When we are young, we don’t think about death as something we need to plan for or even deal with. However, as we begin to shoulder more and more responsibility, the need for a backup plan gains prominence. Providing financial protection to your family often forms the basis of your backup plan. And in this context, a simple form of insurance called a term plan becomes very important.
What is Term insurance?
Answering the question of what is term insurance is straightforward. A life insurance policy that provides coverage for a fixed period (the term) in exchange for regular premium payments. If the insured person passes away during the term, the policy pays out a death benefit to the beneficiaries designated by the policyholder. Imagine a world where you could buy a product that could replace you.
Different Ways to Buy a Term Life Insurance Plan
Here are the different ways to purchase a term life insurance plan:
1. Online Purchase
The e-commerce boom has made financial instruments, including insurance policies, available online. Buying a term insurance plan from your provider’s web portal saves time and money.
- Determine the sum assured based on your current income, number of dependents, existing liabilities, and financial goals.
- Choose a reliable insurer based on claim settlement ratio, solvency ratio, market reputation, and claim settlement time.
- Use online calculators insurers provide to determine the premium amount based on the sum assured and policy tenure.
- Fill in personal information such as date of birth, gender, habits, monthly income, and contact details.
- Choose a sum that adequately covers your family’s financial obligations and select a policy tenure that suits your needs.
- Determine whether you want a lump-sum payout, regular income, or both.
- Consider adding riders such as critical illness cover or accidental death benefits to enhance the financial safety net for your family.
- Provide the necessary documents and details for your customer’s (KYC) process.
- Disclose information about your health history to ensure your policy remains valid in the future.
- Understand the exclusions and terms of the policy before making the payment.
- Pay the premium using net banking or credit/debit cards. Purchasing a term insurance plan online offers convenience, transparency, and cost-effectiveness.
2. Offline Purchase
This method allows face-to-face interaction with experts who can guide you through the process and answer any questions.
- Look for insurers with high claim settlement ratios, good customer reviews, and a range of term insurance products.
- Contact an insurance agent or visit the nearest branch office of your chosen insurer to discuss options.
- Assess your needs with the help of an expert: Share your financial details, goals, and responsibilities with the agent to determine the most suitable term insurance plan for you.
- Fill in the necessary details and submit the required documents as specified by the insurer.
- Depending on your age and sum assured, you may need to undergo medical tests to assess your health condition.
- Carefully read through the terms and conditions of the policy before signing it. Clarify any doubts or concerns with your agent.
- Pay the premium using cash, cheque, or demand draft as the insurance company accepts.
- While offline purchase offers personalised assistance and guidance, it may involve additional paperwork and longer processing times than online methods.
Group Insurance Through Employers
If employed, your company may offer group term insurance coverage as part of its employee benefits package. Group insurance provides life insurance coverage to people under a single policy. The premium is usually lower than an individual term insurance plan due to economies of scale.
Check with your employer about the group term insurance coverage offered to employees.
Understand the policy terms: Read through the document and familiarise yourself with its features, limitations, and exclusions.
Evaluate whether the coverage provided by your employer is sufficient based on your financial obligations and goals. Consider supplementing it with an individual term insurance plan if necessary.
Enrol in the group insurance plan: Follow the enrollment process provided by your employer to become a policyholder under the group term insurance plan.
Group term insurance can be a cost-effective way to secure life insurance coverage for yourself and your family. However, remember that coverage may cease if you leave the company or retire.
4. Banks and Financial Institutions
Banks and financial institutions also offer term life insurance plans as part of their product portfolio.
- Check the term insurance plans offered by banks and financial institutions to find one that meets your needs. Contact the bank or financial institution through their customer service helpline or visit a branch office for further information.
- Obtain quotes from multiple banks/financial institutions and compare their features, premiums, and benefits.
- Fill in the application form, submit all necessary documents, and undergo medical tests if required.
- Read the document carefully before signing it. Seek clarification if needed.
- Pay the premium through online banking or any other accepted payment mode specified by the bank/financial institution.
- Banks and financial institutions allow you to leverage their established reputation in the financial industry.
Conclusion
Securing your family’s future with a term life insurance plan is crucial. By understanding the risks covered, assessing your needs, and exploring different purchasing options, you can make an informed decision that provides the necessary financial protection for your loved ones.
