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“Protect your family – Get Term Insurance”

By
Term-insurance, Mr. Satyan Jambunathan

Insurance industry offers you vast range of products. It is diffcult task to choose the right product according our need. However, it has been seen that very few people in India are aware about the peculiarities of the product they are buying.  Mr. Satyan Jambunathan explains about the Term Insurance and its need in the present times:-

What is term insurance?
It is one of the simplest forms of life insurance, where an individual pays a fixed amount of premium and in case of death of the life assured, the family receives a lump sum payment from the life insurer.

Why term insurance?
It ensures that the family is not left financially vulnerable in case something happens to the earning member. Liabilities can be covered and future income can be protected through term insurance. Moreover term plans these days offer benefits for health (critical illness and disability) as well as accidental death.

What are the benefits of buying protection?
Lifestyles of Indians are changing, leading to lifestyle related ailments. A family’s fortune can be wiped away in case the breadwinner is diagnosed with a critical illness. Having a plan that provides financial protection against critical illness enables the family to continue with their regular life without an additional financial burden as these days there are plans which pay the lumpsum benefit upon diagnosis of the illness.

Term plans are more affordable now than they were 15 years ago. The rates of protection plans have dropped by almost 50%. Moreover, these plans are now comprehensive i.e. covering accidental death, critical illness and terminal illness, along with providing a life cover.

These days, life insurers offer nominees the option of receiving the claim amount as a regular income, to enable families better manage their finances.

What is the ideal cover?
This depends on the income, expenses and liabilities of an individual. Consider a 30 year old married male, with a child, who has a monthly income of Rs.25,000/- and an outstanding home loan of Rs.10,00,000/-. If something were to happen to him, the family needs to pay off the loan and continue with their lives as well. The ideal cover for this individual, to enable the family pay off the loan as well as sustain, would be calculated as: Rs.25,000 x 12 months x 28 years + Rs. 10,00,000 = Rs.94,00,000/. He should continue with this cover till his retirement.

What are the points to be considered before buying term insurance?
Buy early
: The cost of buying insurance increases with age. The earlier one buys, the lesser one pays. Therefore start as early as possible and continue till retirement. Claims settlement ratio: Ensure that the life insurer has a consistently high claim settlement ratio and a reputation for hassle-free claim settlement.

Nomination: Ensure you have a nominee for the policy, who will be the beneficiary of the policy proceeds.

Truthful Disclosure: Disclose all information about yourself, especially medical information, truthfully. This will facilitate a smooth claim settlement.

Medical tests: A medical condition if revealed, may lead to a higher premium. Don’t change your mind. This just means that you need financial security even more, to ensure your health problems do not impact your family’s finances.

Mr. Satyan Jambunathan
Chief Actuary, ICICI
Prudential Life Insurance Company

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