Written by
Updated :
Reviewed by
On this Page
Your family is the life’s most precious possession. You want to provide for the well-being of your family members in all phases of life. To ensure they can live without financial hurdles in your absence, it is crucial to make them prepared by buying one of the best term plans in India.
Popular term plans in India act as a financial cushion to support your family in the event of your unfortunate demise. While selecting the best term plan, therefore, it is crucial to analyze your specific needs and various other important factors.
How to Choose the Right Term Plan Basis Your Life Stage?
At different stages of life, your financial requirements may vary. For instance, if you are a young, unmarried individual, your financial responsibilities will differ from that of a married one having kids and senior parents.
Throughout various life stages, you need the best term plan that works as a financial support system to help your family maintain their lifestyle.
Traditionally, term plans in India are pure life insurance products without any survival benefits. However, various new-age term plans come with several payout options and survival benefits that you can choose based on your current life stage.
1. If You Are Young and Unmarried
If you are in your 20s and the sole breadwinner in the family, you need a term plan that protects the financial needs of your parents, who may be nearing retirement. Alongside, it should cover the life goals of your siblings, if any. In such a scenario, you must buy the best term plan with a lumpsum payout option.
Max Life Online Term Plan Plus (UIN: 104N092V04; A Non-Linked Non-Participating Individual Pure Risk Premium Life Insurance Plan) is a go-to option for you to secure your family’s future financially. Being one of the most popular term plans in India, it covers the risks of death, disease, and disability and is available at an affordable premium. You can get an estimate of the premium for this term plan using our online premium calculator.
2. If You Are Married but Has No Child
After getting married, you step into a new phase of life. To build a life together with your spouse, you might have also borrowed loans, like a personal or home loan. In case of your unfortunate demise, these financial liabilities may fall upon your spouse.
You can plan for her well-being in your absence by buying the best term plan. The most suitable term plans in India for such a scenario would be the ones that provides a fixed amount to your spouse along with monthly income. You can also choose a term plan that provides basic life cover and increasing monthly income, thus allowing your loved members to avail of the plan’s financial benefits without worrying about inflation.
3.If You are Married and Have Young Children
When you have kids, their dreams become yours. You do everything possible to help them achieve their full potential. Whether it is about the expenses of their higher education, lifestyle needs or marriages, your term plan should cover them all. Therefore, select one of the best term plans in India with an adequate sum assured to cater to all these expenses. Ideally, the term plan coverage must be at least 15 to 20 times your current annual income.
3.If You are Married and Have Young Children
When you have kids, their dreams become yours. You do everything possible to help them achieve their full potential. Whether it is about the expenses of their higher education, lifestyle needs or marriages, your term plan should cover them all. Therefore, select one of the best term plans in India with an adequate sum assured to cater to all these expenses. Ideally, the term plan coverage must be at least 15 to 20 times your current annual income.
Hence, if your total income is Rs. 10 Lakh a year, you may choose a term plan that offers a sum assured of up to Rs 2 crores. It will help your spouse and kids fulfill their long-term goals. In addition, you can select a monthly income payout option under the term plan to provide for your family’s day-to-day expenses.
4. If You are Nearing Retirement
While you continue to work in your life, you plan to save enough funds to support your retirement years. You want to live the golden years of life without financial worries.
In such a scenario, buying the basic term plan will not help as it does not offer any maturity benefit. A better choice of a term plan would be the one with the return of premium option.
For example, Max Life Smart Term Plan (UIN: 104N113V02; A Non Linked Non Participating Individual Pure Risk Premium Life Insurance Plan) is one such option out of many term plans in India. This term plan not only offers life cover but also provides an option of return of premiums after the policy period. You can also consider it as the best term plan with survival benefits.
5. If You Get Diagnosed with a Critical Illness (at any life stage)
Irrespective of the life stage, the occurrence of a critical illness can drain all your savings to get the necessary treatment. It will also cause a financial burden to your family while they take care of your well-being.
One way to prevent this is to opt for a critical illness rider while buying the best term plan for your family. The critical illness rider under the term plan provides an amount (Critical Illness Sum Assured) in case you are diagnosed with a life-threatening health condition within the policy period. With a significant amount in hand, you can opt for the best possible treatment without compromising your savings.
Also Read: Difference between Health Insurance, Critical Illness & Cancer Insurance
What Should You Consider While Buying a Term Plan?
The term plan you choose for your family must align with needs and financial requirements of you and your loved ones. You can easily find several term plans in India, each of which has unique features. To make a well-informed decision of buying the best term plan, here is what you should do:
3.If You are Married and Have Young Children
The term plan you choose for your family must align with needs and financial requirements of you and your loved ones. You can easily find several term plans in India, each of which has unique features. To make a well-informed decision of buying the best term plan, here is what you should do:
1. Analyze Your Family’s Specific Needs
First and foremost, your term plan purchase decision must be need-based and not peer-based. The term plan that your friend or a colleague has bought may not fit well into your financial situation. Therefore, do a self-analysis of your needs before you proceed to compare between the best term plans in India.
The life cover you choose under a term plan must be based on the number of dependents and their goals.
2. Consider Your Existing Financial Liabilities
The choice of the best term plan for your family also depends upon its ability to cover all existing and future liabilities. The amount your family will receive under the term plan must be large enough to maintain their current lifestyle and future financial needs, if something happens to you.
In your absence, the burden of any existing liabilities such as loans, will most likely to fall upon your family. Therefore, it is crucial to consider the amount payable for outstanding loans while deciding the life cover under a term plan.
3. Research About Various Term Plans Online
All major life insurance companies offer term plans in India. But these term plans are available at different rates of premium payable and offer a variety of plan features. Besides availability, therefore, you must know about the different features, benefits and the factors affecting the premium rates of various term plans in India.
As a term plan buyer, you can access a wealth of valuable information in the form of articles and case studies about various term plans in India online. Dig deeper to understand how to buy the best term plan to make an informed decision. The more you know about term plans, the easier it will be for you to select and buy the one that suits your requirements.
4. Determine the Policy Tenure
The tenure of a term plan is the period for which your life is covered. It is usually also the period for which you agree to pay the premium unless you have opted for a shorter premium payment period deliberately. Most of the best term plans in India allow you to choose a policy tenure based on your current age.
Not only this, available term plans in India offer a high cover at a low premium if you buy one at an early age. Alongside, the premium of a term plan remains the same during the entire policy period. It means that by buying the best term plan at a young age, you can save a substantial amount while building the financial safety net for your family.
5. Select the Right Insurer
With many insurance companies offering different term plans in India, it is crucial to choose a reliable insurance partner.When deciding to buy the best term plan, also perform some basic checks on the insurer based on:
- Claim Settlement Ratio (CSR) – This ratio signifies the number of claims settled by an insurance company. Therefore, buy a term plan from an insurer with high CSR.
5. Select the Right Insurer
With many insurance companies offering different term plans in India, it is crucial to choose a reliable insurance partner.When deciding to buy the best term plan, also perform some basic checks on the insurer based on:
- Claim Settlement Ratio (CSR) – This ratio signifies the number of claims settled by an insurance company. Therefore, buy a term plan from an insurer with high CSR.
- Solvency Ratio – It is the size of an insurance company’s capital to all the risks it has taken. Every insurer has to determine the solvency ratio as per IRDA regulations, which determines its financial health.
- Persistency Ratio: It defines the percentage of the number of active policyholders paying the premium to the net policyholders. A high persistency ratio implies higher level of satisfaction amongst the customers.
Also Read: Why should you consider Claims Settlement Ratio
Start looking for the best term plan based on your current life stage and secure your family's financial future right away!
Term Plan Options with Max Life Insurance
Max Life Online Term Plan Plus (UIN: 104N092V04) (A Non Linked Non Participating Individual Pure Risk Premium Life Insurance Plan)
Max Life Smart Term Plan (UIN: 104N113V02) (A Non Linked Non Participating Individual Pure Risk Premium Life Insurance Plan)
Sources:
[1] http://www.policyholder.gov.in/What_Life_Insurance_to_Buy.aspx
[2] http://www.policyholder.gov.in/General_Advice_for_Life_Insurance.aspx
ARN:- July/Bg/27B