What is Term Insurance?

Know more about what term insurance is and why you should buy it.

#Term-Insurance
4:54 min read

On this Page

What is Term Insurance? What does it mean?

Term insurance policy is a type of life insurance that offers comprehensive financial protection against life’s uncertainties. Based on the term insurance plan you buy; your family will receive the sum assured in the event of your untimely demise within the policy period. The money received will help your loved ones to deal with financial hardships in your absence.

When you consider buying term insurance policy, you need to know and understand term insurance meaning and know which plan will suit the requirements of your family and yourself. For instance, the life cover of term insurance you choose must be adequate to help your family pay for the regular expenses, child’s education and other liabilities.

What are the Features of Term Insurance Plans?

Now that you are aware of what is term insurance, you should check features and benefits of term insurance plans. Following are some of the primary term insurance benefits & features:

· Coverage Against Life’s Eventualities

What is Term Insurance Max Life Insurance


If you are the sole breadwinner of your family, you can help secure your loved ones against any financial setback they might have to face in your absence through a term insurance policy. The policy enables you to support a worry-free financial future for your family. You can easily take a significant life cover for a relatively small premium payable under these term insurance plans.

For example, if you are a 25-year old, non-smoker female, you can buy a term insurance plan with Rs.50 lakh life cover and pay for next 35 years, your premium will be Rs. 3,599 per anum approximately (inclusive or exclusive of tax ). Furthermore, you can use online term insurance premium calculators to see how your premium liability varies according to your age.

· Cover for Critical Illnesses

In your 20s and 30s, you may think that you will never suffer from a critical illness such as cancer or kidney failure. However, if it happens, not only will your health deteriorate, but you may lose your hard-earned savings to get the necessary treatment. Although the plain-vanilla term insurance plans offer a death benefit, you can increase their coverage with a critical illness rider.

As the name suggests, a critical illness rider provides additional benefits when attached with your term insurance policy i.e. if you get diagnosed with an illness covered under the rider, a lump sum amount is paid to you to avoid any financial setback that your family might have to face for getting the treatment.

Also Read: Critical Illness Cover

· Cover for Accidental Death or Disability

Accidents can happen anytime and anywhere. Depending on the severity, you may need a significant amount of money for the incurred medical expenses and compensate for the loss of income. Popular term insurance plans help you tackle such situations with accidental death or disability rider.

Max Life Insurance offers a Comprehensive Accident Benefit Rider (UIN: 104B025V03) with their term insurance plans. The rider provides extended financial protection to your family by also covering you for accidental dismemberment and death.

· Multiple Payout Options

If you feel your family members do not have the necessary know-how of handling large amounts of money as they may find it challenging to utilize a lump sum amount they receive under your term insurance policy, you can choose from multiple payout options available with Max Life’s term insurance plan.  

For instance, you can opt for term insurance plans that offer to pay a lump sum immediately on death and a fixed amount every month to your family. This way, your term insurance policy will work as a source of regular income for your family.

Also Read: Term Insurance Benefits

How to Buy Term Insurance Policy?

Besides understanding what is term insurance and the importance of buying term insurance policy, you need to do thorough research about the term insurance plan that you need. Buying term insurance plans online is quick and hassle-free. All you need to do is follow a few easy steps.

Here is a stepwise checklist you should follow to buy term insurance policy:

1. Assess Your Financial Needs

You must fully understand the financial needs and requirements of your family and yourself before you select a term insurance policy. The policy you choose must have an adequate life cover, large enough to take care of your family’s needs in your absence.

Start with analyzing all sources of income, the number of dependents, existing financial liabilities, and the lifestyle expenses of your family. Moreover, you should consider the life goals of your spouse and children.

Term insurance plan with critical illness cover

1. Assess Your Financial Needs

You must fully understand the financial needs and requirements of your family and yourself before you select a term insurance policy. The policy you choose must have an adequate life cover, large enough to take care of your family’s needs in your absence.

Start with analyzing all sources of income, the number of dependents, existing financial liabilities, and the lifestyle expenses of your family. Moreover, you should consider the life goals of your spouse and children.

Term insurance plan with critical illness cover


This way, you will be able to select an adequate financial protection that will help your family live without worries, even in your absence.

2. Estimate Term Insurance Policy Premium

Once you have assessed your financial needs, the next step is to calculate term insurance premium that you need to pay for your term insurance policy. When you search online, you will find there are multiple types of term insurance plans available. These include basic term insurance plans, term insurance with survival benefits (term plans with return of premium), and term insurance with various payout options.

The premium payable under a term insurance policy depends on several factors such as the chosen life cover, policy tenure, type of plan, age, gender and smoking habits. One way to check how the premium varies with these factors is to use an online term insurance premium calculator.

The ideal coverage amount for a term insurance policy should be around 15-25 times your annual income based on your age.

3. Check the Insurer’s Claim Settlement Ratio (CSR)

Before you proceed to select a term insurance policy, it is crucial that you check the CSR of the insurance company you choose. CSR is the ratio of the number of claims received by the insurer versus claims settled by them during a financial year. A high CSR implies that the insurance company does its best to resolve the settlement claim filed by your nominee.

Max Life Insurance has a Claim Settlement Ratio of 98.74% for the financial year 2018-19. (Source – As per IRDAI annual report FY18-19).

4. Select Riders for Additional Coverage

Based on your needs and preferences, you can customize a term insurance policy with add-ons, also called riders. Term insurance riders are optional features that you can add to your basic plan to increase insurance coverage.

Max Life Insurance offers the following riders for their term insurance plans:

· Max Life Accidental Death and Dismemberment Rider [UIN: 104B027V03]

· Max Life Waiver of Premium Plus Rider [UIN: 104B029V03]

5. Pay Term Insurance Premium Online

Once you reach this step, you have all the necessary information to make a prudent decision to buy term insurance policy. The last step of this checklist is to pay the premium online.

You need to provide details of your income, profession, present address, and lifestyle habits before you choose an adequate life cover and riders. Subsequently, you are redirected to pay the premium online using any of the multiple payment modes.

For further assistance, you can also contact our customer service team, and we will be happy to help you buy the best term insurance plan that aligns with your needs.

Why Should You Undergo Medical Test While Buying Term Insurance Plans?

Term insurance plans work as a financial backup for your family in case of your untimely demise. As part of buying term insurance plans, you may be asked to undergo certain medical tests. While you may think these tests are not necessary, it is not so.

Undergoing medical tests, if required, is important while buying term insurance plans as it minimizes the risk of claim rejection. Based on your medical test reports, your term insurance policy’s premium may vary.

Who Should Buy Term Insurance Plans?

Ideally, you should take a term insurance policy as soon as you start earning. The term insurance plans are necessary if you have financially dependent family members. Whether you are 18 years of age or 65 years, Max Life’s Term Plan has got you covered.

To buy a term insurance plan right away, please click here.

ARN:- Apr/Blg/14

Why buy Term Insurance Max Life Insurance

 

Who Should Buy Term Insurance Plans?

Ideally, you should take a term insurance policy as soon as you start earning. The term insurance plans are necessary if you have financially dependent family members. Whether you are 18 years of age or 65 years, Max Life’s Term Plan has got you covered.

To buy a term insurance plan right away, please click here.

Why buy Term Insurance Max Life Insurance

Calculate Term Insurance Premium