- Life insurance penetration in India (2019) was around 2.82%, but non-life insurance penetration was far lower at 0.94%.
- If we look at the urban phase of India, the term insurance coverage has increased by 7% in the last year. Although there is a small spike, term insurance penetration remains at 28%, which means that just 3/10 people purchase pure protection plans, compared to 70% of insurance ownership.
‘When life gives you lemons, make a lemonade.’ Many of you use this phrase when life throws bouncers at you. But, this phrase cannot be used every time, especially when a financial burden steps into your life because there is no substitute for money.
It is where life insurance steps in to ease your life when attacked by uninvited monetary crunches or incidents that break the cash flow in the family.
This blog will guide you in understanding,
- What is life insurance and its importance?
- What is a term insurance plan, and why is it preferred the most in India?
- Which term plan should you buy in India for 2022?
What is Life Insurance?
Life insurance is one of the protection assets that one can invest in. While some consider it additional financial stress, I would like to label it as a wise decision that pays you back when your life is hit with challenging situations such as – accidental deaths, severe illness, disability, and many more.
In a more direct definition – when a policyholder purchases life insurance, they are liable to pay premiums to the insurance company (based on the opted plan). Later, in return for the premium payments made towards a life insurance policy, the insurer pays an amount promised to the insured’s nominee(s)/legal heirs if the client meets with an unfortunate death.
Also, according to the policy, if the life plan matures, the insurer will pay the individual or his family a lump sum payment after the life insurance hits the maturity period.
With different needs arises different types of life insurance policies, and they are as follows:
- Term Insurance Plan
- Health Insurance Plan
- Child Insurance Plan
- Group Life Insurance
- Unit Linked Insurance Plan
- Endowment Plans
- Term Insurance with Return of Premium
What is a Term Insurance Plan?
In legal terms, term life insurance is the best, beneficial, and inclusive type of insurance under the broad insurance umbrella. It is an agreement between the policyholder and the insurer (insurance provider/company). The insurer pays a predetermined sum to the insured’s beneficiary if the policyholder meets with a tragic demise (paid on behalf of the premiums paid by the policyholder).
It is a long-term investment that comes in handy to manage and balance any mayhems in life. As the name suggests, it covers you for a specific time or number of years. Moreover, term life insurance is significantly less expensive than regular life insurance.
Term insurance is a profitable deal because,
- They help in living a tax-free life (because you pay the premiums)
- With Riders on, you get additional benefits
- You don’t need to bother about the family’s financial strength because the death benefit sees it all.
- As the size of the family increases, you can also increase your cover.
- Term insurance will cover it for you if you face an unfortunate accident and end up in partial or total disability.
- It offers you critical illness cover so that your family isn’t crushed under the financial burden.
There are different types of term insurance plans in the insurance world, and they are as follows:
- Increase Term Plan
- Decreasing Term Plan
- Level Term Plan
- Term Insurance with Return of Premium
- Convertible Term Plans
- Riders on a Term Plan
All these types of term insurance plans differ as per the different needs of people because everyone’s priority is different, and so are their requirements from a term insurance plan.
ABSLI Life Shield Plan: Door to Savings and Security
I believe so far you have understood the need to buy a term insurance and the benefits associated with it. Now, the real question is
Which plan should you buy?
Please don’t bother about that because I have one of the best term insurance plans that one can own, and it is the Aditya Birla Sun Life Insurance Life Shield plan that comes with 8 different Options to suit different needs from different walks of life. They are as follows:
Option 1 – Level Term Assurance
Option 2 – Level Term Assurance with Waiver of Premium (WOP) Benefits
Option 3 – Increasing Term Assurance
Option 4 – Increasing Term Assurance with Waiver of Premium (WOP) Benefits
Option 5 – Decreasing Term Assurance
Option 6 – Decreasing Term Assurance with Waiver of Premium (WOP) Benefits
Option 7 – Return of Premium
Option 8 – Return of Premium with Waiver of Premium (WOP) Benefit
Some of the perks and features of ABSLI Life Shield are as follows:
Inbuilt terminal sickness benefit: If you opt for this plan, this benefit will assist you if you are diagnosed with the severe disease when your term plan is active. You will instantly get 50% of the relevant Sum Assured on Death, up to Rs. 2.5 crore and the outstanding premiums would be annulled.
Enhanced life stage protection: This feature helps increase the existing coverage following eventful occurrences such as marriage and children (without taking a medical test).
Waiver of Premium: All future premiums will be canceled if the policyholder suffers a severe health crisis and total and permanent disability in the active policy term. The policy’s death benefit shall remain unaffected.
Joint Life Protection: This benefit gives you the leverage to safeguard your better half by clubbing her into the term plan. Your spouse’s sum assured will be equal to half of your applicable sum assured.
Return of Premium option: Under this benefit, if you survive and sail through the maturity period, the whole amount of all premiums you paid will be reimbursed.
Note: Go through the Options before assuming any benefits you will enjoy.
Things to Consider Before Investing in Term Insurance Plan
There are countless term insurances available in the market, but does that mean all of it is right for your needs and pocket?
No, they are not. It is why I have brought you a list of factors that you must consider before buying any term insurance plan. The vital elements are as follows:
- To begin with, always map your budget, monthly and yearly expenses, money for the emergency kitty, and many more. The idea is to have a clear understanding of your pocket allowance.
- Please don’t ignore the sum assured because it matters at the time of need.
- Policy Duration
- The features, benefits, eligibility, and riders.
- Premium payment method
- Look for the payout Options
To all the earning souls, it is always advised by financial advisors to invest in insurance at a younger age due to lower premiums, long-term benefits, and better returns.
Prevention is better than cure; it’s better to be prepared before ending in a debt-ridden circle.