As term insurance plans only cover death during the policy term and have no maturity value, comparing them helps in keeping the premium cost lower.
Term Insurance Policy: Before you start finding the premium of a term insurance plan using the term insurance premium calculator, there are quite a few important things to keep in mind. As term insurance plans only cover death during the policy term and have no maturity value, comparing help in keeping the premium cost lower. Therefore, it is important to make a term insurance premium comparison and then decide.
As the name goes, term insurance meaning is that the plan provides risk cover or life coverage for a fixed term. A term insurance plan has a fixed term and the policyholder needs to pay premium regularly till the end of the term. If a policyholder dies before the end of the term, the death benefit is paid to the nominee and if the policyholder survives till the end of the policy, there is no maturity value.
The premium that you will pay will depend on several factors such as – age, the sum assured and the term you choose. The premium can be paid monthly, quarterly, half-yearly or annually either through cheque or online. Comparatively, the annual premium outgo is less than when the payments are made on a monthly basis. Hence, it’s better to pay annual premiums. The premium rates differ when you buy a term plan online and are about 25 per cent lower than offline purchase.
The term of the policy can be as long as 35 years while some insurers also provide coverage till age 65 of the individual. The longer the policy term you keep, the more will be the premium on same parameters such as sum assured. Ideally, choose a policy term by when you expect your financial liabilities such as children education etc to be over.
The life cover in terms of sum assured is the amount that the nominee of the policyholder is entitled to get from the insurance company in case death occurs within the term. The premium is low in term plans compared to traditional plans and one may, therefore, opt for a higher cover of say Rs 1 crore or Rs 5 core or even higher.
However, insurers have their financial underwriter to determine the maximum coverage that can be provided to you based on your income and other details. Most financial planners suggest keeping a life cover of at least ten times of one’s take-home income. Its better to keep reviewing life insurance needs every five years for optimum coverage.
There are different kinds of term plans – Plans with increasing, decreasing cover or term plans with return of premium. It’s better to buy the plain-vanilla term plan which is the purest form of risk cover. If you have family members who are financially dependant on you, it’s better to have a life cover. Even if you are unmarried but have dependant parents, a life cover is desirable.