Important Aspects of 5-year Term Life Insurance Plan

5 Year term life insurance is the most cost-effective life insurance plan that one can consider for short-term investment. The 5 Year term insurance policy comes with a death benefit, which is ideal for covering immediate financial liabilities.

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Providing the much-needed financial protection to your family is the first and foremost priority as a responsible individual. So, how can you secure them during a financial crisis, even in your absence?

By purchasing a term life insurance plan, you can ensure the financial future of your loved ones. The next obvious question is- which will be the right term insurance plan?

Among various term plans, a 5 year term life insurance plan is in the spotlight for its short-term benefits. Let's understand its aspects to make an informed decision.

Why is it Important to Buy a Term Insurance Plan?

A term insurance plan is the simplest and pocket-friendly policy available in India. It offers security to the family of the insured against unfavourable events in life. 

Considering life's unpredictability, one must consider buying term insurance plan to secure the future of the family as it offers death benefits.

A 5-year term life insurance plan can act as a great rescuer during unfortunate events. It offers short-term benefits and is suitable for the fast-paced times that we are living in.

Following are the reasons that make buying a term insurance plan a must:

  • It will financially aid your family to pay off the unavoidable expenses. 
  • This will help you to ensure financial stability for your family.
  • The pay-out will help your family to meet emergency expenses if any.
  • Your family can pay off your existing debts.
  • A term plan provides high coverage at lower rate of premiums.

There are many insurance providers in India, which provide a 5-year term plan. Let us now understand the key features of a 5-year term life insurance policy.

Key Features of 5 Year Term Life Insurance Plan

The below features make a term insurance plan the right choice for meeting your insurance needs.

  • Death Benefit- In the case of the policyholder's untimely demise during the policy period, the nominee is entitled to receive a death benefit. The death benefit provided by this plan is higher than the other traditional plans. 
  • Tax Benefit-Individuals can avail tax benefits under Section 80C of the Income Tax Act. This helps to reduce the financial burden on the taxpayer.
  • Surrender Benefit-Policyholder can avail surrender benefits if at any point he/she wishes to withdraw the policy before the maturity date. 
  • Riders-Policyholders can always opt for additional riders along with the base plan. This will enhance their overall coverage benefit without burning their pocket. These riders are available at a minimum additional cost.
  • Low Premium -A 5-year term policy comes with low premiums. Age is one of the major factors that determines term insurance premiums. If you are young and healthy, there are better chances for you to get low premium deals. 
  • Online Buying Facility- Buying a online term plan is the most convenient way of purchasing insurance. All you’re required to do is, visit the website of the insurance company, enter your basic details and go with the other formalities to buy. Alternatively, you can also buy through insurance brokers like policybazaar.com. Online buying of insurance also comes with additional benefits. 
  • Future Planning-Becoming financially wise means how you plan your finances, keeping the most important life goals in mind. By consider adding a 5 year life term insurance policy to your financial portfolio, you can take a step ahead towards this goal.

Who Can Buy a 5-Year Term Insurance Plan?

  • This plan is best suited for single-income families, where the insured is the sole breadwinner.
  • Senior citizens not older than 65 years of age can opt for this policy. 
  • Best suitable for individuals who work in life-threatening conditions and want to ensure the financial security of their loved ones.
  • People who have started their careers can also opt for a 5-year term insurance plan. 
Kal Kisi Ne Nahi Dekha Kal Kisi Ne Nahi Dekha

Factors to Consider Before Buying a 5 Year Term Life Insurance Plan

In order to ensure the right term life insurance plan, you should consider a few factors. Here you go:

  • Claim Settlement Ratio-This is an important factor to compare before buying a term insurance policy. The insurance company may be offering the term plan at an affordable price, but if its claim settlement ratio is not up-to-the mark, then it is not the right company for you. A claim settlement ratio above 90% is considered as a decent ratio in the market.
  • Claim Rejection Ratio-Also, you must check the claims rejection ratio of a company. This will tell you how many claims were declined by the insurer on various grounds. It will reflect if they are genuine or not.
  • Premium-Premium is one of the major factors to consider. Based on your coverage, the premium is decided. You must seek a plan that will offer you high coverage on a pocket-friendly premium. However, don’t blindly pick a policy with a lower premium. You should consider your needs first, then decide on the coverage and premium. 
  • Regular Pay out Option- This option will allow your family to receive the death benefit in the form of regular pay-outs on a monthly, quarterly, semi-annual, or annual basis. Many insurance providers offer this option with the plan.

Wrapping it Up

We can say that a 5 year term life insurance plan is best for short-term financial requirements. Almost all the insurance companies in India provide short-term plans like this. However, it is advisable to go for a long-term life insurance plan, so that you can reap the benefit of higher coverage. A term plan with a policy tenure of a minimum of 25-30 years can provide better coverage as compared to a 5 year term plan. Again, it is completely your call and you should decide based on your requirements only.

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