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Facts About Term Insurance That Everyone Should Know

27-08-2022 |

Term insurance is the most basic life insurance plan that offers coverage for a fixed period against the payment of a fixed premium. Most people are aware of a term insurance plan but lack information on all the benefits of term plans.

 

Buying a term plan that does not cater to your requirement defeats the purpose of purchasing life insurance to create a safety net for your family. Hence, if you are thinking of buying one, then make sure that you understand the Term Insurance advantages and disadvantages before signing the dotted line. 


 

Facts About Term Insurance That Everyone Should Know

 

Here are some term insurance hidden facts for your quick reference.

 

  • A suitable sum assured at a lower price
    The life insurance segment has seen the launch of different types of plans like endowment plans, unit-linked insurance plans, money-back plans, etc. Most of these plans are saving-type of insurance plans. Usually, the sum assured and death benefit are different amounts. It is important to note that these plans do not offer a comprehensive cover like a term plan.

    Also, a term plan allows you to choose the term insurance sum assured and the policy term. Further, the premium amount is lesser than other saving-type insurance plans.

  • Better coverage
    The term insurance coverage is usually more than other life insurance plans. Also, most insurance companies offer flexibility allowing you to increase the coverage by agreeing to pay more premium amount. Hence, you can get the amount of coverage you need to ensure the protection of your loved ones.

  • Boost the sum assured of an active policy
    Most people are unaware of the fact that they can increase the sum assured of an active term insurance policy. Instead, they surrender the policy and purchase a new one with a higher sum assured.

    Tata AIA Life Insurance allows policyholders to boost the sum assured of some of the active policies at certain milestones in life. However, remember that increasing the sum assured can result in an increase in the premium amount.

  • Insurance up to 100 can be possible
    One of the most interesting term life insurance facts is that some providers offer term plans to people up to 100 years of age! Hence, make sure that you shop for term insurance online and observe insurance companies and plans carefully to choose the best option for your needs.

  • Hiding facts can impact term insurance claims
    Many people provide incorrect information while applying for a term insurance. This can be counterproductive as any such wrong information could result in the claim being rejected by the insurance provider.

    Hence, make sure that you disclose all information about yourself to avoid facing claim rejections in the future. Share information about any history of family diseases or habits like smoking or chewing tobacco with the insurer before buying the policy.

  • Term insurance is a simple contract


    A term insurance policy is a basic contract between you and the insurance provider where you agree to pay the premium throughout the policy term. In return, the insurance provider promises to pay a pre-decided amount to your family after you are gone. If you survive the policy term, then you don’t get money.

  • Types of term insurance
    Insurance companies offer a wide range of term insurance plans to cater to the different needs of people. Hence, make sure that you go through the different types of term plans offered and compare the features and benefits with your requirements to choose the perfect plan.

  • Anyone can purchase a term insurance plan
    Until some years ago, it was believed that term insurance plans were only for the breadwinners of the family. However, there are no such restrictions. Anyone can buy a term insurance plan by paying the agreed premium regularly.


Conclusion

Since term life insurance plans do not offer any kind of money back, the premium paid is a pure expense to the policyholder. Therefore, many people had started opting for life insurance plans that offered some form of money back if the policyholder survived the policy term.  However, term insurance plans are pure life insurance plans with no riff-raff. 

L&C/Advt/2022/Aug/1997

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Frequently Asked Questions

What is a term plan and its benefits?

A term plan is a basic life insurance plan that offers coverage for a fixed term at an agreed premium amount. The benefits of term insurance are as follows:

  • More sum assured
  • Affordable premiums
  • Coverage until a later age
  • Coverage for critical illness (if specified in the plan)
  • Accidental death benefit
  • Tax* benefits

Should I buy a term insurance plan in 2022?

A term insurance plan is the most fundamental type of life insurance available. With advantages like whole life insurance (up to the age of 99 years), tax benefits, and many more, a term plan is designed to help you create a financial safety net for your family and loved ones.

Disclaimers

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the 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 does 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.
  • IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER
  • THE LINKED INSURANCE PRODUCT DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICY HOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF THE FIFTH YEAR.
  • Past performance is not indicative of future performance.
  • All investments made by the Company are subject to market risks. The Company does not guarantee any assured returns. The investment income and price may go down as well as up depending on several factors influencing the market.
  • Please make your own independent decision after consulting your financial or other professional advisor.