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Considering the ever-rising inflation, evolving lifestyles and increasing cases of critical illnesses, understanding what is term insurance should be the first step in financial planning. You may ask, how this helps you?
To understand this, let’s look at what is term life insurance and how it works in detail:
What is Term Insurance?
If you are wondering about what is term insurance, we are here to help you. Simply put, term life insurance meaning can be regarded as an agreement between the policyholder (insured) and the insurance company, where in case of the policyholder’s untimely demise, a specific sum is paid to the insured person’s family by the insurance company. You will find that term plans are significant when it comes to long-term financial planning.
When understanding what is term insurance, it is important to also know – term insurance is the purest form of life insurance policy that offers comprehensive financial protection to your family members against life’s uncertainties.
Based on the term insurance plan you buy, your family will get life cover or sum assured in case of your untimely demise within the policy period. Let us know more about what is term insurance and the many features and benefits it offers.
What are the Key Features of Term Insurance?
Now that you are aware of what is term life insurance plan, you should thoroughly understand the term plan meaning for your loved ones by checking the features and benefits of term insurance plans. Following are some of the primary term insurance benefits and features:
Cover Against Eventualities
If you are the sole breadwinner of your family, you can help secure your loved ones against any financial setback by understanding what is term plan early in life to support a worry-free financial future for your family. You can easily take a significant life cover for a relatively small premium payable under these term insurance plans.
Provides Add-on Riders
Once you know what is term insurance and choose one to buy, you can add riders to your term insurance plan. Riders will help you extend your policy benefits by paying additional premium, and get comprehensive coverage and riders serve this purpose well.
With Max Life Insurance, you can opt for Max Life Accidental Death and Dismemberment Rider [104B027V03; Non-Linked Non-Participating Individual Pure Risk Premium Health Insurance Rider] & Max Life Waiver of Premium Plus Rider [UIN: 104B029V03; Non-Linked Non-Participating Individual Pure Risk Premium Health Insurance Rider].
Provides Cover for Critical Illnesses
In your 20s and 30s, you may think that you will never suffer from a critical illness such as cancer or kidney failure and hence, not pay attention to what is term life insurance meaning. However, if it happens, not only will your health deteriorate, but you may lose your hard-earned savings to get the necessary treatment. Although the regular term insurance plan meaning for a plan includes a death benefit, you can increase their coverage with a critical illness rider.
As the name suggests, a critical illness rider provides additional benefits when attached with your term insurance policy i.e., if you get diagnosed with an illness covered under the rider, a lump sum amount is paid to you to avoid any financial setback that your family might have to face for getting the treatment.
Also Read: Critical Illness Cover
In your 20s and 30s, you may think that you will never suffer from a critical illness such as cancer or kidney failure and hence, not pay attention to what is term life insurance meaning. However, if it happens, not only will your health deteriorate, but you may lose your hard-earned savings to get the necessary treatment. Although the regular term insurance plan meaning for a plan includes a death benefit, you can increase their coverage with a critical illness rider.
As the name suggests, a critical illness rider provides additional benefits when attached with your term insurance policy i.e., if you get diagnosed with an illness covered under the rider, a lump sum amount is paid to you to avoid any financial setback that your family might have to face for getting the treatment.
Also Read: Critical Illness Cover
Cover for Accidental Death or Disability
Accidents can happen anytime and anywhere. Depending on the severity, you may need a significant amount of money for the incurred medical expenses and compensate for the loss of income. Knowing what is term insurance and investing at the right time helps you tackle such situations with accidental death or disability rider.
Max Life Insurance offers a Comprehensive Accident Benefit Rider (UIN: 104B025V03) with their term insurance plans. The rider provides extended financial protection to your family by also covering you for accidental dismemberment and death.
Offers Tax Benefits
As taxpayers, you may be concerned about what is term insurance tax benefits. With term Insurance plans, you can avail tax benefits on premiums paid under Section 80C of the Income Tax Act, 1961. You can avail tax benefits up to Rs.1.5 lakh on the premium paid. Not only this, with the critical illness cover, you can also avail additional tax benefits on premium paid under Section 80D of the Income Tax Act, 1961.
Tax benefit as per prevailing tax laws
Include Multiple Payout Options
If you feel your family members do not have the necessary know-how of handling large amounts of money as they may find it challenging to utilize a lump sum amount they receive under your term insurance policy, you can choose from multiple payout options available with Max Life’s term insurance plan.
For instance, you can opt for term insurance plans like the Max Life Smart Secure Plus Plan[104N118V01], which is designed keeping in mind your unique financial security requirements and enable a reliable support system for emergencies.
The Max Life term insurance Smart Secure Plus Plan also offers you with options of two death benefit variants and comes backed with features such as return of premium. Besides, term plan meaning of financial protection also includes inbuilt benefits like cover for terminal illness. When you understand what is term insurance and make prudent choices, you can be assured that all your insurance needs are completely covered.
Include Multiple Payout Options
If you feel your family members do not have the necessary know-how of handling large amounts of money as they may find it challenging to utilize a lump sum amount they receive under your term insurance policy, you can choose from multiple payout options available with Max Life’s term insurance plan.
For instance, you can opt for term insurance plans like the Max Life Smart Secure Plus Plan[104N118V01], which is designed keeping in mind your unique financial security requirements and enable a reliable support system for emergencies.
The Max Life term insurance Smart Secure Plus Plan also offers you with options of two death benefit variants and comes backed with features such as return of premium. Besides, term plan meaning of financial protection also includes inbuilt benefits like cover for terminal illness. When you understand what is term insurance and make prudent choices, you can be assured that all your insurance needs are completely covered.
What is Term Insurance Online Buying Procedure?
When you consider financial security and understand what is term plan, you need to know and understand term life insurance meaning for your family and know which plan will suit the specific requirement. For instance, knowing the term insurance meaning and how it can deliver financial security is critical to choosing the adequate cover amount. This willhelp your family pay for the regular expenses, child’s education and other liabilities.
Besides understanding what is term insurance and the importance of buying term insurance policy, you need to do thorough research about the term plan meaning, features and benefits. Buying term insurance plans online is quick and hassle-free. All you need to do is follow a few easy steps.
Here is a stepwise checklist you should follow to buy term insurance policy:
1. Assess Financial Needs Before Investing In Term Insurance
You must fully understand the financial needs and requirements of your family to determine what is term life insurance and benefits, best-suited for your family. It provides security and stability to your family, hence the policy you choose must have an adequate life cover, enough to take care of your family’s needs in your absence.
To understand what is term plan cover required, start with analyzing all sources of income, the number of dependents, existing financial liabilities, and the lifestyle expenses of your family. Moreover, you should consider the life goals of your spouse and children to determine the term policy meaning for their future.
1. Assess Financial Needs Before Investing In Term Insurance
You must fully understand the financial needs and requirements of your family to determine what is term life insurance and benefits, best-suited for your family. It provides security and stability to your family, hence the policy you choose must have an adequate life cover, enough to take care of your family’s needs in your absence.
To understand what is term plan cover required, start with analyzing all sources of income, the number of dependents, existing financial liabilities, and the lifestyle expenses of your family. Moreover, you should consider the life goals of your spouse and children to determine the term policy meaning for their future.
This way, you will be able to understand what is term plan meaning and select an adequate financial protection that will help your family live without worries, even in your absence.
2. Estimate What is Term Insurance Policy Premium Before Investing
Once you have assessed your financial needs and understood what is term plan meaning, the next step is to calculate what is term life insurance premium that you need to pay for your policy. When you search online, you will find there are multiple kinds of term plan meanings available, as there are different types of term plans. These include basic term insurance plans, term insurance with survival benefits (term plans with return of premium), and term insurance with various payout options.
Estimating what is term plan premium depends on several factors such as the chosen life cover, policy tenure, type of plan, age, gender and smoking habits. One way to check how the premium varies with these factors is to use an online term insurance premium calculator.
The ideal coverage amount should be around 15-25 times your annual income for term life insurance, meaning your loved ones have a substantial corpus to take care of them when you are not around.
3. Check What is Term Insurance Claim Settlement Ratio of the Insurer (CSR)
Before you proceed to select a term insurance policy, it is crucial that you check the CSR of the insurance company you choose. But, what is term insurance CSR? It is the ratio of the number of claims received by the insurer versus claims settled by them during a financial year. A high CSR implies that the insurance company does its best to resolve the settlement claim filed by your nominee.
Max Life Insurance has a Claim Paid Ratio (Claim Settlement Ratio) of 99.51% for the financial year 2022-23. (Source – Individual Death Claim Paid Ratio as per audited financials for FY 2022-2023).
4. Select Riders for Additional Coverage Available
Based on your needs and preferences, you can customize the term life insurance meaning of financial protection for your family with add-ons, also called riders. If you are wondering what is term plan rider value? The answer is it can add an extra layer of financial protection which can be immensely valuable during emergencies.
Max Life Insurance offers the following riders for their term insurance plans:
5. Pay term Insurance Premium Online
Once you reach this step, you have all the necessary information to understand what is term plan meaning and make a prudent decision to buy term insurance policy. The last step of this checklist is to pay the premium online.
For further assistance, you can also contact our customer service team to understand the term life insurance meaning and details. We will be happy to help you understand what is term policy meaning and buy the best plan that aligns with your needs.
Who Should Buy Term Insurance Plans?
Ideally, you should take a term insurance policy as soon as you start earning, especially if you have financially dependent family members. Whether you are 18 years of age or 65 years, Max Life’s Term Plan has got you covered.
To buy a term insurance plan right away, please click here.
Frequently Asked Questions (FAQs)
Q. What is Term Insurance Premium?
A. Now that you know what is term insurance plan, it is of utmost importance to know about what is term insurance premium. Term insurance premium is the amount you pay to the insurance company for the financial coverage.
The insurance company provides financial coverage in exchange of the term insurance premium which provides financial protection in case of your untimely demise during the policy term. Term Insurance premium can be either monthly/quarterly/semi-annually/annually.
Q. What is Term Insurance Rider?
A. Understanding what is term life insurance riders will help you get better financial security. In term plan meaning, riders are add-on benefits with your term insurance plans. With these riders, you can avail extended benefits with basic life cover. Max Life Insurance offers Max Life Accidental Death and Dismemberment Rider [104B027V03; Non-Linked Non-Participating Individual Pure Risk Premium Health Insurance Rider] & Max Life Waiver of Premium Plus Rider [UIN: 104B029V03; Non-Linked Non-Participating Individual Pure Risk Premium Health Insurance Rider].
Q. How much Term Insurance do I Need?
A. Experts usually propose that sum assured in term insurance should be at least 10 times of your annual income, while 15 to 20 times is always a better option to avail. But, you should calculate your term insurance cover as per your need or calculate the term insurance premium that you need to pay for the cover you want to buy. You can also use Human Life Value Calculator or Max Life Term Insurance Calculator to make these complex calculations easy for you.
Q. What are the tax benefits with Term Insurance?
A. With term insurance policy, you can also avail tax exemptions to reduce your tax burden. You can avail tax deduction on your term insurance premium up to Rs.1.5 lakh under Section 80C of the Income Tax Act, 1961. Not only this, if you opt for critical illness benefits, you can avail tax benefits up to Rs. 25,000 under Section 80D as well.
Q. What will affect my Term Insurance Premium?
A. Anyone who knows what is term policy meaning, knows that there are numerous factors which affect your term insurance premium. Term insurance premium varies depending on various factors such as age, annual income, the amount and tenure of insurance coverage, health condition and whether you are a smoker/non-smoker.
Q. Does term insurance provide terminal illness benefits?
A. Yes, most term insurance policies offer the option to opt for add-on riders such as critical illness riders that provide an additional cover against terminal illnesses. However, the terms and conditions of such riders varies across different insurance providers.
Q. Is it possible to add a rider in an existing term insurance policy?
A. Yes, if you understand what is term life insurance meaning, you should know that you can add a rider while renewing your existing term insurance policy. Note that some insurance providers may have different terms and conditions.
Q. What documents will I need to buy term insurance plans?
A. To buy a term insurance plan, you will need the following documents:
- Salary slips, income tax returns, bank statements, and other forms of evidence of income are appropriate for income proof.
- A driving license, Aadhaar card, voter's id, passport, and other forms of identification may be used as proof of address.
- PAN card, Aadhaar card, a Voter ID card can be used as identification proof.
- Aadhaar card, Voter ID card, passport, driving license, and other forms of identification may be used to prove your age.
Q. What are the minimum and the maximum age to buy a term insurance policy?
A. Generally, the minimum age to buy a term insurance policy is 18 years, whereas the upper age limit differs as different insurance providers have different criterions. Also, different term insurance plans have different entry age limits.
Q. What are the exclusions of Term insurance plan?
A. Term insurance does not provide cover for every situation, and these instances are known as exclusions. Here, if the policyholder’s death occurs due to specific circumstances that are excluded as per the policy terms and conditions, the beneficiary may not get the claim. However, note that such exclusion vary from company to company. For detailed exclusions, please refer to policy prospectus before concluding a sale
Max Life Term Insurance Plans
ARN No : Jun23/Bg/12N
Disclaimer:
**Healthy non-smoking male, 24 years, 2 cr cover,25 years policy term,25 year premium payment term, exclusive pf GST for Max Life Smart Secure Plus Plan (UIN:104N118V02)
*^Savings mentioned are indicative of the maximum premium difference when the same plan/variant is bought offline