The insurance sector in India has seen impressive growth in recent decades with the arrival of new private-sector companies. Private insurers have emerged as the big players in offering life and non-life products in the Indian insurance sector. The average Indian has also found new perspectives on life insurance and pure protection term plans after the COVID-19 pandemic.
The number of urban Indians with a term insurance plan increased by 4% in 2021, according to the India Protection Quotient survey conducted by Max Life Insurance.
Term insurance plans are one of the traditional products in the insurance sector, and India has one of the highest life insurance penetration rates in India. Therefore, it is important to find the best term insurance plan for unique advantages.
How to Choose the Best Rs. 1 Crore Term Insurance Plan
The favorable state of the insurance market in India offers a promising indicator for buying a term insurance plan now. But should you buy a term plan just because it is a traditional insurance product? It is important to learn about term insurance and its variants alongside other related factors before buying one.
Here are some of the crucial pieces of information you must keep in mind before buying term insurance plans.
Term Insurance Plan: Defined
A term insurance plan is a fundamental type of life insurance plan. It offers financial protection to the nominee or family of the policyholder in the event of the policyholder’s untimely demise during the tenure of the term policy.
Life insurers have to pay premiums for term insurance plans according to the policy’s terms and conditions. For example, you can buy a term insurance plan with a sum assured of Rs. 1 crore with a policy term of 30 or 40 years. You have to pay the premium for the term insurance plan during the tenure of the term insurance. In the case of premature death of the insured individual, the insurer would pay the sum assured, i.e. Rs. 1 crore, to the nominee.
Variants of Term Insurance
Here, you can dive deeper into the answers to ‘What is term plan?’ and explore the different options. The common types of term insurance plans include:
- Level-term insurance
- Increasing-term insurance
- Decreasing-term insurance
- Term plan with premium return
Each type of term plan features unique conditions that suit the varying needs of people seeking life insurance.
- The level-term insurance plan features a constant sum assured, and the insurer pays the sum assured in the event of the death of the insured during the policy term.
- Increasing-term insurance plans offer the flexibility for increasing the sum assured every year.
- Decreasing-term insurance plans have the facility of reducing the sum assured every year according to a pre-defined condition.
- Term plans with a return of premium option offer the advantage of obtaining your premiums back as a maturity benefit. Such types of plans refund the premiums paid after deducting applicable taxes to the insured who lives past the tenure of the plan.
Important Factors You Need to Keep in Mind for Term Insurance Plans
The thought of purchasing an Rs. 1 crore term insurance plan offers the assurance of protecting your family in the event of any unprecedented circumstances. How do you find the ideal term insurance plan that ensures that your family or nominee receives the sum assured? Here are some of the most important factors you must consider before you buy term plan online:
- Alignment with Your Needs: You can choose a term insurance plan that suits your needs. These policies offer unique advantages for different categories of users. For example, people who want uniform coverage can go for the level-term plan. On the other hand, if you have to pay back a loan, then you can choose a decreasing-term loan.
- Claim Settlement: Term insurance plan users are more likely to look at the sum assured as an indicator of the plan’s effectiveness. On the contrary, the ideal marker for an effective term insurance plan is the claim settlement ratio. You should check how many claims the insurance company settles in every financial year as compared to the received claims.
- Compare the Premium and Sum Assured: Finally, you should also pay attention to the ratio between coverage and premium paid in the term insurance plan. Consumers should choose term insurance plans which offer a broader scope of coverage through add-ons.
To Sum Up
Term insurance plans are one of the safest alternatives for entering the life insurance market. However, it is also important to compare different insurance service providers before making your final choice. Remember that the term insurance plan is not only a tool for diversifying your investment portfolio but also for safeguarding your loved ones.