What is Term Insurance?
Term insurance is life insurance that pays out in case of the death of the insured person, during the term of the insurance policy. This type of insurance is cost-effective with highly affordable premiums. These premiums can be paid as Single Premium or Regular premiums, as per the policy you have selected.
In term insurance, a fixed premium has to be paid at regular intervals. In return, the insurance company provides a specific amount as insurance cover. This amount is paid to the family in case the person whose life is insured, passes away.
Reasons to Buy Term Insurance Online
Why do you need Term Insurance?
- Your family depends on you: The term insurance money can be used to meet your family’s monthly expenses and important goals like your child’s education.
- Your assets need protection: You may take loans for assets like a house or a car. However, if something happens to you, your loved ones might be burdened with loan repayments. In such a situation, the term insurance payout which your family will receive can be utilized in paying off outstanding loans.
- Lifestyle risks: Modern day lifestyle problems can lead to a host of ailments. Some term insurance plans don’t just protect your family after death but also during your lifetime by offering critical illness protection. This feature pays out on the diagnosis of certain critical ailments like cancer or heart attack.
Who should buy a Term Insurance Policy?
- Young parents#: Young parents enter a ‘high responsibility’ phase in their lives. They have to take care of children and each other. Mothers often take a break from work for periods ranging from a few months to several years. Sometimes this entails a complete change in role to that of a homemaker. This can result in the family being largely or wholly dependent on the earnings of the husband. There’s also the cost of raising a child - toys, books, schooling and yes the latest PlayStation - all of which go up with inflation.
Life insurance need: Very high, to finance household expenses and child rearing including those ever-rising school fees. Consider buying it immediately.
- Newly-married#: Typically, such couples only consider term insurance if one of them is a home-maker or has a part-time job. However, remember that even working families can have periods when one member is dependent on the other because of unemployment, sickness or childbirth. Such couples should consider getting term insurance, even if they do not see an immediate need for it.
Life insurance need: High. You should consider buying it immediately.
- Dual income families with no kids#: With double income and no dependents, sometimes you have more money than ways to spend it and insurance can seem unnecessary. However, if one member of the family brings home a much larger salary than the other or there are outstanding liabilities such as credit card bills, mortgages, and car loans, you should consider getting term insurance. Your spouse may not be able to pay these liabilities, in your absence.
Life insurance need: Moderate, if there is a substantial inequality of income and/or outstanding loans. Buy it in the next three months.
- Single persons with no dependents#: Do you need life insurance if you are single and have no dependents? The answer is no as of now. However, your situation might change as you grow older. You might marry and have children within a few years. In such a scenario, it is better to get your term insurance policy early because premiums are much lower at younger ages. Also, if you have dependents such as aged parents you should also consider buying life insurance to protect their lifestyle.
Life insurance need: None, but can arise with future family or dependent parents. You should consider buying it in the next one year.
- Senior citizens#: Retirement is a time of relative freedom and few family responsibilities. Retirees typically get pensions or live off their accumulated savings. Their children are usually grown up and financially independent. However, this may not always be the case. Your spouse may still be financially dependent on you. Your children may also need your support during periods of sickness or unemployment or even for major financial goals like home buying. You also might also be helping them meet EMIs on their mortgage. It is advisable to keep your cover intact unless you are absolutely certain your family will not depend on you in any way.
Life insurance need: Consider buying it unless you are absolutely certain that your family will not depend on you in any way.
- IT professionals: As an IT professional, you are surrounded by an environment of great opportunity and great risk. Your job may allow you to quickly move up the income ladder and travel the world for on-site assignments. However, the stress of living and working in a big city can also pose major risks to your health. You might also be in the initial stages of buying a home and have a loan outstanding on it. Will your family be able to pay the EMIs, in your absence? You can safeguard them from this problem and secure their financial future, by buying term insurance.
Life insurance need: Rising standard of living and lifestyle risks make life insurance a necessary purchase.
- SIP Investors/Mutual Fund Investors#: An SIP will build wealth for your future but you should also secure that future with a Term Insurance Plan (TIP). You should buy a Term Insurance Plan even before you start investing through a Systematic Investment Plan (SIP) if you have financial dependents. The size of the term insurance cover depends on many factors such as your annual income, your family’s monthly expenditure, their goals and your age, and others. Here are two simple ‘Rules of 10’ to consider. One, for every ₹100 of SIP, spend ₹10 on the TIP. Two, ensure that the life insurance cover you get from your TIP is about 10 times of your annual income.
Let’s look at a quick example. Say you have an annual income of ₹5 lakh and you do a monthly SIP of ₹5,000. According to the two Rules of 10, either your life insurance cover should be ₹50 lakh or your TIP should be ₹500 per month. Simple, isn’t it?
Life insurance need: Life Insurance cover will help protect the wealth-building process launched through SIPs.
Benefits of a Term Insurance Plan
- High Life Insurance Amount at affordable premiums: Term insurance plans provide high life insurance cover. The cover compensates for several years of lost earnings and hence can be extremely high compared to the annual premium. With Term Insurance plans, a large amount of Life Cover comes at a small premium.
- Cover Against Critical Illnesses^: Along with providing life cover, a new-age term plan like ICICI Pru iProtect Smart also provides protection against critical illnesses. For a small additional premium, Critical Illness Cover provides lump sum payments when a critical illness like a heart attack, cancer, kidney failure etc is first diagnosed.
- Support In Case Of Disability: In new-age Term plans such as ICICI Pru iProtect Smart, the insurance company pays your future premiums in case of total and permanent disability. As a result, your life insurance cover continues even if you are unable to pay premiums.
- Additional Security: To increase the security of your family, a Term Policy provides upto double pay-out (up to ₹2 crores) in case of an accidental death+. For example, if your Life Cover is ₹1 crore, a Term Insurance plan with Accident Cover pays ₹2 crores to your family in case of an accidental death+.
- Tax Benefits: Term Insurance plans offer tax benefits^^ on premiums paid up to ₹1.5 lakh under Section 80C. New-age Term plans with critical illness cover also offer additional tax benefits on premiums paid up to ₹25,000 under Section 80D. You also get tax benefits^^ under Section 10(10D) on the money that your family receives in case of an unfortunate event.
How to choose Best Term Insurance Plan?
While buying a Term Plan, we always have questions like which Term Plan is best and how to compare the best Term Insurance Plan. Here are some parameters which may help you choose the Best Term Plan for yourself:
- Claim Settlement Ratio: This ratio tells you how many claims for life insurance have been paid out as a proportion of claims made. The higher this ratio is, the better.
Fact: ICICI Pru Life has a claim settlement ratio~ of 97.88%
- Solvency Ratio: Solvency ratio tells you whether the insurer you choose will be financially capable of settling your claim if the need arises. IRDAI mandates that every life insurer should maintain a solvency ratio of at least 1.5.
Fact: ICICI Pru Life has a solvency ratio$ of 3.20
- Option to add Critical Illness Benefit: A critical illness like cancer or brain surgery can cost a lot of money and cripple the family’s finances. Critical illness protects your family from this risk. It pays out immediately on diagnosis and only medical documents confirming diagnosis are to be submitted.
Fact: Critical illness covers with term insurance plans are very popular. One in three of our customers also attach a critical illness cover to their term plan`.
- Additional Covers Available: If financial security of your family is your goal then you must make sure that you choose a term insurance plan with comprehensive cover and benefits.
Accidental Death Benefit: If you have opted for Accidental Death cover, your family will get upto double the pay out in case of death due to an accident, subject to maximum of ₹2 crore.
- Waiver of Premium: In case of permanent disability of the person covered by the policy, future premiums will not need to be paid.
Why choose ICICI Pru iProtect Smart?
- Fits in your tight budget: After paying your monthly rent, phone and light bills, a term insurance premium can be difficult. ICICI Pru iProtect Smart’s affordable premiums make sure it isn’t.
- Gives you longer cover: The best time to buy life insurance is now. Buying now will ensure that you get live cover at low premiums for the desired term. ICICI Pru iProtect Smart can cover you till the age of 85 and you also have option to get whole life cover till age 99.
- Option to cover 34 critical illnesses^: ICICI Pru iProtect Smart pays on the diagnosis of any one of 34 critical illnesses. No hospital bills are required.
- Option of lump sum or income: ICICI Pru iProtect Smart allows your family to get their life insurance payout as a lump sum, income or a combination of both. A lump sum payment is a single payment made to the nominee on the death of the insured person. An income payment is a series of annual or monthly payments, made to the nominee on the insured person’s death. The latter option can save your family from the hassle of managing and investing a large sum of money.
- Helps you fight terminal illness: ICICI Pru iProtect Smart pays out your insurance cover even before death, if you are affected by a terminal illness. This includes AIDS.
- Option to add personal accident cover, now or later: Personal accident cover pays a higher amount in case of death due to an accident. You can add this feature while buying the policy or at a later stage.
- Creditor Protection: You can buy the insurance policy under the Married Woman’s Property Act++. This protects the money paid under the policy from seizure by creditors such as banks. It thus provides an additional layer of protection to your family.
Why Choose ICICI Pru Life?
The Best Term Insurance Provider 2017-18
For our term product iProtect Smart, we have been recognized and awarded the Best Term Insurance Provider of the Year by Money Today Financial Awards 2017-18.
We were rated No. 1 in Customer Loyalty in FY 2016–17 by Kantar IMRB1.
Our claim settlement ratio~ as per IRDAI Annual Report for FY 2017–18 is 97.88%.
We are one of India's Top 50 most valuable brands, 4 years in a row by Millward Brown BrandZ2.
** The premium rate is for life option, regular pay and Income Payout option of ICICI Pru iProtect Smart for 25 year healthy male for policy term of 15 years and inclusive of tax. Yearly premium will be ₹5,444. You can choose to purchase other variants of the product as per your needs. For more details, please refer the product brochure.
*The premium rate mentioned is for your current age, term selected and the sum assured chosen and are inclusive of Tax.
~Claim statistics are for Financial Year 2017-18 and is computed basis individual claims settled over total individual claims for the financial year. For details, refer to Public Disclosures in our Website.
^The critical illness benefit is an accelerated benefit and the death benefit will be reduced by the critical illness cover paid to the policyholder. The future premiums payable for the residual CI Benefit will reduce proportionately. In case the CI Benefit equal to the Death Benefit, the policy will terminate on payment of the CI Benefit. Only doctor’s certificate confirming diagnosis needs to be submitted. On payment of Angioplasty, if the CI Benefit is more than ₹5,00,000 the policy will continue for other CIs with CI Benefit reduced by Angioplasty payout. To know more about the illnesses covered, please refer to the Sales brochure. Available under Life and Health and All in One options. Critical Illness benefit is available till age of 75.
+Accidental Death benefit is up to ₹2 Crores. Accidental Death Benefit is optional and available in Life Plus and All in One options. Accidental Death Benefit cover is available upto age 80.
++Nothing herein contained shall operate to destroy or impede the right of any creditor to be paid out of the proceeds of any policy of assurance, which may have been effected with intent to defraud creditors. Unless taken otherwise with the intent to defraud creditors. In case of any third party claim in the Courts of India with regards the insurance proceeds, the amount shall be subject to the judiciary directions. Please seek professional legal advice for the applicability of this provision.
^^Tax benefit of ₹54,600 (₹46,800 u/s 80C & ₹7,800 u/s 80D) is calculated at highest tax slab rate of 31.2% (including Cess excluding surcharge) on life insurance premium u/s 80C of ₹1,50,000 and health premium u/s 80D of ₹25,000. Tax benefits under the policy are subject to conditions under Section 80C, 80D, 10(10D) and other provisions of the Income Tax Act, 1961. Goods and Services Tax and Cesses, if any, will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on above.
`Based on number of policies sold online between January 2016 - February 2017.
$As per IRDA Annual Report 2016-17.
1 Source: http://www.business-standard.com/article/specials
ICICI Pru iProtect Smart UIN 105N151V04.