In the contemporary scenario, term insurance is a simple and one of most fundamental products available in the catalogues of insurance service providers. Providing coverage at a fixed rate of payment for a limited period of time, term life insurance ensures that family members receive an assured sum in the unfortunate event of death of the policy holder. On the other hand, a thoughtfully planned health Insurance helps in shielding your family from the financial uncertainties in life, especially in case of an untimely demise or critical illness. A good health insurance policy helps in counteracting the effects of increasing liabilities and lifestyle diseases.
Life term insurance is related to pure risk protection and is seldom used for other planning needs or charitable giving strategies.
Features of Term Insurance Plans
A regular term insurance plan in India would include:
Death Benefit – This is available in case the policy holder’s demise takes place during the duration of the policy. The coverage figure linked with the plan is payable to the nominee.
Maturity Benefit- In case of survival across the policy term, nothing is payable at the time of maturity.
Tax Benefit-The premium paid qualifies for deduction u/s 80 C.
In general, insurers charge different premium amounts in accordance to the risk profile of the person taking the policy. This is likely to be assessed on the following parameters:
Medical History and “Loading”
A very important factor that insurance companies take into account while assessing the risk element is the history of any existing (and possibly life threatening) diseases at the time of taking the policy. On the basis of this, insurance companies charge an extra premium known as ‘loading’; this is because the risk of insuring an individual suffering from any disease is greater in comparison to insuring a person without any pre-existing diseases.
Life Style and Habits
Apart from the medical history, the overall life style and habits of the insured, such as smoking, drinking, occupation etc., have to be taken into account too. Generally, the premium of a client who has a smoking habit is higher in comparison to that of a non-smoking client.
Riders in Term Insurance Policies
Certain term insurance plans are also available with additional benefit known as riders:
Accidental Death Benefit Rider—Here, a small amount of extra premium is charged along with the regular premium. If a person dies due to an accident, then he gets additional benefits in the form of an increase in the ‘sum assured’.
Return of Premium- Under this policy rule, the premium amount associated with the policy is higher than the regular premium; and the premium paid during the entire duration of the policy is paid back if the assured survives the policy term.
Waiver of Premium—This rider comes with a nominal fees policy which states that if the life assured becomes permanently disabled, then the insured does not have to pay any future premiums.
Critical Illness– In this case, if a major disease (as specified in the insurance policy) is diagnosed within the term of the policy, then a compensation amount equivalent to the amount assured in the critical illness rider is disbursed.
Most organizations provide an online term insurance purchase of the policies.