What is 15 Year Term Insurance Policy?

 

It’s no longer news that exigencies can really turn around our lives. The biggest example was COVID-19 that changed the way we live and work. The global health crisis didn’t just lead to financial loss, but it also caused deaths in large numbers. While loss of life is unpredictable, it’s definitely possible to safeguard your family’s financial needs in case of your absence. That’s where a term insurance plan steps in.

Every individual has different needs and preferences, but if you are looking to provide security to your loved ones in the long term, look no further than a term insurance plan with a 15-year tenure.

How does a 15-year term policy work?

Once the policyholder purchases  a term policy with a 15-year tenure, they must pay regular premiums to avail the coverage or the death benefit for the family, in case he/she dies during this tenure; i.e. 15 years. In case the policyholder survives through the tenure, there is no maturity amount that is paid, unless of course, the policyholder has opted for a plan with a Return of Premium option, which allows the policyholder to reap maturity benefit if they survive the entire policy tenure

The benefits of a 15-year term insurance policy

As mentioned above, 15 years is a good time period to ensure coverage for your loved ones, in case an emergency strikes leading to loss of life.

Here are some benefits that you must be aware of:

• Risk protection for 15 years to the policyholder’s family, offering peace of mind
• Inculcates discipline with a fixed payment as per decided frequency
• Death benefit offered to the nominee; in case of death of the life assured during the policy term. It could be natural death, death by accident, or death due to critical illness
• Helps in planning future financial needs like your child’s education or marriage
• Income tax benefit under Section 80C of the Income Tax Act*, as well as exemption from tax on receiving the death benefit under Section 10(10D)
• Increased flexibility than traditional term life insurance policies
• Affordable premiums to ensure coverage, without emptying the pockets of the policyholder

Is there any way to calculate 15-year term life insurance premiums?

The premium is calculated based on several factors, including the age of the policyholder,  annual income, sum assured, medical history, and if they have a history of smoking, drinking, chewing tobacco or any other major health risks. If someone has greater health risk, the premium may be higher accounting for potential consequences in the long run.

FAQs

1. Is it a good idea to avail the term insurance plan with a 15-year tenure?

It is definitely a good idea for those individuals who are looking to safeguard their family’s financial needs in their absence for a tenure of 15 years.

2. Does one receive a maturity benefit if the policyholder survives during the tenure of the 15-year term insurance plan?

No. If the policyholder survives the term, they do not receive any maturity benefit, unless of course they have opted for a plan with Return of Premium, which allows them to reap maturity benefit if they survive the entire policy period.  

3. How can one cancel the 15-year term insurance policy?

You could reach out to your insurance company and let them know your decision in writing. Some insurance companies also prescribe a standard form for cancellation of policy. Once this is filled and submitted, the insurer will carry out the procedure for cancellation. However, one cannot get any refunds of premium if the policy is cancelled outside the prescribed cooling / free look period

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