Why Do We Need Term Insurance - The Policybazaar Show

In this week’s episode, Vivek Law analyses the need for term insurance policies and what to consider while choosing the best cover with Santosh Agarwal, Chief Business Officer, Life Insurance, Policybazaar.com, and Ashish K Srivastava, Managing Director and Chief Executive Officer, PNB Met Life Insurance.  

WHAT IS TERM INSURANCE

Term insurance is a type of insurance policy that provides coverage for a particular period of time or a specified ‘term’ of years. In the case of the insured individual’s death during the term period, the policy remains active and provides a death benefit to the family. Insurance is an important part of financial planning. An individual’s term insurance cover mostly depends on his/her financial liabilities and aspirations, both in the present and the future. It also depends on the age and annual income of the insured. Ideally, the term cover should be 10-15 times the annual income of the individual. Buying early helps as the premiums are low and affordable. In order to avail more benefits, it is often advised that at the age of 30, one can buy a term cover that is 25 times the individual’s annual income. The premiums are low at this point and the term insurance can be updated with time.

((calculator)) 

The insurance sector has been on the lookout to provide maximum benefits to the consumers at competitive rates. Choosing the correct insurance company becomes one of the top priorities. The things that a consumer must keep in mind while choosing an insurer are their financial viability and credibility. The claim settlement rate also becomes an important aspect while selecting the best insurance company. High claim settlement rates are the indicators of the company’s credibility.  

Term insurance policies are better than any other insurance covers as they cover Death, Disability and Disease, the 3Ds. The onboarding process for term covers is more hassle-free as it mostly doesn’t involve medical examinations. The term insurance also has riders, which is an attachment, amendment or endorsement made in the term policy enabling the policyholder to avail additional coverage. Some of the common riders in India are the waiver of premium, critical illness rider, an accidental disability rider, and the accidental death benefit rider. There are also different term plans that can go on for 99 years as well. The millennials are also leaning towards the term insurance instead of other future planning or investments as they are more flexible. 

THE MYTH BUSTER | INSURANCE IS A WASTE OF TIME 
Term insurance is a policy that saves your family even in your absence. The premiums for life insurance and term policies do not fluctuate or rise with time. Hence, the premium rates remain the same while the plan is upgraded with time and needs. Term policies and health insurance should be an individual’s priority while financial planning.