Does a term plan cover all types of deaths?
Knowingly or unknowingly, we all take small steps towards ensuring maximum safety. For example, you wearing a helmet before riding, or wearing a seatbelt before driving. There are numerous such instances. However, when it comes to securing the future of our loved ones, we tend to miss out a few important points.
One of the smartest ways of securing the finances of your loved ones and their future is a term insurance plan. The chances are high that you would have come across term insurance but maybe never bothered much about it. If you ask any expert, they would easily recommend it for its sheer benefits and cost-effectiveness.
What is term insurance then? It is a simple insurance plan that offers coverage against your life. You would pay a premium on a yearly basis to your insurer and in turn, they will offer you a sum assured. If anything were to happen to the policyholder, the insurer will pay the sum assured to the nominees.
The only difference is that in term insurance, nominees will receive financial assistance only after the death of the policyholder. If the policyholder outlives the term of the policy, there are no financial benefits.
There are a few salient features of term insurance plans. For starters, they pay out huge corpus to the nominees in the event of the death of the policyholder. It is feasible to get a similar sum assured with normal life insurance policies as well, but it comes at a cost. For an endowment plan or other policies, you will end up paying premiums tuning to several times of that of a term plan.
That brings to the second crucial benefit of term plan, its cost-effectiveness. A term plan offers unparalleled coverage and sum assured at very affordable prices. And with insurers allowing smaller time frames for payment, it turns out to be very light on your pockets.
Best Term Insurance Plans
Here is a list of some of the best term insurance plans for the current year.
- LIC’s e-Term
- Minimum Tenure: 10 years
- Maximum Tenure: 35 years
- Maximum Maturity Age: 75 years
- Minimum Sum assured: INR 25 Lacs
- Claim Settlement Ratio: 98.14%
- ICICI Prudential’s iProtect Option
- Minimum Tenure: 10 years
- Maximum Tenure: 30 years
- Maximum Maturity Age: 75 years
- Minimum Sum assured: INR 25 Lacs
- Claim Settlement Ratio: 94.10%
- HDFC Life’s Click 2 Protect Plus
- Minimum Tenure: 10 years
- Maximum Tenure: 40 years
- Maximum Maturity Age: 40 years
- Minimum Sum assured: INR 25 Lacs
- Claim Settlement Ratio: 94.01%
- Max Life’s Online Term Plan – Basic Cover
- Minimum Tenure: 10 years
- Maximum Tenure: 35 years
- Maximum Maturity Age: 70 years
- Minimum Sum assured: INR 25 Lacs
- Claim Settlement Ratio: 93.86%
- Bajaj Allianz’s iSecure
- Minimum Tenure: 10 years
- Maximum Tenure: 30 years
- Maximum Maturity Age: 70 years
- Minimum Sum assured: INR 2.5 Lacs
- Claim Settlement Ratio: 91.29%
- SBI Life’s eShield
- Minimum Tenure: 5 or 10 years
- Maximum Tenure: 30 years
- Maximum Maturity Age: 70 years
- Minimum Sum assured: INR 20 Lacs
- Claim Settlement Ratio: 91.06%
- Kotak Mahindra’s Preferred e-Term Plan
- Minimum Tenure: 10 years
- Maximum Tenure: 40 years
- Maximum Maturity Age: 75 years
- Minimum Sum assured: INR 25 Lacs
- Claim Settlement Ratio: 90.69%
- Met Life’s Term Plan-Full Lump Sum Payout
- Minimum Tenure: 10 years
- Maximum Tenure: 40 years
- Maximum Maturity Age: 75 years
- Minimum Sum assured: INR 20 Lacs
- Claim Settlement Ratio: 90.24%
- Bharti AXA’s e-Protect
- Minimum Tenure: 10 years
- Maximum Tenure: 30 years
- Maximum Maturity Age: 75 years
- Minimum Sum assured: INR 25 Lacs
- Claim Settlement Ratio: 88.13%
- Aegon Religare’s iTerm
- Minimum Tenure: 5 years
- Maximum Tenure: 40 years
- Maximum Maturity Age: 75 years
- Minimum Sum assured: INR 10 Lacs
- Claim Settlement Ratio: 81%
Top #3 that you can consider for a comprehensive coverage:
- HDFC Click to protect 3D Plus
- Offers total sum assured paid as lumpsum in the event of the death of policyholder or diagnosis of terminal illness.
- In the case of total permanent disability, the premiumsare waived off while the policy is still active.
- The plan offers 9 different types of covers to choose from such as Life option, Extra life option, Income option, 3D Life option and so on.
- Max Life Online Term Plan
- Offers the option to pay till you are 60 years old and enjoy benefits till term.
- A healthy list of protection and additional liabilities.
- Protection against the death or critical illness of policyholder.
- ICICI Pru iProtect Smart
- Offer critical illness cover with the term plan.
- Get life cover up to 99 years.
Types of Death Covered in Term Insurance
One of the first things that you must before buying any policy is to go through the salient features, terms and conditions. This will help you avoid the feeling that you missed term insurance hidden facts. Since term insurance only pays out in the case of deaths primarily, it would be beneficial to be aware of the type of death covered in term insurance.
- Accidental Death
A term plan covers accidental death of a policyholder. In fact, most insurers offer additional coverage for accidental death, which doubles the sum assured in the event of the death of the policyholder.
- Natural Death
Death due to natural causes or health-related issues is covered as a part of term insurance policies. If they die due to a critical illness, they are entitled to receive the sum assured as well as the death benefit.
- Suicide
In the event of suicide within 12 months of buying the policy, insurers usually do not honour the policy. Some of them might return the insurance premium or a portion of it. It is mostly at the discretion of insurers how they handle suicide cases. While few of them acknowledge suicide cases after the completion of a year or two, others do not.
The following are the types of death not covered in term insurance and which you should be careful about.
- Intoxication
Whether it is accidental or any other form of death due to an overdose of drugs or alcohol, insurance companies will not honour the agreements.
- AIDS
If a policyholder loses his/her life due to sexually transmitted diseases like HIV or AIDS, insurers do not cover the same under their policies.
- Self-inflicted injuries
If a policyholder is involved in self-inflicting injuries or hazardous activities, the claim will almost certainly be rejected by the insurer.
- Homicide
If the investigation of the death reveals that the nominee was involved in the act by anyway, the claim will be rejected.
Term insurance plans are gaining popularity and quite rightly so. Their affordable and flexible nature combined with extremely high sum insured makes them a very good investment option. You can buy a term insurance plan online making it just that much more convenient. If you do not already have a term insurance policy, it is high time that you start considering or even buy one.
Read more Complete guide on how term insurance can help you save tax.
Read more How insurance can help your finances grow.
Check out our video below to understand what is term insurance
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Courtesy Article: Ankita Sejpal / March 26, 2019
