What is term insurance policy? Before we explore the meaning of term insurance, let’s understand what’s insurance. According to Oxford Dictionary, insurance is defined as: arrangement with a company in which you pay them regular amounts of money and they agree to pay the costs, for example, if you die or are ill/sick, or if you lose or damage something.
What is Term Insurance (Meaning)?
Term insurance is a life insurance policy providing cover for a specified term, or certain tenure of years. If the insured dies during the validity of the term insurance policy, the beneficiaries of the policy get the insured amount.
Unlike other insurance policies, term insurance is a pure insurance instrument without any other benefits such as annuity payments or endowment payments. If the policy holder survives the policy tenure, there is no cash benefit at the expiry of tenure. This makes term insurance one of the cheapest way of getting your life insured.
Companies and organizations can avail of group term insurance policies that provide a life insurance cover to all its employees or members.
Read: [Infographic] History of insurance to know its origin and when did it start in India
Why Term Insurance is Better?
Term insurance plans provide pure life insurance cover. Being a no-frill life insurance plan with zero cash/investment benefit, term insurance is cheaper than other life insurance plans. It makes term insurance more affordable and allows you to get a bigger life insurance cover at a lower premium cost.
- Cheapest way of getting life insurance
- No investment component frees your corpus for better investment avenues
- Get tax deductions for premium paid
- Policy tenure of 5 – 30 years
- Minimum age for policy: 18 years
- Maximum age for policy: 70 years
Bigger Life Insurance Cover: Since term life insurance plans are cheaper, you can get a bigger life insurance cover for the same premium as an endowment insurance plan. You can get a term life insurance cover of Rs 1 crore for annual premium of around Rs 12,500.
Insurance Riders (Add-ons): If you are interested, your term insurance can also include riders to customize and enhance the insurance cover utility of the policy. For instance, you can opt for a critical illness rider, which entitles the insured to receive the sum assured on being diagnosed with any critical illness. Other term insurance riders include loss of employment, accidental death, disability, etc.
Increase Policy Value: Some insurers allow you to increase the term insurance policy amount on certain stages of life such as marriage and becoming a parent. This flexibility means you can enjoy the required insurance cover without getting a new policy.
How to Get Term Life Insurance?
Most insurance companies in India offer term insurance as online and offline insurance plans. You can choose for online term insurance policies to get started quickly without requiring any insurance agent’s help. Customize your term insurance with riders to suit your insurance requirements. Make sure you opt for a term insurance plan from a company with the best claim settlement ratio. A higher claim settlement ratio means lower risk of your insurance claim getting rejected at the time when you or your family require the insurance amount benefit.