Will 7 zeroes suffice? Exploring the 1 crore term insurance plan
Romesh (32) is the sole earning member of his family that includes his spouse, parents and his two children. Although he earns sufficiently well each month, his expenses have been increasing year-after-year. While his elderly parents require routine medical care and emergency support, the needs of his growing children are increasing too. Although they currently have a comfortable lifestyle, Romesh is worried about his family’s future. What if something was to happen to him or if he lost his job in the new few years?
To avoid this fear and stress of what-if scenarios, insurance companies offer beneficial plans with financial security in-built into it. In Romesh’s case, as he is the sole earning member, a term insurance policy is a must. But would a life insurance cover of Rs 40 lakh or Rs 50 lakh suffice? Maybe not! However, Rs 1 crore term plan would ensure adequate financial support for the family. Let us explore all about 1 crore term insurance plans, who should buy it, why and how.
What is a term insurance?
Term insurance is solely a death benefit plan, where the policyholder’s family receives the sum insured and other benefits mentioned in the policy upon the policyholder’s death. Term plans are not savings plans and do not provide any benefit to the policyholder if they survive the term of the policy. In that context, they are pure risk covers and do not have any endowment or money-back benefits. Term plans, typically, offer a much larger sum assured as it is designed to provide financial support to the policyholder’s family only in the event of the death of the policyholder.
Key features of Rs 1 crore term insurance plans
By now we know that a term plan is purely a death benefit plan for the nominees of the policyholder; there is savings or investment component to it. That is one of the reasons term insurance plans are offered at low premiums compared to other types of insurance plans. Rs 1 crore term plans, too, can be bought at cost-effective premium. E.g. a number of leading insurers provide Rs 1 crore term plans for as little as Rs 15 or Rs 20 per day, which is affordable to many.
Many insurance companies offer Rs 1 crore term insurance plans at a fixed premium. What does ‘fixed premium’ mean? It means whether the term of the policy is 20 years or 30 years, the insurance company will not modify or increase the premium amount. It will remain constant and fixed through the term of the policy.
Caters to a wider group
As the premium for term insurance is lesser compared to other kinds of insurance plans, it is more accessible to a wider group of customers. Experts recommend individuals in the age group of 25 years to 40 years to buy a Rs 1 crore term insurance plan. It is a good way for sole earners in families to secure their family’s future financially.
Options to enhance sum insured
Many term insurance providers make it easy for policyholders to enhance the sum insured as they grow older and as their income growth increases their capacity to pay higher premiums. Thus, policyholders can make changes to their life insurance policy depending on their family’s lifestyle needs.
Options of add-ons and riders
Many insurance companies offer add-ons and riders on Rs 1 crore term insurance plans. This helps policyholders enjoy more benefits such as critical illness cover, for which insurers usually pay out a lump sum upon the diagnosis of the critical illness. This makes the financial burden on the family much lesser in the midst of trying circumstances.
Buying Rs 1 crore term insurance – factors to consider
For most customers, the cost of insurance or premium payable is one of the main deciding factors when buying an insurance policy. Buying a Rs 1 crore term insurance plan based on the premium cost is easy with the help of online aggregators and premium calculators. However, term policy is a long term commitment and you must be able to pay such premiums over the long term.
Claims settlement ratio
Claims settlement ratio (CSR) is the ratio of claims settled to the number of claims made to an insurance company during a particular year. CSR is a key factor in choosing a plan and an insurance service provider. Every insurance company declares its CSR at the end of the year. The IRDAI, too, shares the CSR of different insurance companies in its reports. You can also access the data on insurer-wise CSR on the IRDAI website.
So, how and why should CSR influence one’s buying decision? It shows the reliability of the insurance company, the history and brings a certain sense of surety and confidence to the customer. An insurance company with a low CSR is best avoided.
Our insurance and financial needs keep changing; hence it would be beneficial to buy term insurance plans that offer the flexibility and options of additional benefits such as riders and add-ons. For example, some term insurance plans also offer premium back features if the policyholder survives the term of the policy. These policies entail higher premiums.
Rs 1 crore term insurance plans available in the insurance market
ICICI Prudential iCare II Term Insurance Plan
- Premium payment options: regular pay, one pay
- Policy term: 5 years to 67 years
- Minimum annual premium: Rs 2,400
- Age bracket: 18 years to 65 years
PNB Metlife Mera Jeevan Suraksha Plan
- Age bracket: 18 years to 65 years
- Maximum age at maturity: 28 years to 80 years
- Offers return of premium options to policyholder
- Offers special rates for women
- Options of death benefit: lump sum, both life partners covered, regular pay-out
Bajaj Allianz iSecure Term Insurance Plan
- Rewards for maintaining a healthy lifestyle
- Term policy 10 years to 30 years
- Entry age bracket: 18 years to 60 years
- Maximum age at maturity: 70 years
Have you made a decision to explore Rs 1 crore term insurance? Well done. Having term insurance of Rs 1 crore or more can ensure sufficient financial security to your family members long after you’re not around.
FAQs: 1 Crore Term Insurance
What are the benefits of term insurance plan?
There are many benefits of term insurance. Term plans offer competitive pricing. For starters, the premium remains constant, unlike in other policies such as health insurance, where it may change with time and age. Term insurance is also one of the more affordable types of life insurance.
Term life insurance provides flexibility. They can be discontinued at any time. If the policyholder stops paying premium, the policy gets terminated. Many term insurance policies provide facilities to renew and convert. Renewability allows the policyholder to continue the policy once it reaches its maturity period, while convertibility allows the policyholder to convert the term insurance policy to another type.
They provide financial security for dependents. Term insurance is truly designed as a tool for the financial security of the policyholder’s dependents. It provides peace of mind to the policyholder and to the family members.
Which are the best companies for term insurance?
Many insurance companies in India offer term plans without medical tests. Some of the insurance companies to consider are: ICICI Prudential, PNB MetLife, HDFC Life and Future Generali, among others.