Mumbai (Maharashtra) [India], May 13: When we mention providing security for your family's future, term plan insurance is the most economical and convenient way. But the thought of this kind of policy does not pass through most of their minds as they are scares about taking either term insurance as a result of the lack of any clear understanding towards its merits. This step-by-step guide will make you aware of what term plan insurance is all about, why it is necessary, and how you can simply determine your premiums using a term insurance premium calculator.

What Is Term Plan Insurance?

Term plan insurance is a life insurance policy that provides your family members with financial security in the event of your premature death. Term insurance is not like the rest of the policies because it is simply a cover against risk and does not have maturity benefits or pay you when you survive beyond the policy tenure. The only reason for availing term insurance is to take care of the future of your family by making a lump sum payment (referred to as the sum assured) to them.

Main Advantages of Term Plan Insurance

  • Low Premiums: Term insurance plans are very affordable compared to other life insurance plans. They offer huge coverage at low premium costs, which puts them within everyone's reach.
  • Flexibility: It is your decision to determine the policy term and coverage amount as per your family's financial requirements and dreams.
  • Tax Advantages: Premiums for term insurance are tax-deductible under Section 80c of the Income Tax Act, and the death benefit is tax-free in most cases under Section 10(10d).
  • Peace of Mind: Being aware that your family's financial security is secure gives invaluable peace of mind.
  • Riders for Enhanced Protection: Riders can be added to your policy, such as critical illness cover, accidental death cover, or waiver of premium.

 

Why You Should Opt for Term Insurance

Life is uncertain, and the financial loads you leave behind can rest on your loved ones when you are no longer there. A term insurance plan gives you coverage, so your family has the funds to maintain their lifestyle, pay debts, or take care of future expenses such as education or marriage.

Moreover, the earlier you buy term insurance, the lower your premium amount will be. Healthy and young individuals can get higher coverage at lower premium costs.

How to choose the right term plan insurance

  • Calculate Your Needs: Estimate your family's current and future financial requirements, including debts, cost of living, and significant life goals.
  • Choose Coverage Amount: The general rule is to choose a sum assured of 10-15 times your gross yearly income. But this may vary based on one's situation.
  • Check Claim Settlement Ratio: Choose an insurance company with a high claim settlement ratio so that claim settlement becomes hassle-free.
  • Compare Policies: Compare different term insurance policies with the help of online tools and choose one which offers the best features at a low premium.
  • Look into Add-Ons: Think about riders who provide additional coverage and incorporate necessary changes in your plan. 

 

How to Use a Term Insurance Premium Calculator

A term insurance premium calculator is an online product that helps you determine your term plan insurance premium based on your requirements. It simplifies insurance planning for you and brings it into public view. Below are step-by-step instructions to work with a term insurance premium calculator:

How to Use a Term Insurance Premium Calculator

  • Go to an Insurance Provider's Website: The majority of insurance providers have premium calculators available on their websites. They are simple to use and are free.
  • Provide Basic Details: Enter your age, gender, smoker status, and income per year. All these assist in calculating your premium amount.
  • Select Policy Details: Select your sum assured, policy term, and premium paying frequency (monthly, quarterly, or yearly).
  • Include Riders: If you want to include your coverage with riders such as critical illness or accidental death, include them in your calculation.
  • See Premium Estimate: Your estimated premium amount will be given by the calculator depending on inputs provided by you.
  • Compare and Decide: Compare term plans on premium estimate basis and choose one according to your affordability and requirements.

 

Advantages of Using a Term Insurance Premium Calculator

  • Time-Saving: Get your premiums calculated immediately without long discussions or forms.
  • Accuracy: Get correct estimates based on your inputs.
  • Comparison-Friendly: Compare different policies and decide which is best.
  • Cost Transparency: View how different parameters affect your premium.

 

Factors Affecting Term Insurance Premiums

  • Age: Young individuals pay lower premiums as they are considered less risky.
  • Health Condition: Medical conditions or unhealthy habits like smoking make premiums increase.
  • Sum Assured: Higher levels of coverage mean higher premiums.
  • Policy Term: Longer terms of policy cost more.
  • Riders: Riders for extra benefits can add to your premium.
  • Payment Frequency: Paying annually is usually less expensive than paying monthly or quarterly.

 

Lowering Your Term Insurance Premiums

  • Buy Early: Buy term insurance early in life to get lower premiums.
  • Choose Suitable Coverage: Don't overestimate your needs so as not to pay exorbitant premiums.
  • Live Healthy: Don't smoke and adopt healthy living to reduce risk factors.
  • Pay Yearly: Pay annually rather than monthly or quarterly to avoid additional charges.
  • Compare Policies: Compare policies with a term insurance premium calculator and choose the cheapest one.
     

Myths About Term Insurance

  • It's Expensive: Term insurance is one of the cheapest types of life insurance.
  • No Returns Mean No Value: Even in the absence of maturity advantages, the financial security provided by it cannot be priced.
  • Tough Claims Process: Opting for a good insurer with good claim settlement rate makes the process smooth.
  • Only for Breadwinners: Even for housewives or non-working members, they can be rewarded by term insurance for being included in the family income.

Conclusion

Term plan insurance is a vital step in securing your near and dear ones' financial future. Term plan insurance insures you fully at affordable rates and ensures peace of mind to you and members of your family. Term insurance premium calculators make it a simple task to choose the ideal policy of coverage suitable to your needs and means.

Remember, the sooner you purchase term insurance, the lower it will cost. Don't wait until some life-changing event occurs, and then you begin thinking about your family's financial well-being. Act now and protect your most valuable assets.