Term insurance is one of the most effective ways to secure financial protection for your loved ones. With evolving financial needs and advancements in the insurance sector, modern term insurance policies offer various features beyond just life coverage. Choosing the right policy requires understanding the essential features that provide comprehensive benefits. New-age term insurance policies not only provide financial security but also act as saving plans for long-term financial stability.
This guide explores the must-have features to consider when selecting a term insurance policy.
Why term insurance is essential?
Term insurance ensures financial security by offering a lump sum payout to the nominee in case of the policyholder’s untimely demise. It helps in covering daily expenses, loan repayments, and future financial needs. Compared to other life insurance plans, term insurance is more affordable and offers higher coverage. With additional features and riders, new-age policies provide enhanced protection tailored to individual financial goals.
Must-have features in a new age term insurance policy
To make the most of your term insurance, look for these key features when purchasing a policy:
1. Adequate sum assured
- The sum assured should be at least 10-15 times the policyholder’s annual income.
- A higher coverage amount ensures financial stability for dependents.
- Consider inflation and future financial obligations while deciding the coverage amount.
2. Flexible payout options
- Insurers now offer multiple payout options, including lump sum, monthly income, or a combination of both.
- Monthly income payout ensures financial stability for dependents, especially in the absence of a regular income.
- Some plans allow beneficiaries to customise the payout structure based on their needs.
3. Critical illness rider
- A critical illness rider provides financial support in case of serious health conditions like cancer, heart attack, or kidney failure.
- The rider ensures a lump sum payout upon diagnosis, helping in covering medical expenses.
- It acts as an additional safety net without affecting the base sum assured of the policy.
4. Accidental death and disability rider
- This feature enhances the sum assured if the policyholder passes away due to an accident.
- It provides financial aid in case of permanent disability, ensuring continued income support.
- Many insurers offer this rider at a minimal additional cost.
5. Waiver of premium benefit
- If the policyholder is diagnosed with a critical illness or faces total disability, the insurer waives off future premiums.
- The policy remains active without additional financial burden on the insured.
- This feature ensures uninterrupted coverage even in challenging circumstances.
6. Increasing cover option
- Some term insurance plans offer an increasing sum assured over time to combat inflation.
- This feature is ideal for those planning long-term financial security for their families.
- The coverage amount increases annually by a fixed percentage without a significant rise in premiums.
7. Return of premium option
- Unlike traditional term plans, some policies offer a return of premium feature.
- If the policyholder survives the term, all premiums paid are refunded.
- This feature acts as a saving plan while ensuring life coverage throughout the policy term.
8. Long policy tenure and whole life coverage
- Choosing a longer policy tenure ensures financial protection during the policyholder’s working years.
- Some insurers offer whole life coverage up to 99 years, providing lifelong security.
- Ideal for individuals looking to provide financial stability to their families even in later years.
9. Tax benefits
- Premiums paid towards term insurance qualify for tax deductions under Section 80C of the Income Tax Act.
- Additional tax benefits are available under Section 80D for critical illness riders.
- The death benefit received by the nominee is tax-free under Section 10(10D).
10. Easy claim settlement process
- A high claim settlement ratio indicates a reliable insurer.
- The claim process should be simple and hassle-free to ensure quick financial aid for dependents.
- Insurers with digital claim processing provide faster settlements without unnecessary paperwork.
How to choose the right term insurance policy?
When selecting a term insurance policy, consider these key factors:
- Assess financial needs – Choose a policy that aligns with your current financial responsibilities and future goals.
- Compare multiple plans – Research different insurers, their coverage options, and premium rates.
- Check policy exclusions – Read the policy document carefully to understand what is covered and excluded.
- Consider additional riders – Select riders based on your specific needs for enhanced coverage.
- Ensure affordability – Choose a policy that provides adequate coverage without straining your finances.
Conclusion
New-age term insurance policies offer extensive features that go beyond basic life cover. From flexible payouts and riders to saving plans and increasing cover options, these policies provide comprehensive financial security. Choosing the right term insurance plan with essential features ensures long-term stability for your loved ones. By carefully assessing coverage options and benefits, you can select a policy that offers the best protection while aligning with your financial goals.
