5 Simple Steps to Buy a Term Insurance Plan

11-June-2021 |

Term insurance is life insurance in a compact form that gives your family the most affordable financial protection. Term life insurance offers fixed premium coverage for a fixed period. You get a large life cover (i.e., insurance) at a relatively low premium rate. While both protection and investment are part of traditional life insurance plans, term insurance plans are mostly just protection plans. Term insurance schemes are, therefore, said to be mere protection schemes that ensure the financial stability of dependents in the event of the insured's early death. However, compared to conventional insurance plans, term plans have the benefit of providing significantly more affordable coverage with the given amount.


It is important to ensure that even if you are not around, your dependents are financially protected in tough times. For this, purchasing a term policy is the most effective and economical way. The guaranteed amount received through a term plan as reimbursement helps meet your family’s basic financial needs.


The Benefits of Term Insurance


  • Death Benefit

  • Tax* Benefit

  • Rider# Benefits (additional to basic plan)

Key Terms When Comparing Term Insurance Plans


  • Disbursement amount of plan

  • Amount of the premium

  • Terms and conditions of the policy

  • IRDAI-approved settlement ratio

  • Additional benefits offered

Factors Affecting Term Insurance Plans


  • Age

  • Gender

  • Medical history of the family

  • Smoking and drinking habits

  • Profession

  • Duration/policy term

  • Personal health


Thus, considering all the factors, it becomes difficult to find the perfect plan curated for your needs. But with a bit of research and information, you can find the best insurance. To ease your dilemma, here is the stepwise process to choose the best plan possible.



      1. Determine if you require insurance.



Term insurance isn’t self-beneficial; it is the fund your loved ones can use if you are unable to meet their needs. If no one is financially dependent on you, you have no debt, and your assets are enough to pay off your liabilities, you probably don't need term insurance. However, if you have a family and your assets are on the lower side, an insurance policy should be taken. This depends on your family’s requirements, income sources, the liabilities you currently have, the amount required to maintain the current basic lifestyle, and the assets you currently hold.



      2. Choosing the right company



It is important to choose the right insurance company as you put all your savings in the company’s hands, trusting that it will secure your family’s future. To choose the right insurance plan, first, compare the policies of leading companies, remember to choose a plan that corresponds to your financial plan, and do not go overboard. Also, remember to choose a company with high goodwill and trust. Verify their claim settlement ratios provided by IRDA (Insurance Regulatory and Development Authority). For more details, check the company’s complaints, reviews, and customer service quality.



     3. An insurance that fulfils your needs



Choose a term plan that fits your budget and provides the maximum benefits. Don’t rush such decisions as this is about securing your family’s long-term future. Basic term plans, term plans with monthly payouts, and term plans with lump-sum payouts are the three forms of term plans available in the market. While a lump-sum payment plan covers your immediate financial obligations, monthly income is needed to keep the family afloat. It is important to look at exactly what is covered in your policy as there are various terms and conditions one may overlook. And when the time comes, you get to know that the claim is not eligible for settlement.


     4. Additional benefits (riders#) to the policy


Opt for the normal term insurance, and then you can customize it according to your needs and extra precautions against factors, such as accidental death cover, critical illness, disability claim, etc. Some term insurance plans have pre-included additional benefits, while others have optional choices that can be included according to your needs. As a result, in the latter case, you have the option of attaching the desired riders# to the basic policy rather than taking a readymade policy with riders#, which you may or may not find useful.



    5. Option to pay the premium



In the thought of securing the future, don’t ruin your present. Think as per your needs if you can pay the premium annually, half-yearly, quarterly, or monthly. Some insurance policies give additional discounts on annual payments as they get the lump sum amount on such policies. The premium shouldn’t be a burden on your pocket. It is recommended to choose a premium in the range of 20% to 30% of your total income.


Thus, as people are becoming more aware of term plans and their benefits, such as less premium payable than life insurance, tax benefits, and an assurance on the family’s future, they are opting to secure their futures by buying such plans at a premium.



Need help to choose the right plan?


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  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not a guaranteed issuance plan and it will be subject to Company’s underwriting and acceptance.

  • For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.

  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.

  • *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you

  • #Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums and exclusions under the Rider, please contact Tata AIA Life's Insurance Advisor/ branch