The life insurance sector has undergone drastic changes in recent years with insurance policies becoming more customized to suit the modern-day needs of their consumers. Given the fact that there are so many products, deciding on the right kind of term insurance policy and the right amount of cover you need can be intimidating.
 

While choosing a term plan, most people start by analyzing prices. However, you should keep in mind that giving too much importance to price can compromise your family’s financial security.
 

What is Term Insurance?
 

Term life insurance guarantees¹ the payment of a predefined death benefit if the insured person dies during the specified term. Life term insurance guarantees¹ payment of stated death benefits to your beneficiaries if you die during the specified term.
 

• Term life insurance policies offer only guaranteed¹ death benefits and do not feature any investment or savings component, as opposed to a whole life insurance product. 
   

• Term insurance plans with a return of premium² component pay a good sum of all premiums paid for the term plan as maturity benefits.
   

• Term life premiums are calculated according to a person’s age, general health, and life expectancy.
   

You should get a term plan as soon as you decide to have dependents, family goals, or liabilities. 
 

Six Most Useful Expectations You Should Have from Your Term Plan
 

• Fits easily in your monthly budget
  
  

  One of the most important reasons to save in term insurance is the affordability of the plans. It is a cost-effective way to provide extensive financial security to your family. 
  
  The premiums for term insurance policies are the lowest among all the types of life insurance policies since there is no investment or savings component and the entire premium is utilized to cover the risk.
   

• Adequate financial security for your family
  
  Your term life insurance coverage should be decided after examining how much money your family would need if you were to meet with an untimely death. It is important to take into account several factors such as your family’s monthly expenses, loans, liabilities, inflation, important life goals such as marriage or higher studies, and the retirement amount you’d want to leave behind for your spouse. 
  
  As a rule of thumb, financial experts suggest opting for a life cover that’s up to 20 times your annual income if you’re less than 45 years old, and around 15 times the annual income if you are over 45.
   

• Prompt customer services
  
  The main focus of any insurance company should be customer satisfaction. The customer support team is responsible for making the process fast and smooth for you. You should also look for benefits such as having a fast servicing online channel where you can download the policy documents anytime, get quick quotes, renew your policy when it lapses, track your investment pay premiums online, or make a claim. 
  
  Features such as live chat or call back enables you to directly talk to the customer support team about any queries, grievances, or assistance that you may require.
   

• Non-stressful settlements
  
  The right term insurance plan should help make your family’s future easy in your absence. However, you must make sure that you submit all your details correctly while buying the term plan. Misleading or factually incorrect information submitted can result in the rejection of a claim, causing unnecessary trouble to your nominees. 
  
  The solvency ratio gives you information about whether the insurer you choose will be financially capable of settling your claim should the need ever arise. 
  
  However, these parameters are merely an indication and you should only consider them as a filter rather than a key decision-making criterion. 
   

• Wide range of additional riders^# and features
  
  Riders^# add more value to a basic term plan. These are not part of the plan per se and you will need to purchase them in addition to the term plan. 
  
  Tata AIA is such term insurance company offering unique and flexible riders^#. TATA AIA term plans offer additional risk covers such as disability, hospitalization, critical illness, terminal illness, etc. along with the flexibility to receive benefits partially as a lump sum and the rest as income for a fixed period, or as a waiver of future premiums. You should choose your riders^# wisely based on your lifestyle and needs. 
   

• Tax* benefits
  
  Term insurance and tax* benefits always go hand in hand. Under Section 80C of the Income Tax Act, 1961, premiums paid for all life insurance policies are exempted from tax* up to a maximum of ₹1.5 Lakh. The claim amount your beneficiary receives is tax-free* under Section 10(10D) of the Act. 
  
  Moreover, if you purchase a health-based rider^# with your term plan, you can avail of an additional tax* deduction under Section 80D of the Act for the rider premiums paid.
   

Conclusion
 

The benefits of term insurance are varied. You can think of term life insurance as a long-term contract between you and your insurer that will greatly benefit your family when you are not there. Therefore, it is in your best interest to choose the right plan for yourself and your family by considering all the factors discussed above in the article. 
 

L&C/Advt/2023/Feb/0510