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A 2 Crore term insurance plan is a term plan that offers ₹2 Crores as its sum assured. The amount is paid to your family in the event of your demise during the term plan's tenure. This payout is also called a death benefit and is fully tax-exempt# under applicable tax laws.
Also Read: What Is Term Insurance?
A 2 Crore term insurance policy functions similarly to any other term policy: The sum assured is paid upon the policyholder's death and coverage is offered in exchange for regular premium payments.
The policy will also not offer maturity benefits upon survival – unless you opt for a Return of Premium feature. Moreover, 2 Crore term insurance premiums will stay the same throughout the policy term. At Tata AIA, we also offer whole-life term plan coverage of up to 100 years9..
To give you a better idea, let us consider an example to see how 2 Crore term insurance plans work.
2 Crore term insurance offers a high sum assured upon death. This payout amount can be used for anything once received from the insurer. For example, it can clear off existing loans/liabilities, pay for children's higher education, help start a business to earn a livelihood, etc.
Term insurance plans are the most affordable type of life insurance plan. Even at a high sum assured of ₹2 Crores, you can expect pure risk coverage at comparatively lower premiums than other life solutions – even with add-on riders^.
You can claim #tax deductions and exemptions on your 2 Crore term insurance premiums and payout amounts under Sections 80C and 10(10D) of the Income Tax Act, 1961. These can be done every year your policy is in effect and will include deductions for add-on premiums.
Since 2 Crore term insurance premiums stay the same throughout the policy term, you know exactly how much money you need to set aside to pay your premiums. Moreover, #tax benefits available under your plan make it a popular and risk-free way to save on your taxes.
All of these benefits and more are available under Tata AIA's Sampoorna Raksha Promise plans, making our best term insurance plan for 2 Crore.
You should note that maturity payouts, unlike death benefits, may or may not be taxed depending on prevailing tax laws. In this case, Mr. Rajesh's ROP maturity payout will be tax-exempt# since his annual 2 Crore term insurance premiums are below ₹5 lakhs.
In cases where annual term plan premiums exceed ₹5 lakhs, Mr. Rajesh will be taxed per his tax slab rate under his chosen tax regime.
Also Read: Term Insurance Tax Benefits Under Section 80C & 80D
Non-Linked, Non-Participating, pure risk, Individual Life Insurance Product (UIN:110N176V05)
Tata AIA
People in their 20s can buy 2 crore term insurance at an extremely affordable premium, considering they are in their best health with no health complications.
People who are the sole earning members of the family with dependent family members will require financial safety nets. Hence, a 2 Crore term insurance plan can help their family manage the routine expenses in case of any eventualities.
People with increased family financial commitments, such as repaying loans, paying for their child's higher education, etc., should ensure funds to help their family repay pending loans and accomplish their future commitments.
People working in an environment prone to accidents and fatalities, such as in factories, refineries, etc., should always ensure sufficient financial resources to help their families reduce the financial burden in their absence at any time in their lives.
People with a family history of critical or terminal illnesses must financially secure their family members in the event of any eventualities. Therefore, choosing to buy a term insurance for critical illness along with our 2 Crore term insurance plan can help pay their medical expenses while also financially securing their future.
These are some key points to look into before buying a 2 Crore term insurance plan:
Insurance Providers: Not all insurers are the same. The services and plans offered for 2 Crore term insurance plans can be vastly different depending on the insurance company you choose. Always look at the insurer's CSR, reputation and reviews/customer testimonials before buying a plan from them.
Coverage: Evaluate if 2 Crores will be sufficient to secure your family. This can be done by looking into existing liabilities, current living expenses and future financial obligations. While doing so, you should also account for inflation, which is a crucial aspect of financial planning.
Policy term: How long do you need term insurance coverage? Look into what your financial goals are and your current liabilities, if any. This can help you determine the policy tenure and what you need coverage for. If you are still unsure, you can always opt for whole-life coverage with Tata AIA.
Premiums: Although premiums are generally more on the affordable side for term insurance, the prevailing rate will depend on your age, sum assured and policy tenure. The best term insurance plans for 2 Crores will offer affordable premium rates and discounts like preferential rates for women and non-smokers.
To ensure you get a competitive rate, use Tata AIA's term insurance calculator to calculate your 2 Crore term insurance premiums
Riders: Your 2 Crore term insurance plans must offer rider^ options to help enhance the financial coverage. These can be beneficial for what-if situations like critical illness, accidental death or other unforeseen financial emergencies.
Tax Benefits: Get income tax# benefits as per applicable tax laws.
Although the sum assured seems quite large, policy premiums stay affordable. Moreover, your premiums for 2 Crore term insurance will stay the same throughout the policy period. Younger policyholders are also offered lower rates.
Hence, buying a 2 Crore term insurance plan from Tata AIA early in life with a longer tenure or whole life cover when you are in your best health can mean more affordable term plan premiums.
We offer our policyholders multiple 2 Crore term insurance premium payment options like monthly/quarterly/half-yearly/annual during the policy term. Moreover, they can also opt for single/limited/regular pay options to ensure maximum payment flexibility.
These options allow you to customise how and when you want to pay your premiums. This way, you are able to make payments when you can, ensuring sustained 2 Crore term insurance coverage at all times.
You can choose to increase your policy sum assured amount at different milestones based on increasing commitments such as marriage, the birth of a child or when buying a house.
This increase is done through a percentage amount on your base sum assured to ensure you and your family are can to meet your future financial obligations under your 2 Crore term insurance plan.
Your family can receive the death payout as regular income for a fixed period, a lump sum amount or a combination of lump sum and regular income based on the plan options chosen. This ensures they can effectively deal with any financial obligations that arise in your absence.
Claim #tax deductions in your annual 2 Crore term insurance premium payments under Section 80C of the Income Tax Act, 1961. Moreover, the payout benefits received from your plan will qualify for *tax exemptions under Section 10(10D).
Increase your base coverage by opting for add-on riders^ under your 2 Crore term plan. These offer additional financial support during your policy term to manage financial emergencies/perils based on specific scenarios – for an additional premium payment.
For example, riders like our term booster under Tata AIA's Vitality wellness programs can help decrease policy premiums every year if they stay healthy and fit when covered under our 2 Crore term plan.
Other add-on covers, like our critical illness rider, can be used to pay for hospitalisation and medical expenses when diagnosed with a critical illness.
In addition, the riders provide flexible features like providing the payout as a regular income for a fixed period, a combination of a lump sum and regular income or a lump sum, etc.
Generally, your term insurance sum assured should be 10 times your annual income. Some experts even suggest that it should be 20 times. For a more detailed approach, here are some key factors you consider to determine whether a 2 Crore term insurance is right for you:
Your monthly/yearly expenses should give a good idea of how much money your family will need in the future to maintain their current standard of living. List down recurring expenses and other short-term financial obligations for the foreseeable future and subtract any investments to know how much sum assured you need.
Moreover, you also need to secure your dependents. Does your spouse work? Are your children still dependent on you to provide for them? Answering these questions should give you a good idea of who will require the payout amount the most and for how long.
This will also determine how high your sum assured should be since you want the payout amount to last for as long as your family need financial assistance.
Do you have any pre-existing liabilities like loans or debt that still need to be paid off? Or future financial commitments like paying for your child's higher education or marriage? If so, you may want to consider these factors to derive an approximate amount while accounting for inflation.
This estimated amount should be sufficient to clear off the debts and accomplish your secure your family's finances in your absence.
When do you plan to retire and do you have enough money saved up for a retirement fund?
Your current annual income will play a huge role in determining your sum assured. If you are young and have fewer financial responsibilities, a term plan with a life stage benefit may be beneficial as it will allow you to increase your sum assured.
On the other hand, if you are older, already have a retirement fund set up and your children are independent, you may not need as high of a sum assured amount.
This refers to calculating your economic value by considering your future income, liabilities, expenses and investments. To simplify this process, you can use Tata AIA's Human Life Value Calculator to determine your sum assured.
Inflation is a crucial aspect of financial planning. The cost of accomplishing a financial goal will increase with time, based on the inflation rate. Therefore, the payouts from the term insurance plan should be enough to help your family accomplish their financial goals based on future living costs.
Calculate your required funds based on your family's financial goals and revise the amount based on the inflation rate to derive a realistic value.
Also Read: 3 Reasons Why You Must Consider Inflation When You Buy Term Insurance Plan
This is the first thing insurers look at when you buy term insurance. Younger policyholders are charged lower premiums as they present less risk. This is because the younger you are, the less likely you are to develop health complications or critical illnesses.
Hence, we recommend buying your 2 Crore term insurance plan in your younger years to enjoy lower premiums.Your medical history is another important factor that affects the cost of the term insurance plan. For example, if your father has increased blood glucose and blood pressure levels, you are more predisposed to developing the same conditions later in life.
This can increase the death risk, resulting in higher 2 Crore term insurance premiums for you when compared to a person with a family medical history of no health complications.
The more riders^ you opt for, the higher your premium rate. Thankfully, these are optional. So, if you want to get add-on covers for your 2 Crore term insurance policy, carefully evaluate the benefits and the cost before adding them to your term plan.
Lifestyle is an important factor determining the premium for term insurance of 2 Crores. For example, smokers are charged higher premiums than non-smokers since they present an increased risk. Therefore, look into cutting down or quitting habits such as smoking, drinking alcohol, etc., before buying a term plan.
In addition, informing the insurer about such habits during inception is important to avoid any future discrepancies, as it can cause problems for your family during death claim settlements.
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