We understand that one of your biggest priorities is to keep your family financially safe and secure, even when you are not around. In case of your absence, you would not want them to compromise on their standard of living or fall short of finances at life’s crucial stages. While you can do very little to control the uncertainties of life, you can do a lot to give your loved ones a secure future by planning in the present. One of the apt ways to do this is by obtaining a term life insurance plan

 

What Does a Term Life Insurance Plan/Policy Mean?
 

Term life insurance is a type of an insurance product that works as a financial cushion to protect your loved ones, in exchange for the payment of a premium. Premium is a sum that you have to pay at regular intervals to avail a term insurance policy.
 

The main aim of a term insurance is to provide your family members financial support in the event of your unfortunate demise. It does this by giving a monetary amount (called a life cover/sum assured) to them on the occurrence of the death of the life assured. While buying term insurance, you are the policyholder/life insured and your family members are the beneficiaries/nominees.
 

 

What Does Term Insurance Offer?
 

Apart from giving a guaranteed¹ sum assured on the policyholder’s demise, term insurance offers a range of other benefits:
 

• Option to choose sum assured payout
  
  The policyholder can choose the way their beneficiary receives the sum assured. They can receive it as a one-time lump sum payment or in monthly instalments, depending on their financial needs.
  
  
• Coverage for terminal illnesses
  
  Some term insurance plans give the policyholder an option to avail for terminal illness protection. Under this, if the policyholder is diagnosed with a listed terminal ailment, the policy provides an earlier payout of a portion of the sum assured, for treatment of the illness.
  
  
• Return of premium² and income tax^* benefits
  
  In case an individual survives after the expiry of the policy term period, a few term insurance plans give back their policyholders a return on the premium paid. This premium is generally payable only after the insurance company deducts customary charges like extra premium for riders^#, taxes^*, loading for modal premium, etc. Certain term plans offer tax^* exemption benefits under Section 80C and 10 (10) D of the Income Tax Act, 1961 that gives returns on the premium paid by the policyholder.
  
  
• Options to add additional riders^#
  
  
  • Accidental Death Benefits: Term insurance plans also give an option to avail add-on riders^# such as Accidental Death Benefits which gives an additional monetary benefit, along with the base sum assured.
    
    
  • Permanent Disability Rider^#: A Permanent Disability Rider^# will give a portion of the sum assured to the policyholder for a few years during the subsistence of the policy if the accident leads to permanent disability and subsequent loss of income.
    
    
  • Critical Illness Benefits: A Critical Illness Rider^# will payout a lump sum predetermined amount on diagnosis of a listed critical ailment to help take care of the treatment expenses.

 

Other optional features: Term plans offer additional features that can help enhance the coverage offered. These optional features are over and above the riders^# offered by the policy. One such optional feature is the Life Stage Benefit.

A Life Stage Benefit is an additional feature that helps you increase coverage limit, later on as you progress in your life. Particularly useful for young investors, this feature will help you upgrade your term cover without the hassle of repeated documentation or paperwork. All you have to do is select this feature at the time of purchasing your policy and you will have the flexibility to upgrade your sum assured by paying an additional premium, upon informing your insurer.
 

While all of the above benefits sound exciting, the Life Stage Benefit is one of the most commonly opted for. Let us dive deeper and take a look at why you should check about the Life Stage Benefit with your insurer, while purchasing a term insurance plan.

 

Why Should You Consider Life Stage Benefit While saving in a Term Insurance Plan?
 

Life stages, usually known as milestones, are predetermined by most insurance companies, which include - getting married, having kids, buying a house or starting your own business.
 

When you opt for a Life Stage Benefit with your term life insurance plan, you can increase your sum assured to cover the rising financial requirements. A Life Stage Benefit gives you an additional sum assured amount during a particular stage of life,without touching your base sum assured.
 

For instance, Kabir bought a term life insurance plan of ₹50 Lakh at the age of 24, when he was single. He made sure to buy a term plan with the ‘Life Stage Benefit’ feature. At the age of 28, he got married to Pooja. To account for an added dependent, Kabir increased his cover by 50% of the base sum assured to ₹75 Lakh (50% of ₹50 Lakh + 50 Lakh) with the Life Stage Benefit feature.
 

After two years, they were blessed with a baby girl. Kabir further increased his coverage by 25% of the base sum assured to ₹87.5 Lakh(25% of ₹50 Lakh + ₹75 Lakh), taking into consideration the added costs of the child’s upbringing and education.
 

After 2 more years, Kabir availed a home loan of ₹50 Lakh and increased the term plan cover accordingly. Now his total term insurance coverage was approximately ₹1.37 crores. After Kabir’s demise, with the help of the term plan, his wife was able to shoulder the responsibilities of their daughter’s education and marriage.
 

Thus, the Life Stage Benefit helps you to increase your sum assured in tune with your rising financial responsibilities. Moreover, in the event of your unfortunate death, your beneficiaries receive the increased sum assured.
 

The best part is that you can use the Life Stage Benefit any time during the subsistence of your policy, as long as you opt for the feature while purchasing the term insurance policy. 
 

If you are not sure of which term insurance policy to buy, speak to our TATA AIA trusted advisor.
 

 

How to Choose Term Insurance?
 

To choose a term insurance plan that gives you the apt benefits, here are a few simple guidelines you can follow:
 

• Assess your present and future financial requirements, goals, and liabilities.
• Factor in the rate of inflation and the rising cost of necessities.
• Compare different term plans and life cover quotes.
• Have a budget in mind for term insurance.
   

 

To conclude, term insurance takes care of every need of your loved ones in your absence. But, with a Life Stage Benefit, it can also take care of your own life’s needs during its most memorable stages.
 

 

L&C/Advt/2023/Mar/0895