When you start to curate a financial portfolio, term insurance becomes a priority. It enables you to leave behind a legacy so that your loved ones can continue living their life comfortably even in your absence. As a term plan plays a vital role in the financial wellbeing of your family, you must examine your financial requirements before you buy term life insurance.
To assist you in shopping for term insurance plans in India, we have enlisted the essential factors that need to be considered.
What is Term Insurance?
To avoid making a premature decision, it is important to know what term insurance is before analysing how to buy the best term insurance plan. True to its name, a term plan offers financial cover to the policyholder for a pre-defined period. If the insurance holder were to pass away while the term policy is still active, the beneficiaries are paid the sum assured.
In the absence of a return of premium term life insurance, if the insured member survives the tenure, there is no pay-out. Policyholders have to pay a premium amount based on their age and health. If you are looking for an online term policy, you can use a term life insurance calculator to determine the cost of your insurance.
Term insurance plans in India come with unique offerings to address diverse monetary needs. Insurance providers enable policy customisation with add-ons such as critical illness, accidental benefit, and return of premium term life insurance to strengthen a basic policy. However, choosing the best term insurance plan from a host of options available can become challenging, especially if you are new to buying life insurance.
Factors to Choose the Right Term Insurance Plan
Your term insurance must align with your financial requirements. To make an informed insurance purchase, here are the factors that need to be considered:
1. Current and Future Financial Needs
Broadly speaking, your term plan needs to support the financial needs of your family in your absence. Therefore, when you buy term life insurance, observe your current and future financial needs. Generally, it is recommended to buy term life insurance that is at least 10 to 15 times your annual income. Include your liabilities such as home loan, business loan, credit card bills, etc., to the required cover. Deduct the combined cost of your investments such as FDs and mutual funds from your insurance cover. Your future financial goals, such as the marriage of your child or their higher education, also need to be accounted for. Finally, consider the retirement corpus you would like to leave behind for your spouse. When all these parameters have been duly addressed, you can estimate the adequate term insurance cover. Using a term life insurance calculator, you can determine the cost of your policy.
2. Tenure of Your Term Cover
Ideally, your term insurance needs to have you covered until you retire from your workplace. Formerly, individuals worked till the age of 60. However, now, people prefer to extend their work-life until the age of 65 at least. Moreover, the responsibilities of marriage and children have also been pushed further. Regardless of your lifestyle preferences, it is recommended to buy term life insurance at the early stages of your life as the premium amount keeps increasing with age.
3. Nature and Extent of Term Plan Coverage
With a change in financial responsibilities at different stages in life, it is important to review your term plan every five years. There are different customisations available with term plans that address different financial needs:
- Level term plan: When you buy a level term plan, the premiums that you are expected to pay remain fixed throughout the tenure of the policy.
- Decreasing term plan: Here, the sum assured decreases by a certain percentage every year, and this decreases your premium. This plan is ideal when initially you have certain liabilities which reduce with time.
- Increasing term plan: As opposed to the former, an increasing term plan is one where your sum assured increases by a certain percentage every year. It factors in the cost of inflation which is an important element in selecting the right term insurance cover.
4. Term Insurance Riders
In the unpredictability of life, basic term insurance might not be protection enough. To protect your loved ones from all possible eventualities, you can enhance your coverage through riders. Riders are additional protection that bridges the gap between good and the best term insurance plan.
Edelweiss Tokio term insurance offers the following riders with the Zindagi Plus term plan:
- Edelweiss Tokio Life Critical Illness Rider: The changing lifestyle has increased our susceptibility to illnesses. With this rider, the policyholder can get a lump sum amount on diagnosis of a critical illness to pay for hospital expenses.
- Edelweiss Tokio Life Accidental Death Benefit Rider: This rider provides additional financial assistance in the unfortunate event that you encounter an accident.
- Edelweiss Tokio Life Accidental Total and Permanent Disability Rider: Accidents come with a cost, and to secure yourself from the immediate expenses, you can purchase this cover over your basic policy.
- Edelweiss Tokio Life Hospital Cash Benefit: Medical bills can burn a sizable hole in your pocket; however, this rider pays for the daily allowance if you are hospitalised for any illness.
- Edelweiss Tokio Life Waiver of Premium Rider: If the life insured gets diagnosed with any one of the 35 listed terminal illnesses, all the future premium payments are waived off, but the coverage continues till policy maturity.
Zindagi Plus from Edelweiss Tokio Life Insurance
The Edelweiss Tokio Life Zindagi Plus plan is designed to address every financial need. With experience in managing finances, Edelweiss Tokio Life helps you plan for a worry-free retirement by strengthening your strategies for wealth creation. The online term policy can be purchased in four easy steps:
- Visit the Edelweiss Tokio website and select your coverage.
- Customise your term plan by opting for suitable tenure, pay-out mode, and premium payment frequency.
- Enhance your coverage by choosing from four unique riders.
- Submit the necessary documents for verification.
You can use the online term insurance premium calculator on our website to determine your exact premium amount.
Term insurance is an important financial safety net, and so it is you must buy the policy from a reliable insurance provider. To find the right insurance provider, check the claim settlement and solvency ratio as they are an indicator of dependability.
Siddhant Dubey - Writer & Photographer
Siddhant works as a freelance content writer who is interested in a wide range of spheres from photography and personal finance to cooking. He is also an aspiring photographer striving to showcase life around him through his vision.