20 Year Term Insurance Plans

Life insurance is a contingency plan for individuals to take care of their family or income in case of a mishap. Human life is very unpredictable, and anything can go wrong at any time. It is therefore very important to have a backup option to keep your loved ones financially secured. Term Insurance is a very common type of policy cover where the policyholder gets life coverage for a set amount of time.  A large sum of money and other benefits are paid to the nominee after the policyholder’s death during the policy term.

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20 Year Term Insurance

Term insurance is a policy that covers you for a certain period and provides you benefits within that period. You can select from plans ranging from 5 years to 30 years or even more in some cases. 

Many insurance providers offer 20-year term insurance plans. If you begin your investment at an early age, it will help you reap maximum benefits. The main benefit of starting early is that you are covered for a longer period, starting with less premium.

What are the Benefits of 20 Year Term Insurance?

Following are the primary benefits of a 20-year term life insurance: 

  • Extended Cover: Policyholders are covered for 20 years, which is a considerable time. You will have a sense of financial security in these 20 years that in case something happens to you, your family will receive the death benefit that will protect them from any type of financial struggles.

  • Death Benefit: Your nominee will receive the death benefit (sum assured) in the event of your death. The sum is decided at the time of purchase and is usually sufficient to cover your family’s immediate financial needs.

  • Income Tax Benefit: You are eligible for tax exemptions under Section 80C of the Income Tax Act based on the premiums you pay. Even the death benefit that your family will receive is tax exempted. (*Tax benefit is subject to changes in tax laws.)

  • Surrender Benefits: Suppose you feel that you are not satisfied with the benefits provided by your 20-year term life insurance. In that case, you can surrender the policy before its maturity.

  • Additional Riders: You can customize the insurance according to your needs by adding additional riders. Some common types of riders are critical illness rider, accidental death rider, etc. They help in increasing the overall protection provided by your term plan.

  • Affordable Premiums: The best thing about term insurances is that they are extremely affordable. This means you can ensure a higher sum at affordable premiums, which won’t strain your present budget.

Popular 20-Year Term Insurance Plans

Some of the popular 20-year term insurance plans available in the market are: 

  • Aegon Life iTerm Plan: The plan offers coverage starting from Rs 10 Lakh and has no upper limits. It is ideal for those looking for term plans with smaller premiums. You can get coverage for as long as 75 years. Aegon’s Claim Settlement ratio is currently sitting at 98.01%.

  • HDFC Lite Click2Protect Plus Term Plan: HDFC is slowly becoming one of the strongest banks in the country. Their Claim Settlement Ratio was 99.07% for the last financial year. The plan offers features like Life Cover with additional accidental benefit options and income benefits options. It offers a minimum coverage of Rs. 25,00,000 for a tenure ranging from 5 years to whole life.

  • Kotak Life Preferred eTerm Plan: The plan offers a cover starting at Rs.25 Lakhs and offers additional benefits like Total and Permanent Disability and Critical Illness rider. The claim settlement ratio is around 96.38%. You can get coverage for a tenure ranging anywhere between 10-40 years.

  • LIC eTerm Plan: Life Insurance Corporation of India is a second name for trust in the country, with a Claim Settlement Ratio of 96.70%. The plan offers a cover of a minimum of Rs 50 Lakh for non-smokers. You can get this plan for a tenure ranging between 10-40 years. If you invest in it early, you can choose a longer tenure, like 20-40 years.

  • SBI Life eShield: State bank of India is the largest bank when it comes to customer base. Their claim settlement ratio is currently around 94.52%. The plan comes with three options - increasing cover, level cover, and level cover with future-proofing. You can get insurance cover for up to your whole life, i.e., 100 years.  This plan is suitable for you if you are purchasing term insurance late in your life. The maximum eligible age is 65 years. This means if you purchase the plan for 20 years, you will be covered until you reach 85. If you feel that it isn’t sufficient, you can always get coverage for a longer tenure.

How to Select a Suitable 20-year Term Insurance Plan? 

The process of buying a suitable 20-year term life insurance plan is simple. Look for a trustworthy insurer and invest in a plan that is most suitable for you. To spot a good insurer in the market, you can focus on the following two things: 

  • Claim Settlement Ratio: The ratio is the analysis of the total number of claims lodged in a year and the total paid out of it. Higher the claim settlement ratio, better chances of your family getting the benefits in your absence. Therefore, look for insurers with high ratios.

  • Solvency Ratio: Solvency Ratio is proof if your insurer is financially capable of settling their liabilities and debts. It shows the ratio of their capital size and the total risks they bear. Just like a high claim settlement ratio, look for insurers with a high solvency ratio as it indicates their financial strength.

Once you have shortlisted insurers, you should start comparing the plan to find the best fit for you. Ensure these things before starting the comparison of the 20-year term insurance plans available in the market:

  • Your Requirements: The sole purpose of a term plan is to meet your financial requirements at the time of need. Therefore, keeping your requirements in mind while purchasing the term plan should be in top priority. Analyze the expenses your family might have within the 20-years and find a policy that promises to provide for all those expenses. 

  • Premiums: Generally, the first point people consider when buying an insurance plan is price. There is no doubt that price is important, but compromising on price might mean you are compromising on the benefits your family will get. Therefore, look for policies that offer maximum protection at affordable rates.

  • Riders: When it comes to ensuring protection for the family, you should do the max you can. Though adding riders mean increasing the premium cost, they also enhance the term plan protection. For example, apart from death, your policy should also cover critical and life-threatening illnesses. In that way, if something happens to you because of any illness, your family will receive adequate coverage. The critical illness rider well serves this purpose.

It is advised to add riders that are beneficial to you. Therefore, look for policies that offer essential riders at reasonable rates.

In Conclusion

A good insurance plan aims to protect your family from the 3 ‘D’ problems of life – Death, Disability, and Disease. It is not only important to ensure a financially secured present for your family, but you should also plan about securing the future. Considering the worst-case scenarios is crucial. Investing in a 20-year term plan is one of the best ways to secure your family for the said tenure financially.

FAQ's

  • Q. Are the premiums exempted from GST? 

    Ans. Yes, the premiums paid for term life insurance are exempted from GST. (*Tax benefit is subject to changes in tax laws.)
  • Q. What does happen when the plan runs out? 

    Ans. When your policy period runs out, you will no longer be covered. You can either convert it into a permanent policy or choose a new one. 
  • Q. What are riders? 

    Ans. Riders are optional additional benefits that you can add to your insurance plan to enhance the coverage.
  • Q. How do you decide on the term length? 

    Ans. Various factors help you select the term tenure. If you start at an early age, you could be covered for a longer term. If you want higher benefits and do not want to pay high premiums, you can extend the policy term. 
  • Q. Would smoking impact the premium I am paying? 

    Ans. Yes, it is important to disclose your smoking habits. Smokers are usually charged a higher premium. Some insurers even deny selling a policy to someone with a smoking habit because insurers see them as high-risk customers.
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