Term Insurance – Neviim Insurance

What is term life insurance?

Term insurance is a type of life insurance that provides coverage for a specific period of time or years, i.e., a term. This type of life insurance provides a financial benefit to the nominee in case of the unfortunate demise of the insured during the policy term. Term Insurance policies provide high life cover at lower premiums. For e.g.: Premium for ₹ 1 Crore Term Insurance cover could be as low as ₹ 485* p.m. These fixed premiums can be paid at once or at regular intervals for the entire policy term or for a limited period. Premium amount varies basis the type of the premium payment method opted by the buyer.

Who should buy a term insurance policy?

Anyone with financial dependents should buy a Term Insurance Policy. This includes married couples, parents, business people and self-employed, SIP investors, young professionals with dependent parents, and in some cases, even retirees.

Life insurance premiums paid are deductible from taxable income under Section 80C^{^^} and hence carry a double benefit for taxpayers – protection and tax-saving. The amount (maturity value) received under a term insurance policy is also tax-exempt subject to conditions under Section 10(10D)^{^^} of the Income Tax Act, 1961^{^^}. Term Insurance also has among the lowest premiums compared to the different types of insurance policies.

Hence, individuals who derive any of the three significant benefits associated with term insurance should consider buying such policies. The three significant benefits are – life protection, tax-saving and affordable premiums.

Parents:

Parents are generally the sole source of financial support for their children. The needs of children extend from school fees and living expenses to hefty university fees, later on in life. An unfortunate event with a parent can jeopardise their future and deprive children of life’s opportunities. Parents must ensure that this scenario does not come to pass, by purchasing a term insurance policy. This policy will pay out a lump sum and/or income to satisfy their children’s expenses, in the event of any mishap of the parent(s).

Newly-married couple:

Roses, chocolates and movie tickets are great, but here’s a truly long-lasting gift for your spouse – term insurance. This gift will give your spouse more than momentary joy, and it will secure their future. Term Insurance assures the spouse of financial support in case of a mishap with the insured person and should be purchased as soon as possible by married couples.

Working Women:

The women of today are on an equal footing with men, whether it be managing their finances or providing for their family. Today, a family is as dependent on the woman’s income as it is on the man’s. This dependency brings with it the need to financially secure your loved ones in case something happens to you. A Term Insurance plan assures that your parents/spouse/children are financially secured even in your absence. It ensures that your family does not have to compromise on their lifestyle and can continue with the goals you set for them. The term insurance cover amount also helps to take care of any outstanding liabilities like home loan, auto loan, education loan, and more. Not only this, but some term insurance plans also come with the added benefit of a critical illness^ cover that provides a payout if you are diagnosed with a serious illness like breast or cervical cancer.

Young Professionals:

Young professionals are just starting their careers. Many of them are not yet married and have no financial dependents. However this is likely to change in the future as they get married or support their parents/relatives. Such individuals should buy term insurance now rather than wait. This is because once a policy is purchased, the premiums stay the same throughout an individual’s life. On the other hand waiting to buy term insurance in the future can force customers to pay higher premiums because term insurance premiums incease with age.

Taxpayers:

Term Insurance premiums paid are allowed as a deduction from taxable income under Section 80C^^ of the Income Tax Act, 1961^^. The term insurance payouts on maturity are also exempt from tax subject to conditions under Section 10(10D)^^. Hence taxpayers can use term insurance to reduce their tax burden significantly.

Self Employed:

As a self-employed person, you face many challenges. Unlike salaried individuals, you do not earn a fixed monthly income; you have an uneven source of income that depends on the ups and downs of the market. Plus, you may have also taken a business or personal loan from creditors, banks, or even your family and friends. Hence, buying a term insurance plan to secure your family becomes even more important for you. A term life insurance policy can ensure that your family remains financially secure even in your absence.

SIP Investors:

Investors in mutual fund SIPs (Systematic Investment Plan) invest a fixed amount every month in a mutual fund. The wealth creation in an SIP is driven by a stream of regular instalments which compound over time. However, an unfortunate event of the investor can stop the flow of instalments. Term Insurance can protect the SIP by providing the nominees of the insured person with funds to continue the SIP.

Retirees:

Retired persons need to have term insurance if they have dependant spouses or families. Buying term life insurance can also be a way of leaving an inheritance for their families. This is because, Term Insurance is paid out to nominees in case of any mishap with the insured person. The payment of Term Insurance is also tax-free subject to conditions under Section 10(10D)^^ of the Income Tax Act,1961^^.

Terms related to term insurance

Here are some terms you must know:

Claim Settlement Ratio:

The Claim Settlement Ratio (CSR) is the ratio of the total number of claims raised in a year and the number of claims settled in a year by an insurer. The higher the number, the more reliable the insurance company is, as the chances of your family’s claim being rejected are low

Term insurance premium:

This is the money you pay to the insurance company in return for financial protection. Premiums can be made in monthly, half-yearly, and annual instalments. Premiums tend to increase as you age

Add-on benefits (riders):

To enhance the coverage of your plan, you can add benefits to your plan, such as a critical illness rider, an accidental death rider, or a permanent disability rider. Riders come at a nominal cost over the premium

Sum assured:

This is the amount of money that your nominee will receive in case of an unfortunate event. This also determines the premium amount for the term plan

Death benefit:

This is the same as a sum assured and is given to the nominee in case of an unfortunate eventuality

Features of term insurance

Here are some features of term insurance plans:

Low entry age:

Term insurance plans have a minimum entry age of 18 years only. You can buy a term plan and secure your loved ones as soon as you reach adulthood

Long term protection:

The term plan offers long policy tenures of up to 40 years that allow you to protect your family members for a long time

Easy to buy:

Term insurance can be purchased online in minimal steps. You can compare different plans and features with a few clicks and pick a plan that suits your needs the best. The submission of documents, premium payment, and all other customer queries can be submitted online from the comfort of your home or office

Easy premium payment options:

Term insurance plans offer flexible premium payment options like monthly, quarterly or yearly payment

Adjustable cover:

The term plan is flexible and allows you to increase or decrease the sum assured basis your financial condition

Liability protection:

The sum assured of a term insurance plan can be used to ensure your family’s financial security and protect them from debt liabilities like a loan repayment

Term insurance - benefits

High Life Insurance Amount at affordable premiums:

Term Insurance plans provide a large amount of life insurance cover at an affordable premium. This cover can compensate for several years of lost earnings

Cover Against Critical Illnesses^:

Along with providing life cover, a new-age term plan like ICICI Pru iProtect Smart also provides protection against critical illnesses. For a small additional premium, Critical Illness Cover provides lump sum payments when a critical illness like a heart attack, cancer, kidney failure, or any other critical illness^ is first diagnosed

Support in Case of Disability##:

Insurance company pays your future premiums in case of total and permanent disability. As a result, your life insurance cover continues even if you are unable to pay premiums

Additional Financial Security:

To increase the security of your family, a Term Policy provides additional payout (up to `2 crore) in case of an accidental death+. For example, if your life cover is `1 crore, a Term Insurance Plan with Accident Death Cover pays `2 crore to your family in case of an accidental death+

Tax Benefits:

Term Insurance plans offer tax benefits^^ on premiums paid up to `46,800 under Section 80C^^. New-age Term Plans with critical illness cover also offer additional tax benefits on premiums paid up to `7,800 under Section 80D^^. You also get tax benefits^^ subject to conditions under Section 10(10D)^^ on the money that your family receives in case of an unfortunate event

Death benefits:

In the unfortunate event of death during the policy term, your family receives the death benefit from term insurance. Your nominee can choose to receive a regular income along with a lump sum benefit in your absence

Survival benefits:

Standard term insurance does not offer any benefits if you survive the term. However, a return of premium term plan also provides you with a lump sum or regular income as guaranteed benefits to help you fulfil varied financial goals. The term plan pays back an amount that is at least equal to the total premium paid. You receive these guaranteed benefits at the end of the tenure

We offer different types of insurance for businesses, including coverage for property damage, legal liability and employee-related risks.

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