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Term Insurance – A must in your kitty!

Published On 19 Apr 2011 By . Under: Term Insurance. Tags:   
Heard of a term life insurance policy? Not yet? Your agent never stressed on it, or even talked about a term insurance policy? Well, this is the situation most of us face. Due to the low margins term insurance policies carry, agents hardly try selling it. But a term insurance is a must in your kitty as it offers high insurance value at very low cost.

Lets illustrate with an example:

What is a term life insurance policy?

 Term Life Insurance Importance
Say you want to get insured for a sum of Rs 20 Lakhs for 25 years. If you opt for a money back plan, it would cost you a whopping Rs 67000 per annum, while a term insurance policy would cost u only Rs 5722 per annum. Now thats some difference. So whats the flip side?? The flip side of a term insurance policy is that if u happen to survive the insured period (in this case 25 yrs), u dont get back the money you invested. That means, in case of above example an amount of (5722*25) = 1,43,000 goes down the drain.

Read about money back policy.


So why buy term life insurance?

Despite this minor (yes its minor indeed) drawback, a term life insurance is mandatory. Your life insurance coverage should be such that it can take care of your dependents in case something happens to you. When you calculate the life insurance cover you need also factor in major expenses such as your son’s/daughter’s marriage etc.

Want to know how much insurance cover you need? Click here.

As a thumb rule, your life insurance cover should be atleast 6 times your annual salary. Say you earns 5 lakhs a year. In this case you would need a cover of Rs 30,000. If you opt for traditional insurance plans, the premium would be very high. If you take lesser cover, you risk the future of your family and dependents. Hence in this case, term life insurance policy comes to your rescue as it provides a high cover at low costs.



How to find Best Term Life Insurance?

While deciding term life insurance that suits you best, compare the various plans in market, the features they offer and the features you need and then zero in on the policy that suits you best. Some of the points to keep in mind while deciding best term insurance are:

  • Learn about the various features policies offer.
  • Decide upon which features you want.
  • Compare various policies which offer these facilities.
  • Find out about various other factors like effectiveness of customer care, easy of filing claim, claim settlement ratio, etc.
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