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According to the IRDAI’s handbook, over 328 million Indian have opted for a life term insurance or regular life insurance. Even though this is a huge figure, it only makes up 25% of your entire population. The main reason for the majority of people not subscribing to a term policy is lack of awareness.
This in-depth guide covers every important aspect that one needs to know about term policy and life insurance plans. But before we start about death benefits, we must know about the policy that provides the benefits mentioned above.
Life term insurance offers basic life cover. It ensures that the nominee receives death benefits either as a lump sum amount or as periodic payments in the event of the policy holder’s demise. The policy enables the individual’s family members to continue maintaining their lifestyle even after losing their primary breadwinner. Term policy with a return of premium is thus the best way to avail life cover.
The assured sum given to the beneficiaries after the unfortunate death of the policyholder is known as death benefits. If the death claim form has been filed correctly, then the death benefit is paid out within a month. The beneficiaries get to choose the type of payout that will be most beneficial to them. They can either choose to get a lump sum amount at once or choose to get a smaller amount over a significant period.
Before the individuals apply for the policy, they should be aware of what is covered under the benefits.
In case of suicide - The death benefits will only be available to the beneficiaries, only if the suicide occurs at least a year after the policy. If it takes place within the first year, then the death claim will not be awarded to beneficiaries.
In case of an accident - The person should not be intoxicated during the accident. If the postmortem report suggests otherwise, then the death benefits will be waived.
In case of death due to illness or natural cause - It is covered by all the life insurance plans and term insurance plans in India.
There are certain types of deaths that are not covered by the usual term policy. They are compiled below-
If the policyholder dies during a hazardous activity not covered by the insurance. The same applies to death through self-inflicted injuries.
The death benefit insurance will not be awarded to a person who dies of an STD.
The death benefit will also be refused if the policyholder dies due to drug or alcohol abuse.
The death of the policyholder during a natural disaster also allows the insurance company to waive the death benefits.
A policyholder can also enjoy term insurance premium tax* benefits. Concerning the premium paid, the holder can avail of a deduction of up to Rs. 1,50,000 per year under Section 80C of the Income Tax Act, 1961. In the event of the person’s unfortunate demise, the nominee can avail of death benefits which are tax-free* as per Section 10(10D) of the Income Tax Act, 1961. Thus, term insurance with a return of premium covers major risks and challenges of the family for a lifetime.
You must understand your requirements and look at all the options available before purchasing term insurance. Here are a few reasons why anybody should go for a term plan.
Low Premium: The premium of term insurance is lower than any other insurance plans as it only provides life protection without any other investment element attached to the insured amount. It offers the highest death benefit at a nominal premium where often the individual has to pay less than one present of his or her annual income.
Wide range of tenure: One can purchase a term plan for as low as 10 years and as high as having life cover up to the age of 70 years. In case a person has taken a short term loan, like a personal loan or home loan, he or she can avail of shorter plans. A longer plan can cover the costs of multiple loans.
Addition of riders1: Certain plans allow the policyholder to add riders1 as per the requirement. Some of the riders1 include covers for critical illness, permanent or partial disability, accidental death and other unfortunate events. The inclusion of riders1 comes as an added advantage only at a nominal fee.
Tata AIA term insurance policies allow flexibility to the policyholder. They can choose the options that best fit their lifestyle. The term policy also covers hazardous activities due to professional endeavours. The professional’s jobs include mining, oil drilling, etc., allowing the individual a sigh of relief. The premiums are also significantly low as compared to the coverage that it provides.
The death claim insurance policy is a better way to ensure the financial security of your family. After your departure, your family will not have to worry about the daily expenses. They can also take a loan on the policy amount to take care of the major expenses like children’s education, their marriages, etc. The policy amount can also be invested into other plans to boost the earning potential through the death claim amount.
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*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.
1Riders are not mandatory and are available for a nominal extra cost. For more details on the benefits, premiums and exclusions under the riders please refer to the Rider Brochure or contact our Insurance Advisor or visit our nearest branch office
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 Insurance shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.