You may have tried to purchase a term plan in many situations. However, the availability of so many options might have made it difficult for you to choose the right one. You would have put it off to purchase it later when you can compare and review the different features.
But remember that mishaps can happen quickly. It is better to be proactive than ignorant. It will be much easier to select a term plan if you are clear about what you need.
We will be discussing some of the most important features to look at when buying a term policy. Comparing online term plans from four insurance companies will help you better understand your needs. Let’s compare iLife Secure of Aviva, Online Term Options III of Max Life and Reliance Life Online Term.
A term plan of Rs. 30 is required for a non-smoker aged 30. 1 crore. Around 30 years old is the peak age when you are able to fulfill your responsibilities. Some of these you can carry forward as time goes on. You can fulfill most of the responsibilities until you turn 55 years old. A 30-year-old should have 25 years of coverage.
Maximum age of entry
This may seem like an insignificant point to compare for young people. However, it is crucial for those who haven’t bought any life insurance policies until they are 40-60. The premium amount will be affected by your age. You can purchase i-Life until the age of 50, Max Life till 60, Reliance Life’s Online Term plan is available till 55, and Bharti AXA the plan from 45 to 65.
Maturity Age
Look for the plan with the highest maturity age to ensure you’re covered until your full potential age. Reliance Life, Online Term Option III and Bharti AXA have a maturity age of 75 years. If the insured passes away within the maturity period, the nominee can receive the amount insured. Deaths that occur after the term’s expiration are not covered.
Premium payment
Online term plans are known for being more affordable, but there may be a difference in rates due the applicant’s medical condition. Aviva charges a premium for a non-smoker aged 30 with no evidence of any health conditions or critical diseases in their family history. Online Term Option III costs Rs. 12,977 per year. 14,717 annually. The Reliance Life’s online term can be accessed at Rs. 15,162 annually. To get eProtect Of Bharti AXA premium of Rs. 15,281 must be paid each year.
You can choose whether you want to pay the premium half-yearly, or every year for Aviva’s iLife Secure. Premium must be paid annually for the other three plans.
Policy term
Term plans can be purchased for terms ranging from 10-30 years. However, each company has its own feature-structure. The premiums for Online Term Plans and eProtect would be higher. These plans also offer a longer coverage period if you look at the policy term. Although you may be tempted to purchase Aviva’s iLife Secure, if you prefer a longer coverage period or a higher maturity age, then you should consider purchasing one of the other policies with a lower premium.
Death benefit
Term plans are also known as pure vanilla plans. Each company pays the sum insured upon the death of the policyholder. However, there are differences in how each company pays out the death benefit. i-Life Secure pays a lump amount of 10% of the death benefit. The rest is paid by 6% at the end each year for a period of 15 years. Online Term Option III gives the selected sum insured as benefit, and the nominee receives the remainder of the sum insured at the end each month for a period of 10 years. Reliance term plans and Bharti-AXA offer a lump sum benefit.
The second plan is best if you feel it is more convenient to receive instalments monthly. If you have an alternative source of income and your family has large amounts to cover larger liabilities each year, receiving an annual instalment is a good option.
No Cost Look Period
The grace period for all four policies is the same, i.e. 30 days. However, there is a different free look period. The free look period is the time you have to review the policy details and return it within the specified time frame if it is not satisfactory. This opportunity is available for 30 days if i-Life Secure or Online Term Option III is purchased. It’s only half the time if you purchase term plans from Reliance Life or Bharti AXA.
While a longer free look period is better, it’s not the best. However, you can still examine every aspect of the policy within a few days. You can take your time if you feel that other features are worthwhile.
Riders
You can have a rider or not. Some companies offer riders, while others give you the option. This makes a plan more flexible. However, any type of rider can increase your premium. Ask your insurer to include a specific rider in your base plan, or to provide a plan that includes a rider.
This is the Max Life Online Term Plan III Accidental Benefit Rider. It is a good choice if you don’t have an insurance plan that provides accidental benefits. The premium amount isn’t as high as if you had another accident plan. However, if you have health insurance that provides this benefit, you can opt for any other plan after prioritizing what you prefer.
Conclusion
When choosing a plan, it is important to look at the brand, market share, rating on sites like ICRA, as well as how long the company has been in business. Although IRDA has strict standards for insurance companies regarding maintaining a solvency ratio, they also have the option to re-insurance to offset the risk. This will obviously reduce their chances of being halted but it is always safer to be safe than sorry.
It is not an easy task to choose the right term plan. However, you need to take the time out of your hectic schedule to learn the best way for protection.