Things You Should Expect From a Term Insurance Plan

Things You Should Expect From a Term Insurance Plan

Term insurance provides life insurance coverage for a specific period or "term," such as 10, 20, or 30 years. The primary purpose of term insurance is to provide financial protection for your loved ones if you pass away during the coverage term. It pays out a lump sum upon your death, which your beneficiaries can use to cover expenses like mortgage/rent, debts, college tuition, and daily costs of living.

Term insurance policies are more straightforward and less expensive than permanent life insurance policies. You can easily buy a term plan and protect your loved ones financially.

6 Things to Expect from a Term Insurance Plan

1. Coverage and Premiums

A term insurance plan provides a death benefit payout to your beneficiaries if you pass away during the policy's term. When you purchase the policy, you select the coverage amount, such as Rs. 1 crore. The premium depends on age, health, lifestyle, coverage amount, and policy term.

For instance, a healthy 30-year-old may pay around Rs. 7,000-10,000 yearly for a Rs. 1 crore cover. Term premiums are locked in for the initial years and only increase moderately later as you age.

2. Policy Term

You can choose how long you want coverage—select longer terms like 30 or 40 years for protection throughout your working life. Some terms synchronise perfectly with major goals like children’s education and retirement planning needs.

3. Exclusions and Claims Process 

While buying term insurance, understand the policy exclusions and claims process. Most term plans have few exclusions and easily approve claims. You can typically find claim settlement ratios of over 90% for established insurers. This suggests that 9 out of 10 death claims get paid out on average.

4. Reliable Service 

Reputed insurance providers offer responsive customer assistance via multiple channels, such as online chat, call centres, emails, and offline branches. You can easily reach them with questions before or after the policy purchase. They quickly address queries and ensure smooth onboarding, service requests, and claims by keeping you posted on progress.

5. Financial Strength & Transparency

Only consider insurers with the highest financial ratings. These insurers display strong financial results publicly every year, giving confidence that they will remain solvent and pay their promises decades later. Insurers disclose all major charges and policy rules transparently beforehand in benefit illustrations and policy contracts.

6. Ease of Administration

Managing your term insurance requires no paperwork or commissions. You get instant online policy access to view your coverage, premium payments, nominations, etc. Most insurers also inform policyholders of important details like premium notices via emails or messages.

The Bottom Line

Term insurance offers several benefits that make it a valuable tool for financial planning. Since it covers you for a set period, it tends to be substantially less expensive than permanent insurance, especially when you are younger. Nevertheless, opting for a reasonably priced term plan with extensive coverage from a trustworthy insurer gives peace of mind, ensuring your family's well-being even in your absence.

  Disclaimer: This content is part of a marketing initiative. No TNIE Group journalists were involved in the creation of this content.

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