Raghav is a 30 years old healthy IT employee who has two children and has a home loan. Now, he is wondering if investing in a 1.5 Crore term plan will be beneficial. However, how he would go for the selection of the right plan? What are the factors to consider while buying a 1.5 Crore term insurance plan? Does a 1.5 Crore cover amount sufficient for the financial needs of his family? Before selecting any plan, Raghav needs to understand what is 1.5 Crore Term Insurance Plan and how it works:
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1.5 Crore Term Insurance Plan is the simplest type of insurance plan that offers a sum assured of Rs. 1.5 Crore upon the death of the policyholder during the policy term. This plan helps an individual to be financially secured. Since it is a pure life insurance product a policyholder can receive large life cover at low premium rates, mainly if he/she buys it early in life.
The primary goal of Raghav is to secure his family’s future. Apart from that here are some more reasons that he should consider for 1.5 Cr term insurance:
Comprehensive Coverage: 1.5Cr Term Insurance plan helps a policyholder to build a strong financial safety shield around his/her family members and help them in difficult times.
Protection Against Liabilities And Loans: In case of a policyholder's unforeseen death, his/her family members can use the death benefit availed from the 1.5 Crore Term Insurance Plan to pay back unpaid liabilities and loans.
Now after researching and understanding why buying a 1.5 Crore Term Insurance plan is important, Raghav contacts a policybazaar agent to know how this term insurance work?
Term insurance is a life insurance product that offers life coverage for a fixed period.
If the policyholder passes away unfortunately while the plan is in force, the nominee/beneficiary will be eligible to receive a death payout from the insurer as per the policy’s T&Cs.
The premium amount will be fixed and will not change during the policy term.
Thus, buying a 1.5 Crore Term Insurance Plan is a smart decision for the future.
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As already discussed, 1.5 crore term insurance offers financial help to policyholder’s family members and dependents in case of his/her unforeseen death. Raghav might wonder whether a 1.5 Cr term insurance plan is sufficient for him or not. To be clear, he can consider these questions in his insurance search:
If Raghav has an unpaid car or home loan, it can turn out to be a burden on his family members if someday he dies. So, considering this point is a smart decision when determining the right coverage for his term insurance plan.
One should always ensure that the investments made all over the years will be easily accessed by his/her family after him/her. Some examples of investment are mutual funds, FDs (fixed deposits), Provident Funds, etc. If Raghav already has 50 Lakh of investments, he can deduct this sum from the life cover needed to safeguard his family. For example,
Raghav was thinking of investing in a term plan that provides high life cover. Let’s see Raghav’s finances:
Age of Raghav – 30 years
Age at Retirement – 60 years
Existing expenses of the family – Rs. 3 Lakhs for a year
Expenses of the family for the next 25 years with a certain % of inflation – Rs.2 Crore
Home Loan – 60 Lakhs
Child’s Higher Education in Future – 50 Lakhs
Full Expenses – (2 Crore + 60 Lakhs + 50 Lacs) Rs. 3.10 Crores
Investments (Mutual Fund + PF) – 50 Lakhs
Required Life Cover - Rs. 3.10 Cr – Rs. 50 Lacs = Rs. 2.4 Cr
So, a 1 Cr Term Insurance plan will not be sufficient and it is short up to Rs. 1.4 Crore for Raghav’s family in case of an eventuality and he would check for a term plan with a large cover.
High coverage at low premium rates
Flexibility in Payment i.e., pay monthly or receive the death benefit in one single sum
Easy customization of plans by attaching riders like critical illness benefit, accidental death benefit, return of premium, etc.
Helps in financial planning for the long run
Tax Benefits are available as per the prevailing laws of the Income Tax Act, 1961.
Raghav is now clear that 1.5 Crore Term Insurance will be the right one for him but he is still confused about choosing the right 1.5 Cr term plan and what factors are to be considered while buying this plan?
Raghav first has to research the different term insurance plans to make sure the product he buys fulfills all his needs. Here are some of the factors that one should look into before buying a term plan:
Premium Rate: It is advisable to choose the term insurance plan with low premium rates as per your income.
Claim Settlement Ratio: CSR (Claim Settlement Ratio) is the number of claims that the insurance company settles yearly. A CSR of above 95% indicates that the insurer is committed to accomplishing its obligations to its life assured. So, to ensure that your nominees receive the claim timely, you should opt for an insurer with a high CSR.
Add-ons: Insurance companies offer other important features with term plans, apart from a life cover, like:
Additional benefits to increase the coverage
Accelerated payments in specific cases
Increase coverage with changing requirements
Below mentioned is the step-to-step guide to buying a 1.5 Crore term insurance policy from Policybazaar:
Step 1: Go to the 1.5 Crore Term Insurance Form
Step 2: Fill in the basic details such as name, Date of Birth, and contact number and click on ‘View Plans’
Step 3: Answer the questions about smoking or chewing habits, annual income, occupation type, educational qualification, and language
Step 4: After submitting all the details, a list of all available 1 Crore term insurance plans will be displayed
Step 5: Choose the plan that suits your financial needs and proceed to pay
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+All savings provided by insurers as per IRDAI approved insurance plan. Standard T&C apply.
