December 2019 annual report from insurance regulatory development authority of india (irdai) reveals a meager life insurance penetration of 2.74% in india.
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Indians are underinsured due to limited awareness of the benefits of life insurance policies and how such plans work. But if the support of your loved ones depends on your income, you must safeguard their financial security in your absence. and term life insurance is one of the best instruments so that your family never lacks financial resources.
so you need to understand what term insurance is and how it works.
what is term insurance?
term insurance is a pure protection life insurance policy. provides coverage for a defined period in exchange for a specified premium amount.
In the event of an unfortunate event during this time period, the insurer provides a guaranteed payment #. compensates your nominee for the loss of their income.
Affordability is a characteristic feature of temporary plans. These plans do not include any investment component. the entire premium covers mortality risk. therefore, term insurance provides substantial coverage at affordable rates. Thus, regardless of your budget, term insurance can cover the economic needs of your dependents in the event of an eventuality.
what is a term life insurance policy?
Your policy is the contract between you and the insurance provider that you agree to pay the required premium, and benefits are provided by the insurer in the event of a valid life claim from your beneficiary.
what is the term of the policy?
The term of the policy is the duration of your life coverage. if an adverse event occurs within this period, your insurer pays the policy benefit to its representative. You can choose your term plan policy tenure based on your insurance needs.
How does a term life insurance policy work?
1. the deal
A life insurance policy, including a term life insurance plan, is a legal agreement between you and the insurance company. you, the person paying for the coverage, are the policy holder. you can buy coverage for yourself or another family member. the person whose life is insured is the insured life.
You, the person paying for the coverage, are the policyholder. you can buy coverage for yourself or another family member. the person whose life is insured is the insured life.
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As the owner, you must pay the insurer a pre-established premium. In addition, the insurer pays a fixed death benefit to your nominee if a contingency occurs while the policy is in force.
2. filling in the proposal form
You must disclose the following information on the term plan application form:
- medical history
- current health conditions
- lifestyle habits
- annual income
- nature of your profession
- older age
- unhealthy habits like smoking
- Risk-prone hobbies like skydiving
- dangerous professions
- chronic health problems
- Decide on your life coverage: Your coverage must be sufficient to cover current living expenses and the future needs of your dependents. children’s college fees, marriage, spouses’ aging needs, and outstanding obligations are some of the factors to consider.
- choose the term of your policy: calculate the duration during which your loved ones will need financial support. it may be the time left until your children complete college or your retirement.
- choose a premium payment method: term plan insurance allows a single payment of the full premium. or you can choose regular payments during the policy period or for a limited period of time.
- select payment option: with a one-time payment, after paying outstanding debts, your family can invest the rest. the returns can fund your living costs. however, if your family lacks financial literacy, you can opt for a combination of a lump sum and a staggered payment. ensures that your loved ones never run out of funds.
- note the riders1: you can increase your basic coverage with riders1 for a negligible premium increase. Such add-ons provide additional payments that cover contingencies, such as accidental deaths.
- tata aia maha raksha supreme (uin: 110n102v03)
- inbuilt perk accelerated pay perk that provides 50% health base coverage in case of terminal illness.
- option to increase coverage with changing insurance needs, without new medical underwriting.
- tata aia sampoorna raksha (uin: 110n129v05)
- financial protection of your family with premium payment term flexible
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- return of premium at maturity to celebrate policyholder survival after period of the policy.
- payment options to suit your family’s needs: single payment or monthly income.
- tata aia iraksha trop (uin: 110n106v02)
- addresses consumer concerns about not getting any return on their spending on plans term when to survive after the term of the policy.
- At maturity, this plan returns the premiums you paid.
- special premium rates for women and people with healthy lifestyles
- riders1 at additional nominal prices
Useful features of all of the above protection plans include:
Protecting your loved ones from the demands provides unmatched peace of mind. You can use a term life insurance plan to ensure your family’s financial well-being. But to make the best use of this financial product, you need clarity on how forward plans work. you can then compare various schemes and understand the different conditions and exclusions. then you can select the one that offers the maximum benefits with the lowest premiums.
Based on that data, the insurer assesses the likelihood of your family filing a life claim. Factors that can raise the premium amount include:
3. assessing your needs
4. reviewing the premium quote
Based on your data, the insurer provides a premium quote. then when you make the policy payment, you get coverage.
5. covering greater insurance needs
increasing term plans improve your coverage at defined intervals, exceeding inflation. Some term plans also allow you to add to your life coverage at milestones in your life when your obligations increase.
6. assign a candidate
You must name the person who will receive the monetary benefits of your term plan. must be an immediate family member caring for your dependents.
what happens in maturity?
Traditional term plans do not offer maturity benefits. But some progressive term plans, known as return-of-premium term plans (trop2), now return the premium paid if the policyholder outlives the policy tenure.
Single premium and limited payment plans refund a portion of your investment if you withdraw your policy before the termination date.
tata aia term insurance plan
Tata Aia Life Insurance’s hallmark is its Claims Settlement Ratio (CSR), reported as 99.06%3 for FY 2019-20. this csr ensures timely claim settlements in your family’s hours of need.
tata aia offers the following term plans in its protection plan segment: