Term Life Insurance Plans

FAQs:

• What is the definition of Term Insurance Premium?

  Term insurance premium is the sum paid regularly to the insurer to sustain a term insurance policy. For instance, for a cover of INR 1 Crore at age 30, you might pay an annual premium of around INR 10,000.

• Does term insurance cover serious illnesses?

  While term insurance mainly covers death risk, adding a critical illness rider can offer a lump sum on diagnosing specified severe diseases, like cancer or heart conditions.

• Can a rider be added to a current term insurance policy?

  Absolutely! Riders like accidental death or critical illness can be appended, enhancing your term policy. For example, an accidental death rider provides extra benefit if the death is due to an accident.

• What is the minimum and max age for purchasing a term insurance plan?

  Generally, the minimum age is 18 years and the maximum can vary, often up to 65 years. For example, with HDFC Life Click 2 Protect 3D Plus, you can buy up till age 65.

• What are the limitations of a term insurance policy?

  Term insurance doesn't offer maturity benefits. For instance, if a policyholder outlives the policy term, unlike an endowment plan, there are no returns from a term insurance policy.

• What do you mean by life insurance?

  Life insurance is a contract between an individual and an insurer, where the insurer promises to pay a sum of money upon the insured's death or after a set period.

• What is term insurance for?

  Term insurance provides financial protection to the policyholder's family in case of their demise. Consider it a safety net; for instance, if a sole breadwinner with a term policy passes away, the sum assured can help in sustaining sustain the family's lifestyle.

• What are the 3 major types of life insurance?

  The three major types are Term Insurance, Whole Life Insurance, and Endowment Plans. For instance, Term Insurance is pure risk cover, Whole Life covers the insured for life, and Endowment Plans offer death benefit and savings.

• Why is it called life insurance?

  It's called life insurance as it financially safeguards the insured's life events. For example, a policy can cover a family's living expenses if the primary earner passes away unexpectedly.

• What are benefits of life insurance?

  Benefits of life insurance include providing financial security to the family members, covering expenses, mortgages, paying off debts, replacing lost income, and covering education expenses.

• What do you mean by term insurance?

  Term insurance is a type of life insurance that provides coverage for a selected term or period of time. This insurance offers a death benefit if the insured person dies within the term of the policy. For instance, with term plan of 80 years coverage, if the policyholder dies during the term, a death benefit will be paid to the nominee.

• What are benefits of life insurance?

  Life insurance includes financial protection for the family, peace of mind for the policyholder, tax advantages, cash accumulation (in some policies), and the ability to customize coverage based on individual necessity.

• Who is eligible for term insurance?

  Generally, any person aged between 18 to 65 years, with a steady income can purchase term insurance. For instance, a 25-year-old working professional can buy a term policy to protect their family's financial future.

• Who gets life insurance?

  Life insurance is for anyone seeking financial protection for their dependents. For example, a parent can buy a policy to secure their children's future even in their absence.

• Is term insurance a good investment?

  Term insurance isn't an investment but a protective measure for your family's financial stability in case of your demise. For example, the benefit from a Rs.1 crore policy can help cover your family's living expenses, loan repayments, and future goals like your child's education.

• What is life insurance claim?

  A life insurance claim is a request for the payment of the sum assured and other benefits as per the policy terms. For instance, if a policyholder passes away, their nominee can file a claim to receive the sum assured. For a life insurance coverage of INR 1 crore, if policyholder passes away during the term of the policy, its nominee can file a claim of INR 1 crore.

• Is life insurance claim tax free?

  Yes, in most cases, life insurance claim proceeds are tax-free under Section 10(10D) of the Income Tax Act. For instance, if a nominee receives a Rs.1 crore claim, this amount would generally not be taxed. However, tax regulations may vary depending on specific circumstances. It's advisable to consult a tax professional for accurate information.

• What are the 10 benefits of insurance?

  Risk Management: Insurance helps manage financial risks associated with unforeseen circumstances like health issues, accidents, or property damage. A car insurance, for instance, can cover repair costs after an accident.

  
  

  Financial Security: It ensures your dependents' financial stability, especially in the event of your untimely death. A term life insurance can provide this kind of security.

  
  

  Legal Compliance: Many insurance policies are legally required. Vehicle owners, for instance, must have at least third-party liability insurance.

  
  

  Peace of Mind: Insurance provides a sense of security that if the unexpected occurs, financial support is available.

  
  

  Savings and Investment: Certain policies like endowment and unit-linked plans offer savings and investment options alongside insurance cover.

  
  

  Retirement Planning: Pension plans from insurance companies can help in building a retirement corpus, providing financial security during retirement.

  
  

  Tax Benefits: Premiums paid towards insurance policies offer tax deductions under Section 80C, and the payouts are tax-free under Section 10(10D) of the Indian Income Tax Act.

  
  

  Loan Collateral: Insurance policies, particularly life insurance, can be used as collateral for loans.

  
  

  Encourages Savings: Regular premium payments instill a habit of saving money, which helps in long-term financial planning.

  
  

  Supports Business Continuity: Business-related insurance policies, such as key person insurance, protect against the loss of important personnel, ensuring business continuity.

• What are 5 disadvantages of insurance?

  Policy Exclusions: Some events or conditions may not be covered by insurance. For instance, a standard health insurance policy might exclude certain pre-existing diseases.

  
  

  Waiting Period: Certain benefits might not be available immediately after buying the policy. Like, in health insurance, you often have to wait a specific period before you can make a claim.

  
  

  Premium Costs: Regular premium payments can be a financial burden for some, especially for policies with high premium rates.

  
  

  Claim Denials: If you provide incorrect information when purchasing a policy, your claim could be denied later on. For example, not disclosing a smoking habit in a life insurance application could lead to claim rejection.

  
  

  No Cash Value: Some insurance types, like term insurance, do not provide any maturity benefits or cash value if the policy term outlives the policyholder.

• What is the best age to buy term insurance?

  The earlier, the better as premiums are lower for younger ages. For example, a 25-year-old may secure a larger cover at a lesser premium compared to a 35-year-old purchasing the same plan.