What are the benefits of buying Term Plan?
This is the most economical way of financial safeguarding your family in case any unprecedented event takes place. It can be utilized to pay mortgages and debts in future if financial downfall creates havoc in the financial stability of the family. You can avail tax exemptions on the premium paid for Term Plan under Section 80C and if you choose Critical Illness Benefit, the premiums paid for the same are exempted under Section 80D.
What are the different types of Term Plans?
- Pure Term Plan which only provides lump sum payment of Sum Assured in the event of death.
- Term Plan with Return of Premium, where on maturity total amount of premiums paid by the insured is returned along with keeping cover in the agreed duration. Term Plan with Accidental Rider where in additional amount is paid besides the standard sum insured due to the accidental death of the insured.
- Term Plan – Lump Sum plus Fixed Monthly Payouts where in along with lump sum payout of complete sum assured at the time of death, fixed monthly payout is given to the nominee for fixed duration like 10 years or 15 years so that family continue to get assured monthly income to take care of their day to day expenses
- Term Plan – Lump Sum plus Increasing Monthly Payouts. This plan make sure that the monthly payouts to the nominee keeps pace with increasing cost of living due to inflation, hence the monthly payouts keep increasing at the pre determined rate like 10% year on year.
How much cover should I buy?
However there is no strict mathematical formula to calculate cover as it varies from person to perso based on his liabilities, responsibilities, number of dependants and life style but Basic rule is that your cover should be enough payouts of all loans and 10 years of your family current expenses. For example, if your family is dependent on you for 25000 per month and you have home loan of 30 lacs, you should take cover of 30 lacs (loan) + 25000*12*10=30 lacs. Hence, buy a term plan of 60 lacs which will cover your loans and expenses of the family.
What is the right time to buy Term Plan?
Right Now. The earlier you begin, the cheaper it costs but there is nothing called wrong time to safeguard your loved ones. Should I buy the cheapest term plan available? What is Claim Settlement ratio? The ultimate success of Term Plan is easy claim settlement. Which means Claim Settlement Ratio (ratio of claims paid to number of claims that came) and period required to settle the claims should be more important criteria than saving few hundred on premium.
Should I buy the cheapest term plan available? What is Claim Settlement ratio?
The ultimate success of Term Plan is easy claim settlement. Which means Claim Settlement Ratio (ratio of claims paid to number of claims that came) and period required to settle the claims should be more important criteria than saving few hundred on premium.