.
Hence, choose a plan which rightly fits your requirements after evaluating the suitability of various types of life insurance plans to your financial goals.
Popular Life Insurance Riders
Life Insurance policies offer various add-ons Life Insurance Riders. Some of them are explained below-
Accidental Death Benefit Rider
Under this benefit, an additional amount is paid by the insurance provider along with the basic benefit assured in a circumstance of accidental death of the insured. This additional benefit is equivalent to the rider sum promised which is usually equal to the sum assured of the primary policy.
Critical Illness Rider
Critical illnesses such as heart attack, stroke, cancer, kidney failure, coma, paralysis, etc. are provided coverage under critical illness rider. The coverage of various critical illnesses for different insurance companies may vary. The insurance company provides the rider benefit in case if the insured gets prone to any of the covered critical illnesses. The financial support obtained from the rider can be put for medical treatments and also for monthly expenses. Although, in order to claim the rider benefit, there is a waiting time after the date of diagnosis which the insured is required to survive.
Accidental Disability Rider
In a circumstance where the insured endures permanent disability of a body part like loss of limbs during an accident during an accident and is henceforth forced to leave work is ensured with a cash flow under Accidental disability rider. The rider provides an estimated benefit which is the rider sum assured if the person concerned becomes permanently disabled. In case of disability, future payments of premium are also cancelled under some plans.
Waiver of Premium Rider
In a situation of death or disability of the policyholder, it is not needed to deposit future premiums on the insurance policy by the insured under waiver of premium rider in such a case where the insured of the policy and the its policyholder were two different individuals. This rider makes sure that the policyholder gets to avail predetermined maturity benefits and helps to prevent the life insurance policy from getting terminated.
Best Term Insurance Plan In India FAQs
⭐ What is the age criteria for life insurance?
Eligibility criteria may vary among different insurance companies and on the basis of the plan chosen for a life insurance policy. There is no determined age criteria as it is conditioned upon the “kind” of the policy. For instance, Child Plans hold out insurance for children from 90days even, whereas, on the other hand, Pension Plans are also available to be acquired by an 80-year-old individual. Although, for most plans across India, the usual standard range lies between 18 to 65 years.
⭐ How to get duplicate Life Insurance policy?
You can initiate a request for a duplicate insurance policy to your insurance provider in case if you lose your original policy bond. The application can be generated on both, online and offline portals. To create an online application, you need to visit the official website of your insurance provider and login into your account to appeal for a duplicate policy. However, for applying offline, you will need to visit the office of your insurance company, acquire and fill up the application form for duplicate policy and deposit it along with your valid identity proof to initiate the process. Charges would be applicable for availing a duplicate policy and henceforth, the company would issue the policy at its earliest.
⭐ How do I change the premium payment frequency in my life insurance policy?
The change in frequency of premium payments can be done on both, online and offline portals. Insurance companies provide online services to its clients for making efficient adjustments in frequency of premium payments of a life insurance policy. To make adjustments online, you will need to login to your account by going to your company’s official website and apply for a change in the frequency. Otherwise, you will have to go to your insurance provider’s branch and request for an adjustment of frequency offline. Leadingly, you will need to acquire and fill up a request form with accurate policy details and the desired frequency you want to opt for. Hence, the process for changing your premium policy would commence once you duly submit the form will all the required details.
⭐ How do I increase/decrease the life insurance cover in my policy?
Generally, it is not permitted to make adjustments in the coverage amount under a life insurance policy. Although, there are few term plans which grant the permission to expand the sum assured meanwhile the policy’s period. Identically, some unit linked plans also permit increment or decrement in the coverage amount. Hence, it is recommended to review if the policy grants the service to make alterations in your coverage level. If it does, you can get in touch with your insurance company and make an appeal for a change in your sum assured. For that, you will need to submit a written application to the insurance company to change your assured sum . In case of adjustments, the company will update you regarding the new premium and its next due date as the premium would change as well if alterations are made in sum assured.
⭐ What are the documents required to update the address in life insurance policy documents
You can amend your address in the life insurance policy by requesting your insurance provider. For that, an application specifying about the change of address is required to be submitted to your insurance company. Besides the application, a valid proof of the new address is also necessary to be deposited. A registered rent agreement, sale deed of the property, utility bills like electricity bill, gas bill, mobile bill, etc., Aadhaar card having the updated address, passport containing the updated address, etc. are the types of address proof which can be submitted.
⭐ Why do insurance companies put exclusions in their life insurance policies?
Exclusions are drawn by the insurer on the life insurance policies to make sure that an individual is not purchasing a life insurance policy just to seek benefit out of it. For instance, under life insurance policies, suicides committed between a year of commencement or restoration of a policy are prohibited from coverage. This ensures that the people who are thinking about committing suicide do not purchase or regenerate their lapsed policies only to claim the sum assured.
⭐ What happens if Life Insurance Policy gets expires?
Under a life insurance policy, if the premium payments are not deposited within the assigned grace period, the policy gets lapsed but it does not gets expired. In a case of a lapsed life plan, the coverage does not gets concluded if you have deposited premiums for a minimum number of years as mentioned under the plan. Although, the coverage level gets lowered and it is called the paid-up value. You need to pay the entire due amount of premium with applicable interest if you wish to restore a lapsed policy.
⭐ Can I reinstate a lapsed life insurance policy?
Yes, it is possible to restore a lapsed life insurance policy. Such reinstatement is known as revival and it is only allowed upto 2 years from the day of the first unpaid premium. To restore your policy, it is necessary to deposit the due amount of premium with applicable interest along with a submission of a proof of insurability. You can get in touch with your insurance provider to get your lapsed policy renewed. Their team of experts will provide you details regarding the revival formalities which you need to complete and the amount is needed to be paid. Hence, you can get your policy restored quickly by correctly following their guidelines.
⭐ Can I take a loan on Life Insurance Policy?
It is permitted under savings oriented and traditional life insurance plans to avail a loan on a life insurance policy. Although, if you own a term plan or a unit linked plan, the service of loan would not be provided. Loans are offered depending on the surrender value of your life insurance policy and if your policy has achieved a surrender value, you would be able to avail a loan. You can contact your insurance provider to receive assistance with a policy loan in case of requirement of funds.
⭐ How long does medical underwriting take while buying a life insurance policy?
As the insurance company needs to ensure that the insured’s mortality risk does not gets exceedingly higher due to any health condition, the Medical underwriting might acquire some time. Ranging from 2 to up to 15 days, the real time consumed in medical underwriting might vary according to different insurance companies.
⭐ How many nominees one can enrolled in a life insurance policy?
Under a life insurance policy, no specific limits are imposed on the number of nominee enrollment one can do. A minimum of one nominee necessarily needs be added. However, the amount of share payable of the policy benefits to each nominee should be clearly stated in case of enrollment of multiple nominees.
⭐ What if between 2 nominees 1 nominee died in a life insurance policy?
The total sum assured would be paid to the person who is alive amongst the two nominees in case if one of the nominee dies and no new nominee is assigned to replace the deceased nominee.
⭐ How do I change nominee in insurance?
It is possible to replace the nominee under a life insurance policy during any time of its tenure period. You can do so by contacting the expert assistance of your insurance company for appropriate guidance. You would be required to submit a written application specifying the need of change. Make sure that you also mention the name details of the new nominee.
⭐ Can a minor be a nominee in life insurance policy?
Yes, it is possible to appoint a minor as a nominee under a life insurance policy. Although, in such a situation, an appointee also needs to be mentioned who would represent the minor. If the insured dies when the nominee is still a minor, the appointee will be required to collect the death benefit on the minor’s behalf. The appointee would only be needed till the minor reaches maturity. A minor can rightly act as a nominee themselves after reaching the age of 18 years or more.
⭐ What is minimum policy period in insurance
Generally, few policies provide the minimum policy duration of 5 years. Although, the policy tenure is entirely dependent on the type of a life insurance plan you are opting for. Hence, it is recommended to research about the policy period before heading towards buying it.
⭐ What is a single premium?
While the purchase of the plan, when the total premium payment required by a life insurance policy is paid in a single go in an estimated amount, it is called as a single premium. When a single premium payment is made, an individual does not have to bother for the selected time period about paying regular premiums for the continuity of their policy’s coverage.
⭐ What is limited premium payment in life insurance?
A duration of the premium payment which is lesser than the coverage tenure of the life insurance policy is called as the limited premium payment. Hence, limited premiums are paid till a specific period and not throughout the policy’s tenure. For example, you can pay limited premiums 10 to 15 years for a coverage assurance of 20 years under a life insurance policy with a duration of 20 years.
⭐ How much life insurance do I need?
Financial goals, family size, liabilities, existing assets, lifestyle expenses, etc are some of the factors which should decide the coverage amount of your life insurance policy. Ideally, your life insurance coverage should be at least 10 to 15 times your annual income. You can also make use of various evaluation methods for depicting your ideal sum assured and create a better assessment of your coverage requirements.
⭐ What diseases are covered by critical illness insurance?
Major surgeries and severe diseases and provided coverage under the benefit of a Critical illness insurance. Cancer of specified severity, first heart attack of specified severity, kidney failure which require dialysis on a regular basis, open chest surgery called CABG, multiple sclerosis, paralysis of limbs, major organ transplant, etc. are few of the illnesses and procedures which are covered under this benefit.