According to the Insurance Regulatory Development Authority of India’s (IRDAI) December 2019 annual report, India has a paltry 2.74 percent life insurance penetration. Indians are underinsured because they are unaware of life insurance benefits and how such plans work. As a result, you must understand what is term life insurance, the various factors to consider when comparing different term insurances, and how to calculate how much premium to pay for your term insurance plan using a term insurance premium calculator.
What is term life insurance?
Term insurance is a type of life insurance that provides financial protection to the policyholder for a set period. If the insured person dies during the policy term, the company pays the death benefit to the beneficiary. Before purchasing term insurance, one should understand the significance of what is term life insurance, its key features, and why they are important.
The goal of purchasing life insurance is to provide the policyholder with life insurance and financial security for his family.
Individuals can obtain life insurance in two ways:
- Choosing a pure life insurance policy, also known as term insurance
- By purchasing life insurance that includes a savings component, also known as endowment insurance.
Need for Term Insurance
Here are a few reasons why term life insurance is a good investment:
- To look after your family:You are accountable for the well-being of your parents, husband, and children as a sole earner in your household. Purchasing a term insurance policy is critical to ensuring that your family’s obligations are met even if you are not present.
- How To Repay Your Debts:You may have used loans to purchase various things such as an office, a vehicle, or a home. This plan ensures that the burden of these debts will not cause financial hardship for your family after you pass away.
- Be prepared for the unexpected:In the event of your untimely death, the benefits from this plan can assist your family pay for their everyday needs and achieving their long-term goals.
Factors to think about while selecting term insurance
It would be best if you considered the factors that may affect the future performance of your Term Insurance plan to ensure that it performs as expected.
1. The Ratio of Claim Settlement
This is the ratio of a company’s settled claims to the total claims it receives. This is a record of the insurance company’s claim settlements. The IRDAI portal has information about CSR.
2. Ratio of Solvency
The solvency ratio indicates whether or not the insurance firm has sufficient cash to pay your claim. This information is available on the IRDA website. A minimum solvency ratio of 1.5 is required.
3. Critical Illness Coverage Option
Critical sickness is a vital rider that protects against serious illnesses. You should seek it while purchasing a plan. However, critical illness coverage is included by default in all Canara HSBC Life Insurance term plans.
4. Additional Riders’ Availability
Riders like accidental death and disability compensation may come in handy in such situations. These riders will provide more funds to your family or allow you to keep your life insurance coverage without having to pay additional premiums.
5. Life Insurance Requirement
Your life insurance needs to change as you grow older. As a result, having term insurance with increasing the life cover amount is a preferable option. Life protection can be increased with Canara HSBC Life Insurance’s iSelect Smart360 Term Plan.
6. Insurer Reliability
The insurance company’s reputation is the most important factor in determining whether or not it will be able to supply you with life insurance. Before purchasing a term plan, you should review the company profile on the insurance provider’s website.
What is Term Insurance Premium Calculator?
The premium charged for the policy is one of the most important factors to consider before investing in a term insurance policy. Previously, prospective customers relied on information conveyed by insurance salespeople to learn about the premium. However, thanks to an amazing internet tool known as the term insurance calculator, you can now get to the bottom of this yourself.
The term insurance premium calculator is an online tool meant to help you figure out how much premium you’ll have to pay each month and how much coverage you’ll get. The term life insurance plan calculator is straightforward and straightforward to use. It is advisable to utilize a term insurance premium calculator when purchasing a term insurance policy. It allows you to change the amount of coverage you want for your family in the event of your death.
The following are some of the most significant advantages of using a term insurance premium calculator:
Saves Time: The term insurance plan calculator saves time by allowing you to acquire insurance premium rates without submitting any physical copies. Select a term plan that meets your needs and purchase it online for a hassle-free experience.
Plan comparison: The calculator compares different term plan premium rates from Indian insurers.
Budget-Friendly plans: Buying term insurance online is preferred because you can get discounts on the premiums. As a result, utilize these insurance premium calculators online to save a lot of money.
Term life insurance is a financial product that helps secure your family’s future if you pass away prematurely. It provides a lump sum amount to your family, which can be used to pay off the mortgage, fund higher education, or even start a business.
The decision to buy term life insurance should not be taken lightly as it involves making payments for several years. If you do not have clarity on what is term life insurance and its benefits, then you may end up buying an expensive policy with too many exclusions.