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Term Insurance: The Most Affordable Way to Protect Your Family

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Term Insurance: The Most Affordable Way to Protect Your Family
April 11, 2024

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Life is unpredictable, but term insurance can be the unwavering guardian that ensures your loved ones are financially secure, come what may. While most people remember to buy vehicle and health insurance, they often avoid life insurance, believing it to be too expensive. Term insurance, on the other hand, provides affordable life insurance for a set number of years. It is a one-of-a-kind insurance-only policy that does not provide any additional monetary benefits, but can provide you and your loved ones with peace of mind in the event of your untimely death.

What Makes Term Plans Affordable?

Of all the life insurance products in the market, term insurance policies have the lowest premiums. Let’s see why:

1. Only Life Cover Charges

Term plans are unlike money-back plans. The premiums you pay do not get invested in the market. So, there’s no need for a fund manager to invest or monitor your money. Instead, the entire term insurance premium gets used to provide you with life cover. Since there are hardly any overheads, insurance providers can offer term insurance plans at competitive rates.

2. Ease of purchase, competitive pricing

Term policies offer simplicity in understanding, making it convenient for individuals to effortlessly acquire them online.

3. Easy Online Comparisons

Acquiring term insurance online is a swift and straightforward process.. Customers can compare prices and benefits with just a few easy clicks.

Term Insurance Premium Details

As with all other life insurance products, your term insurance premium could change depending on the following factors:

  • Age

Your age is directly proportional to your term insurance plan premium. When you’re young and healthy, your insurer views you as less of a risk. So, they can charge you lower premiums. As you grow older, you may face health issues that could prove fatal. Your insurer will view you as high risk and increase your premium accordingly.

  • Sum Assured

Your term insurance premium depends largely on the sum assured amount you pick. Higher coverage amounts typically attract higher premiums. For example, a Term Plan with a sum assured of Rs 50 lakh could attract a premium ranging from Rs 500 to Rs 1500 per month, depending on the frequency of premium payment you choose, as well as riders like accident or critical illness benefit or return of premium benefit.  

  • Riders

Term policies today come with optional riders. You can pick and choose which riders to add to your policy for enhanced coverage. Depending on the number of riders you select, your premium could increase.

How Do I Choose the Best Term Insurance Policy for Myself?

Picking the right term insurance plan for your needs can prove tricky. Here are some crucial factors to consider before you purchase a policy:

a. The Sum Assured

Ideally, you need to opt for a sum assured amount that is between 15 to 20 times your current annual income. You also need to ensure that the payout will make it easier for your nominee to pay off any outstanding loans. So, you need to find a term insurance plan that offers you the sum assured you require to secure your family’s financial future.

b. Riders

You can choose from the different riders available, including those for accident or critical illness, or return of premium on maturity. These add-on riders help you boost the benefits you can reap from a term insurance plan.

c. Payout Options

Today, policyholders can choose how they want their nominee to receive the term insurance payout. Instead of a lump-sum payout, you can opt for your nominee to receive monthly or annual instalments. Before you purchase your policy, make sure your insurer allows you to select your preferred payout option.

Very often, people assume term insurance plans are not valuable because they are affordable. But, term insurance policies offer individuals life cover at pocket-friendly rates. You can opt to purchase a term plan when you’re young and pay relatively low premiums for the rest of the policy term. Remember to select a tenure that will see you through until your retirement.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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