A term insurance plan is the purest form of insurance as it takes care of only the protection risk.Many of us look to buy the best term insurance plan offering the lowest premium for a sum assured of Rs 1 crore. The primary objective of buying a term insurance plan is to ensure the life goals are not derailed and there is adequate money for the family to maintain the standard of living in case of early death of the bread earner.
There are various goals such as home buying, child’s education, marriage etc. that require considerable funds to achieve them. Buying a term insurance plan that takes care of future financial obligations should be the approach and not merely buying a cover on an ad-hoc basis.
If you are looking to buy a coverage of Rs 1 crore, it is important that you correctly calculate the need. You might require a lesser amount or a coverage of Rs 1.5 crore or even higher. Ideally, one should keep a term insurance coverage of 10-15 times of one’s annual take-home income. Once you have purchased a term insurance policy, do keep reviewing the requirement at least once in five years as needs may change.
Before buying a term insurance plan, you may make use of the term insurance premium calculator available on the websites of most insurers to calculate the premium including or excluding the tax to be paid on it. Making an insurance comparison will help in buying a big cover at a low cost. You may buy term insurance online or offline from one or more than one insurer. Online insurance plans are available at a much lower cost than the offline plans.
Choose to go for a term at least equal to your retirement age. You may even buy more than one term insurance plan with similar or varying coverage and later on as financial liabilities taper off, you may drop one. If you are buying a term plan from more than one insurer, make sure to disclose the details of existing policies while filling the application form.
Below is a table showing the annual premium including GST of 18 per cent for a 25-year non-smoking salaried male for a sum assured of Rs 1 crore for a tenure of 35 years that is available online.
While buying a term insurance plan, an important factor to consider is the premium. For the same amount of life cover, similar tenure and at the same age, the insurance company with the lowest premium can be the best choice as all insurers are regulated by the insurance regulator IRDAI. The solvency margin, a significant parameter indicating the fundamental strength of an insurer, is closely tracked by the regulator and thus puts all insurance companies on similar footing as far as risk is concerned.
A term insurance plan is the purest form of insurance as it takes care of only the protection risk. There is no element of savings and therefore is similar to a car insurance policy. On death during the policy term, the insurer pays the death benefit to the nominee while on surviving the policy term, the policyholder does not get anything.
There are different varieties of term insurance plans – increasing cover plan, decreasing cover plan, plans with monthly payouts, or term plans with return of premium etc. One may even add optional Riders such as accident benefit rider, medical rider along with term insurance plan.
Having purchased the term insurance policy, make sure your nominees are aware of the policy document. Now that you have bought the term plan with adequate coverage, go ahead and start investing money for your long term goals without worrying about life risks!
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