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Term insurance is one of the most important financial products for individuals who want to secure their loved ones at affordable premiums. However, it can be difficult to understand what the right term insurance is and how to buy term insurance plans. Therefore, to help you, we have created this Term Insurance Guide with a step-by-step process for buying term insurance online.
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Note: Know what is term insurance first and then buy a term plan for your loved ones.
Term insurance is a pure life insurance product that offers a large sum assured at affordable premium rates. Under this plan, a death benefit is paid to the nominees/beneficiaries in case of the policyholder’s unfortunate death during the policy term. This ensures that the family is able to maintain their financial stability, even in the absence of the policyholder. The family can then use the benefit amount to care for their financial needs, such as paying rent, child’s fees, or any existing loans.
Term Plans
Let us understand how term insurance works with the help of an example:
Sameer bought a 1 Crore term insurance to secure his family in case of an eventuality. He regularly paid a premium of Rs. 473/month to ensure the policy did not lapse. He unfortunately suffered an accidental death in the 5th policy year. His family then completed the claims form and received the death benefit payout. They could use the amount to pay for the funeral costs, medical bills, and outstanding loans.
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Here is a list of steps you should follow to buy term insurance online:
Enter Your Information
Visit the term insurance page on Policybazaar’s official website and enter the requested details such as contact information, gender, date of birth, tobacco consuming habits, and monthly income.
Enter the Policy Tenure and Sum Assured
If you are young, opt for a longer tenure, and if you are middle-aged, go for a shorter policy term. Since the premiums increase with age, it is suggested that you buy term plan as early as possible to secure a large life cover at low premiums.
Choose the Mode of Premium Payment
Various best term insurance plans allow customers to choose the most suitable premium payment mode at their convenience:
Monthly installments
Quarterly payments
Bi-annual payments
Yearly premium pay
Not only that, you can also choose a suitable premium payment term, like
Regular Term
Limited Term
Single Term
Choose the Death Benefit Payout Mode
Various policies allow you to choose between different modes of payout:
A lump-sum payout to your nominee on your demise. You can select this option if you have outstanding debts such as a home loan.
A section of your sum is assured in a lump sum amount followed by a regular income every month to the nominee for a pre-specified tenure. This is important for meeting life objectives such as higher education and a child’s marriage.
The regular monthly payout for certain tenure.
Increasing income monthly for a specific term.
Choose Term Riders
You can enhance your family's financial coverage net by adding term insurance riders at a nominal amount to the base premiums. If you have a family history of critical illnesses such as kidney damage or heart attacks, then you can add a critical illness rider to your plan by paying an additional amount. For instance, you buy a term plan with an accidental death rider. It may pay Rs. 50 lakhs in case of your death and an additional amount of Rs. 25 lakhs will be paid if the demise has been caused due to an accident.
Fill out the KYC Form
You are required to enter your name, contact number, and address. Also, upload your ID proof such as an Aadhar card or PAN Card. Income proof such as income tax returns, address proof such as utility bills or driving license, and age proof such as passport and recent photographs.
Fill in Your Medical Details
Enter information such as weight, height, tobacco or alcohol history of consumption, medical conditions, if any, occupational hazards based on your job's nature, history of hospitalization, and other related details.
Health Check-ups
The insurer can ask you to undergo health tests if you apply at a certain age or need a high insurance cover. For instance, if you are an applicant who has attained the age of 50 years, then you will have to go through a comprehensive health test.
Carefully Read T&Cs
It is very important to understand the exclusions of policy such as death because of natural calamities, narcotics abuse, or terrorist activities. After agreeing to the terms and conditions, you will be redirected to the payment gateway.
Make the Payment Online
You can pay through credit or debit cards or net banking. A soft copy of your plan will be shared with you by email if your proposal is approved. The hard copy will be posted to you later.
You can purchase a term insurance cover directly from the website of the insurer (as mentioned above) or through an insurance aggregator like Policybazaar. Buying through Policybazaar lets you compare term plans online using their comparison tool. This helps you compare several products available to make a wise choice as per your preferences. If you are planning to buy a term insurance cover, you must follow the below-mentioned steps for the right selection.
The sum assured is the amount that is payable to your nominees after your demise. This sum assured amount should be adequate to meet your loved one’s financial obligations in case of your absence. To determine how much amount will be sufficient, it is important to consider the following factors:
Number of financial dependents present in your family
Your current liabilities such as loans, mortgages, etc.
Funds needed to meet the current lifestyle of your family
Inflation rate
Amount invested monthly towards financial objectives such as education of a child
Most financial experts suggest that a sum assured should be at least 15 to 20 times your current yearly income
Always choose a reliable insurance company before purchasing a policy. Here are some of the factors to note:
Claim Settlement Ratio: If you seek a term life insurance cover, you must ensure that you are buying it from an insurer who is offering a higher claim settlement ratio. This ratio signifies the percentage of claims that the insurer offers. For instance, if the insurer has settled 90 claims out of 100 claims in a year, the Claim Settlement Ratio (CSR) comes out to be 90%. One must choose a company based on its claim settlement ratio.
Solvency Ratio: The solvency ratio of the insurance company helps determine their financial ability to meet their requirements to customers. A higher solvency ratio means fiscal stability.
The grievance ratio also determines the trustworthiness of a company.
Waiver of premium options in case of terminal illnesses or permanent disabilities is an additional benefit that should be considered while choosing an insurer.
Term insurance calculator are available online to compute the amount you are required to pay for your chosen sum assured. The amount of premium should fit into your budget.
Death is an unexpected event for the family of a deceased person. The death of a policyholder brings the extra turmoil of financial crunch. Comparing plans and then purchasing the right term insurance online can secure your loved ones from future adversities.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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