What are the features of term life insurance?

• Low Premium: The premium in term insurance is lowest and most affordable as compared to to other life insurance policy like whole life insurance.
• Policy can be renewed: Term life insurance policy are renewable, no matter how many years they are initially taken out for. These renewable term life insurance policies make it possible for the insured person to carry on with their current policy with all of the benefits. Once the term life insurance benefits expire, you can usually renew the same policy with the same premiums and rates.
• Change in premium: Every time a term life policy is renewed, the insurance company is sure to change the premiums based on certain factors like proposed earning, mortality expense, risk management norms or health of person.
• Convertibility: A term insurance policy that allows the owner to convert the term policy to a permanent life insurance policy during a specified period of time without having to show that the insured is in good health.
• Single-premium term plan: You make a huge one-time payment and avail the cover for specified period.
• Regular premium term plan: You have to pay every year till the end of policy period. Mode of payment can be yearly,semi-annually, quaterly or monthly.

Types of term insurance:

Level term insurance: The level term insurance is one in which the premium remains constant till the policy period. With level, death benefit remains constant throughout the policy period. Example- If you buy a policy for 30 years your premium remains the same for 30 years.

Decreasing term insurance: The sum assured will decrease over the term period and will be nil by end of term. Premiums for a decreasing term policy usually remain level throughout the term period. Decreasing term insurance is generally purchased by those who have financial obligations that decrease over time such as a mortgage or a personal or a business loan.

Annual renewable term insurance: This is another type of life policy that covers you for one year. The premiums you will pay for this level amount of insurance will increase each year.

What are the benefits available under the policy?

1. Free look in period: You can study the policy document thoroughly within a lock in period of 15 days. And if you are uncomfortable with policy,you can return the policy promptly.
2. Return of premium: A Return of Premium feature is a feature that has recently become popular and may be offered in conjunction with term life insurance coverage.The premiums for the insurance with this feature are often higher than for policies without the return.A The return of premium feature will generally provide for a refund of all or some of the premiums you paid for the term insurance at the end of a level term period or at end of the term coverage period if no death benefit was paid out during that period.
3. Cheap premium: The younger you are the cheaper is the premium. A young person can have a very high insurance death benefit for a relatively small premium up to the age of 65.
4. Discount on yearly premium: Companies generally offer 3% off, if premium is paid yearly.
5. Rider: These are additional add-ons which can be add with main insurance for additional premium. Different companies offer different riders like:
   The term insurance provides term rider facilities for the child and the spouse. It is important to give term rider facility for child up to 18 years. While spouse rider available for 20-year period. The term rider facilities are available with some additional premium. It will convert it to individual whole life incase of spouse and child Double Accident Benefit Rider: Critical Illness Benefit Rider: Disability Benefit Rider.

Exclusion to the policy

1. If the insured commits sucide within 12 months of start of policy or reinstament of policy
2. If the insured, did not disclose health related facts while taking an insurance policy.
3. If the insured dies while taking part in a criminal activity.
4. If death occurs after the maturity period.

Claim are basically of two types:

1. Maturity Claim: The claim amount is automatically payable on or after the maturity date. You need to send back the claim form with your signature to the insurance company prior to maturity.
2. Death Claim: In the event of death of insured, nominee need to inform the insurance company. Thereafter, a claim form is properly filled and submitted in the office with all proper policy documents and the death certificate.

Note* Maturity claim and death benefit are tax free sum of money payable on maturity.

How much coverage do I need and for how long?
Most experts say you need anywhere from 5 to 10 times your annual income to replace the cash you bring into the family.But that is not sufficient to cover your family needs if you were to die. A 20-year level premium term policy is a great idea. It locks in the rate for 20 years. By then, you'll have paid off your house, debts, financial needs, dependants' needs and put your kids through school. As you age, you need the income replacement less and less.

 

How to save money on term insurance?

• Lock In Guaranteed Rates As Soon as Possible
• When is your birthday?
• Act before health issues increase your costs
• Buy the right length of coverage.
• Check for pricing breaks
• Check your payment/billing options
• Review your policy and rates often
• Each company sets prices based on their historical and expected mortality experience