Term Plan – The right way to take Life Insurance

By
Hemant Beniwal
121

To explain the way to buy life insurance, let us first explain the way you buy all the insurance other than LIFE INSURANCE. One of the most common insurance that we buy is vehicle insurance. Now, what is the purpose of buying vehicle insurance?

Term Plan - The right way to take Life Insurance

We buy insurance so that in case anything goes wrong with the vehicle, the loss will be compensated by the Insurance company

The premium that we pay is treated as an expense and not an investment. We don’t get anything in return if nothing goes wrong with the vehicle. The cost of insurance is anywhere between 3-5% of the present cost of a vehicle. For example, if the IDV ( INSURED VALUE is Rs. 1 Lac, the insurance is anywhere between Rs. 3000 to 5000 for a year).

Read: Health Insurance for Diabetics – All You Want To Know

The Premium Rate is higher for the old vehicle then the new one.

Now such concept is applicable with most of the Insurance policies like Mediclaim, Accidental, Fire Policy, Householder’ etc that we buy BUT NOT FOR LIFE INSURANCE.

What happens when you think about life Insurance. We believe that this is mostly misunderstood by most Indians. To give you an idea, there are less than 5 % of people in India who have any sort of life Insurance Policy. To add to the misery, on average, the people who are insured have a cover of less than Rs. 90000/-. Now in case, the insured dies, the family get Rs. 90000/-. is something going wrong?

Also, Read – Accidental Insurance

Term INSURANCE is the most critical part of our financial planning.

It is to be bought keeping in mind that if you are not around, who will fulfill all your dreams; the expenses of your family will carry on but who will support them. But unfortunately, most of us think that Life Insurance is for the Future. When the policy is matured, the insured gets some amount which is called maturity benefit.

Term Plan - the right way to take Insurance Click to Tweet

We do not give importance to what is the amount of cover we have. The agent tries to impress you on what will be the returns rather than what will be the coverage.

Check – How Much Health Insurance Do I Need in India?

Life insurance is for present

In an actual sense, Life Insurance is for the present.. it covers the present risk of one living too short and that could make the family suffer drastically So insurance gives the family of the bread earner the financial support if the bread earned is no more.

The bottom line is Investment is for the future and not life insurance. Never mix these two and buy a single product.

So what should one do…

Read: What is Insurance – Investment or Expense

TERM INSURANCE

Term policy is insurance at its purest and simplest form. You pay premiums because there is a guarantee that if something happens to you, your family will be paid out the pre-decided amount, hence you have the peace of mind that even if you are not there, those loved ones you leave behind will not have to bear a financial loss. Term Insurance is protection against the risk of life.

There is no element of investment involved in Term Insurance. If anything goes wrong the insured family gets the sum assured and if nothing goes wrong, the amount is treated as an expense. Since there is no value of your financial investment or a savings element involved, the premium accounts only for the risk cover costs (mortality costs) and hence is very low compared to other insurance products. No other insurance policy will offer you as much value for money as this. To cover your vehicle, you pay around 3% of the present cost of the vehicle, but to yourself at the age of 30 for say 10 lacs & term 25 years, you need to pay not more than Rs.2500/- which is 0.25% of the SUM ASSURED. Now, do you think it is costly?

How to choose the right term insurance plan
How to choose the right term insurance plan

Term Insurance is the cheapest policy available and hence hardly talked about by agents and even insurance companies never promote such cheap and low-cost products. Do you think, the Seller and the manufacturer will be interested in selling you the BEST product which is actually very cost-effective and does not give them the profit that they desire?

Please add your views.

Previous articleAll you want to know about Mediclaim Policy
Next articleLong Term and Short Term Investments
Hemant Beniwal
Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice & TFL Guide Blog in 2009. "The Financial Literates" is a dream & mission to make Indians Financial Literate.

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121 COMMENTS

  1. Thanks TFL, Nice Article

    I am thinking to buy term insurance of 50 lac.

    I have read out about three cheapest term plan
    1. Agon Religare i-Term
    2. ICICI Pru Protect
    3. Kotak e-preferred term

    age – 30
    salary 4 lac

    which term plan should i pick from above 3 or why.

    if you advised not to buy them, clarify why not

    please reply

  2. I am 39 years old. I want to take preffered term plan of worth Rs 40 lakh , annualy premium of Rs 14,500. Is this term plan premium is fine? please also answer it that how is the track record of claim settlement of Kotak? To take the term plan of this company would be good or not?

    • @Vineet
      Kotak Preferred term is least expensive term plan available offline. Its death claim ratio is bit lower than LIC but premium is just half of LIC term plans. If you give right information at the time of taking policy – there is hardly any chance of getting claim denied. Claim settlement normally stuck when you or your agent have filled wrong information or hided things. We normally suggest that one should divide their sum assured in 2 policies from different insurers. It’s having 2 benefits – first it gives flexibility if you want to reduce your sum assured in future due to any reason & second which is bigger benefit in case one of your claims is denied your representatives can reach ombudsman & show that other insurance company has cleared the claims on same grounds. My suggestion is you should take Rs 10 Lakh LIC Anmol Jeevan & Rs 30 Lakh Kotak Preferred term.

      • In casee of death of a person,we have to surrender the original death certificate.If a person got himself insured in two policies,how will he be able to make a claim with the both since the dead certificate will be with the other insurer.I am puzzled.Could you please elaborate?

      • Hi Hemant,

        I have a doubt regarding 2 policies in 2 different insurer’s, in case 1 insurer rejects the claims for any reason, what stops these 2 insurers to talk/inform each other regarding the claim rejection for your policy, if you have given incorrect information or hided information than your claim will be rejected by both of the insurer.

        Please advice on my above doubts.

        Thanks
        Ramesh

  4. i am 34 years old a railway employee, my annual income around 4 lac,
    i want to by a term plan for 40 years for 50 lac,
    plz suggest me which company”s plan is the chaeapest & whether i buy offline
    or via offline.

    thank you

  5. I can not agree more on subject.
    I’m looking at 1Cr term plan, LIC has premium of about 30K for this!!!

    One can not leave LIC’s fact, figure & brand value while taking Term one.
    But higher premiums are also unwanted. From last 4 months or so facing this dilema. I’ll be deviding 1Cr equally in two providers.

    Just one question:
    I’m 26. I was a smoker between age of 21-24. WHat should i mention in form? Smoker/ No Smoker?

    Is there any catagory like ex-smoker!!! (Sad humor!)

    • Hi Paddy,

      Regarding your question – yes ex-smoker is a category in few insurance companies like Max New York.

      Max is having 3 categories – smoker, non smoker(not smoking from last 2 years) & preferred non smoker(not smoking from last 5 years) 😉

      You must mention that you left smoking in which year.

  6. Thank you for this article. I am 36 married have a son 6 yrs. and I already have a LIC Jeevan Sree sum assured 5 lacs. And a Jeevan Saral sum assured around 2 lacs. I also have a company insurance(i.e. if something happen to me my family will get my last drawn Basic+DA upto my 60 years). My current monthly Basic+DA is around 52000. Earlier I was thinking about a Term plan of 50 lacs sum assured but decided against it as i have company insurance. I am confused whether to take it or not. Kindly suggest me.

  7. Can anyone suggest a company offering 1Cr term plan.
    Is it better to go for two companies with 50lac each or one is okay.
    Please do reply.

    • Hai Anitha ,

      Almost all insurance companies are offering term plans for 1 crore.LIC have the highest claim settlement ratio and their premiums are also high (double of others premium)..
      It’s always better to split it(read the article).You can split it and take term insurance from two companies…one from LIC and other from either Kotak or ICICI.

      regards,

      Shamshad

  8. Hi,

    Its very good article and helps us a lot to understand about the term insurance.
    The best is that you take the time to answer everyone’s questions.Thanks.

    I have few questions while going for term insurance.

    I am a 29 yr old. married and have one kid (2Years). Both me and my wife are salaried individuals. We are having home loan and one of ours take home is going for that loan.
    Me and My wife have LIC Jeevan Tarang policy for 5lacks each for 20 Years.
    We have taken HDFC youngstar for our kid.

    Please let me know whether me and my wife need to take term insurance?
    So if,
    how much do we need to take?
    is it good to take from same insurer or diff companies?

    Please help me on these. Thanks for your time.

    Ravi.

    • hai ravi,

      Term Insurance are the purest form of insurance.you should take a sum assured of 40/50 lakhs.you can split it and take from two different companies.LIC + Kotak/ICICI .

      No need to take insurances for both you.ok

      Regards,

      Shamshad

  9. Hi,

    Your article really very help us to understand about the term insurance.

    I have some question while going for term insurance.

    I am 26 yr old. Single, living in pune & my annual income is 2 lacs.
    I am planing to take 15 – 20 Lac Term Insurance plan, but i am not able to decide the better one.
    Also please guide that which is better term insurance with rider or without rider.

    Please let me know whether i take term insurance.

    • Hai Deepak,

      You should take a Term Insurance only if you have any dependents,otherwise there is no need to take any insurance.you can take a accident care insurance.
      If you any dependents ,you can take term insurance from LIC or ICICI have insurance + Accident death benefit

      Regards,

      Shamshad

  10. Hi,

    Your article is very informative, thanks for the same.
    I am 48 yrs. I want to take a policy of about 25 lacs. Please suggest (i) for myself alone (2) a family floater plan.

    Thanks

  11. Hi Hemant,

    I had recently subscribed to your newsletter and read this article on Term Insurance as part of the The Financial Literates E-course (Part-2). I had a follow-up question:
    (1) How does one calculate the coverage amount(sum assured) required for a person? Is there any thumb-rules/guidelines that you can share?

    • Hi Phani,
      Thumb rule is a bad idea because one should calculate his actual requirement & thumb rule can’s answer this. But as you have asked for thumb rule says:
      Young person – 30 years – 13-15 times of your yearly income.
      Middle Aged – 40 years – 8-10 times of your yearly income.
      Near to retirement – 50 years – 4-5 times of your yearly income.

      • By your suggestion what I get is that a person has to keep on changing his plan as he ages.Do you mean to say that?Will that not be cumbersome,changing plan every 10 years?

        • Hi Kaling,
          Definitely not – just try to assume your income at these age levels & you will know that insurance amount will be almost same.

  12. Hi Hemant,

    Thanks for your reply. When you say “one should calculate his actual requirement “, what are the aspects that need to be taken into account? Can you please elaborate?

    Phani.

  13. Very good article hemant.

    If possible also add ur views abt special term plan, in which we get refund all our paid premiums.

  15. hemant ji,
    firstly thank u very much for this kind of site, sir i want to know your opinion
    whehter the offline term plan is better or online termplan.

    • Hi Amit,
      Its good that you want a term plan.I will suggest you to go for online term plan because its cheaper then offline but the details must be provided correctly in online form because it will help in case of claim.

  16. Hi Hemant Ji,
    Really good article, i learn so much. Thanks a lot. Soon, i will start my own TERM Plan. I have one question:
    I need your kind opinion on LIC’s Golden Jubilee Policy-BIMA GOLD (Plan -174), which I have taken in the year of 2006. I took 20 years term. Here sum assured under basic plan is Rs. 3,00,000 with Accident benefit rider sum Rs. 3,00,000. Already I paid 4 times the premium which is 10,000 per year. I have also received one installment of 30,000 from this plan. Right now, I am 33 years old, working in an oil exploration company and earning 50,000 per month. This is the only insurance I have currently. So please suggest me should I continue this policy or should take any new one which will be better for me or I can continue it with my Term Plan which I am going to take very soon.

    With Regards,
    Arunava

    • Hi Uttam,
      I will suggest you to take term plan without riders. You can buy separate accidental insurance policy.

  19. Very informative article as usual. I want to know your views on postal life insurance. Is it term insurance or else?
    In this article u didn’t talked bout this one. Please put your views.
    Thank you.

  20. Hi Hemant,

    I am 41 and diabetic. I tried taking term plan from two companies LIC, Birla sunlife for 50 lac & 1 cr resply through agent. I mentioned diabetic last 3 yers during filling forms. they got medical done and infomed expensive premium 95k by and 65k resply after tests. though my BS leves were not very high. I denied and told I am not going for policies as premium high. Then looked for ICICI pru online term plan again I mentioned I am diabetic during form filling online, They did not asked for medical and issued me a policysame day with decent premium of 30k.
    I want to know Is this ICIC Pru plan is ok, I am wondoring why they didnt asked for medial , will they settel claim if any in future.

    • Hi Dsat,
      It’s good that you have taken term plan. I will like to state that you did a right thing i.e. you went for an online term plan & specifically mentioned that you are diabetic, this shows that you are providing insurer with the right information. According to the rules you have done all right things from your side – which will help your family in taking the claims. But I am bit surprised that they have issued you policy on same day because all insurance policies should go under the knife of risk analyzer. So it may happen that you get a call for medical or increase in premiums.

      • Hemant,

        Thanks for you time to reply to my comment.

        On online application of the ICICI Pru got welcome call from the ICICI pru on the same day and requested for submission of the req. doc. done the same online and after that policy issued as non-medical. After issuance of the policy also got call for feeback on services of ICICI pru. There was no request for medical or increse of premium. Service seems to be good but not sure how would be claim setttlement if any.

        BR

  21. Hello Hemant
    I am planning to take term insurance of 50lacs Icici pru Icare (+accident rider 0f 50lac) at 11968/annum. What is the difference if i do it from sharekhan or by myself online? Sharekhan will follow same procedure. is there any loss to me in this cae? I am having demat with Sharekhan. I have other LIC policy 1 Jeeven Shree-1, 2 money back,1 Jeevan chaya,1 endowment triple cover. Do I have to inform ICICI about this policies as these are not term policies? I am not planning to take any other term policies in future.

    Regards,
    Arun Salvi

  22. One more thing, there is no medical for Icici pru Icare. i am healthy with no addicitons at all. will no medical be concern?

  24. Hi Hemant,

    Do you think it is a good idea to buy term plan in a single premium for 20 years which costs almost half the amount lesser than what we invest for 20 years on annual basis. Kotak E-Preferred offers that kind of benefit.. Do u think one should go for it if he is capable of taking it in a single premium?

    • Hi Manoj
      If Someone is capable enough to pay the single premium for term plan than I think he/she should take that.

  25. Hi Hemant,

    Is there any deference of service giving (at the time of claim settlement) between on line and offline term plans of insurers?

  26. Hi
    I am planning to take term insurance for 1 crore.(I am not looking for any maturity benefit related insurance policy)
    My age is 24 and my salary is around 5lpa.
    As per my web research, I found that Aviva ilife is cheap and best with premium of Rs. 7,025 per year, and I wish to go ahead with it.
    Before taking final call I want to know is this the best one?
    Feedback about dealing with Aviva, Do they keep their promise? etc.
    Is there any other plan better?

  28. I wants to buy a term plan of 30 lac which belong to icici prulife

    suggest me is it good for future or not,if yes
    plz tell the best future term plan for me .
    my mom age is 45 now i want to buy it for her.

  29. Dear Hemant,

    Thank you sharing the post on term plans. I totally agree to this view.

    I recently took a couple of online term plans, and have written a post about my experience and learnings expecting it to be helpful to others.

    Regards,
    Jatiin

    • Hi Jatin,
      I read your article – you did a great job 🙂 especially the comparison of premium & explanation.

  31. I found this discussion very helpful and interesting. I have this query for a long time, but without any convincing answers.
    My take away fro the discussion –
    1. Buy at least 2 term plans from 2 diff insurers.
    2. Make all possible disclosures.
    3. Get all documents verified from some reliable person, in order to avoid any mistakes.

    Some queries –
    1. If someone likes adventure sports like paragliding, etc and they disclose online policies are not issued. How to resolve this.
    2. How to ensure our form is properly filled. Can we get it officially verified by somebody. This is to avoid any problems during settlement.
    3. which 2 insurers to select. I have shortlisted lic, ipru, hdfc and birla. Not sure though. I might go with lic and ipru/hdfc.
    4. How much aggregate cover can one take. For e.g. If my annual gross salary is 20 lacs. How much total insurance can I take, considering all policies.
    5. Does it make sense to club investment and insurance. I need to plan finance for my future expenses and retirement. Should these be kept separate or some of it can be clubbed.
    6. Does it make sense to take policies lime the one from Apollo which provide insurance for loss pay due to critical illness, etc. This may not be a point relevant to this discussion though.

    • Hi Charu,
      Please find my inline replies..
      1. If someone likes adventure sports like paragliding, etc and they disclose online policies are not issued. How to resolve this.
      >Regular participation in adventure sports definitely add some risk to life. It’s on company that they want to accept your proposal or not. If they give you space to explain – you can add details of frequency & level of participation. (you can also write an email as additional information & ask for their acknowledgement)
      2. How to ensure our form is properly filled. Can we get it officially verified by somebody. This is to avoid any problems during settlement.
      >As such there is no process to get forms officially verified – I think online forms are very simple, you just have disclose everything to the best of your knowledge.
      3. which 2 insurers to select. I have shortlisted lic, ipru, hdfc and birla. Not sure though. I might go with lic and ipru/hdfc.
      >Go Ahead.
      4. How much aggregate cover can one take. For e.g. If my annual gross salary is 20 lacs. How much total insurance can I take, considering all policies.
      >I am coming with this post.
      5. Does it make sense to club investment and insurance. I need to plan finance for my future expenses and retirement. Should these be kept separate or some of it can be clubbed.
      >You should not mix insurance & investment.
      6. Does it make sense to take policies lime the one from Apollo which provide insurance for loss pay due to critical illness, etc. This may not be a point relevant to this discussion though.
      >Comprehensive Accidental insurance is a must but in critical illness choice is not easy, it depends on n number of factors.

  32. Hi Hemant, I am working in indian railway. I am in NPS plan. I want to take a term insurance for 30 years. Which will be the best for me as my yearly net income is 3 lakhs, my age is 32 years and also for what amount?

  33. Hi,
    Im 29 years old and having diabetes and need life cover for 40 lacs.Which is the best term plan for me.please suggest.

  34. Dear Hemanta,

    I am now 40 yrs+, I intend to purchase term plan of 50 lakhs assured value. Kindly suggest the best plan to go.

    S Barman

    • Hi Sushanta,

      You can go with ICICI, HDFC – online term plans they are cheaper then offline term plans .

  35. Good morning,

    I invested in Metlife suvidha, hdfc crest ulip and sbi global magnum mutual fund. Let me know how good these policies.. you advise is sorely welcomed

    prabhakar

    • Hi Prabhakar,

      Met Suvidha is a traditional insurance plan. Unfortunately these plans do not yield returns higher then 6%. On the other hand HDFC crest is a highest NAV product which has been a highly mis-sold category.In this product also the return will average out at nearly 7%. You should review these product in relation to your goals and considering inflation.

  36. I am 25 yrs old, unmarried. I have my parents as dependants as of now. I was planning to go for 50 lakh(15 lakhs with LIC and 35 lakhs with HDFC). But bit confused on , whether to go for now or after marriage. Incase if you suggest to go for now, later is it possible to include my wife as one of the dependants?

    Pls suggest

    Thanks

    • Hi Prabhu,

      If your parents are dependent on you then you should for for term plan straight away rather than wait for getting married.Since you are only 25 yrs old you will get good sum insurance at a very low premium. Yes there are quite a few term plans in the market where you can add the additional criteria after you get married. One of them is Kotak term plan where it allows you to increase sum insurance after marriage with a just slight amount of increase in premium. You need to select this flexible option while taking this term plan.

    • You can take one policy now and make your parents as nominee. Once you get married you can take another policy and make your wife as nominee.

      Please keep the sum assured as secret from each other 😉

  37. Dear Hemant,
    I am 32 yrs old with wife & 2yrs son.My annual salary is 8 lac.How much term insurance should i take.I want to divide my total insurance in two or three
    companies.Please tell me companies where should i invest.

  38. Dear Hemant
    I am a NRI and I will be settling in India in the coming 2-5 years hopefully. I also have health problems – diabetes etc. Am I eligible to apply to these online policies mentioned and if not can you advise me which ones I can apply to?
    Thanks & Regards

    • Hi Shoba,

      Online policies are available only in certain cities within India so you might not be able to avail it. Also, not every company cover diabeties and others charge an additional premium.
      You can apply to any insurance companies offline i.e. through an agent.Kotak,Birla are companies offering term insurance to NRIs.

  39. Hi Hemant,

    I am 37 years old and want to buy Term Insurance of either 1Cr or 1.5Cr. I understand from your articles and answers that I should split it. Can you suggest which two companies I should split it with. I looked up AegonReligare as they seem to have the cheapest term insurance policy online with Accident Death Rider and Waiver of Premium on Critical Illness. I stopped smoking 4 years ago.
    Do you think it is a good idea to buy this insurance online or should I contact someone at the company / agent? what benefits do I get buying insurance online?

    thanks in advance for your response.
    Sheshanth

  40. hi,

    I am 50 yrs old and want to take a term plan of 10 lacs for a term of 10 years.
    Can I get such a plan and which insurer would be the best ?

  41. Dear Hemant,
    I am married my age is 29 Years My dependents are my parents and wife. my income is 5.5 Lacs i am looking for term plan 50 lacs. Can I go for 5 lacs plan of LIC and 45 Lacs of Kotak Preferred term ? please suggest.

    • Hi Ganesh,

      Although you can do it but it will increase your premium outgo as term plans with lower rates are offered for Rs 25 lakh and above. LIC has still higher rates for its term policies.

      Any good reason for this breakup?

  42. Hi,
    I am 39 yrs old smoker having diabetic and was searching for a term plan of 50L. Is there any restrictions for getting a term plan because of my diabetes? As I contacted many insurers such as Aegon Religare, SBI Life and HDFC. SBI Life and HDFC (customer care) informed me that they do not have any term plans for diabetes patients.
    Some where (here also) I read that these companies will increase the premium amount after the medicals. Could you please tell me which plan will be suitable for me.

    Thanks

    • Hi Jack,

      Insurance companies have a list of illnesses which they consider to be on higher risk. Some do not issue policies to such individuals while some cover it but with an extra premium. This extra premium is charged for covering the extra risk due to this illness.

      You will not have an option here but to avial insurance with an additional premium.

  43. After reading all your articles I have decided to take a simple yet reliable online term insurance plan and avoided investment through insurance…Currently my age is 22 (twenty two) years old and parents are dependents, had searched for online term insurance plan but found that 35 years is the maximum policy term available. So my policy will expire at 57 years. Probably my retirement will be at 60 years, so for 3 years during highest risk (of dying) I will not be insured at all.So my query is “SHOULD I WAIT TILL 25 YEARS AND THEN OPT FOR MAXIMUM TERM POLICY WHICH WILL COVER MY RETIREMENT?”..Obviously premium are bound to increase after 3 years but I think I will be on safer side..Kindly provide your valuable suggestions…Awaiting for your earliest reply…
    Thanking you.

    Regards,
    Deepak

    • Hi Deepak,

      There are two options:

      1. Buy a term insurance now and enhance it when you reach 25.This way you will be able to cover for the maximum term.The premium difference at younger age is not very substantial.

      2. Alternatively, you have a good enough time horizon.You can start investing with small amount and accumulate a corpus which will be equivalent to the term insurance required

  44. hi Hemant
    i wants to know is term plan is necassry for a defence person

    naturally they are most prone to risk every time. i have asked different companies they are not offering. is there any if yes pls. suggest

    • Hi Surender,

      There are some companies which offer term insurance to defence personal.However even there the risk is assessed on the basis of job profile.You can put your query with Kotak, Birla, HDFC or ICICI.

  45. its is a very helpful site …….it helps all those who are looking for insurance for themselves and their families ..i like it

  46. Hi Hemant,

    A very Good Morning!!

    So far I’ve not bought any Insurance plan.Being a fresher,I would like to know from your end,personally, as to which plan should I opt for , which would fetch an ideal return ? My income details are as below,
    Annual Income : 3 lacs.

    Also, if possible, please explain as to why should I go for that suggested plan.

    Thank you.

    Avinash kumar.

  47. I want to take a on line term plan of 1cr my salary is 6.37 lkhs per annum.
    Please suggest which one i hae to go for most of my friends recomend for HDFC click to protect.

  49. Guys,
    If your life is paralysed by an accident and left you permanently handicapped.How will the TERM INSURANCE benefits you.I think LIC has accidental insurance which TERM INSURANCE dont have.

    • Hi Surendro,

      Term Insurance and Accident Insurance, both serves different objectives. While one covers the risk of dying too early the other covers the risk of living disabled due to accident. Hence, you cannot replace one with another and so one need to have both to cover these risk.

  50. I am thinking to buy term insurance
    age – 33
    salary 7 lac

    Please advice to which Term Policy should i look and what should be Sum Assured.

  51. Hi Hemant,

    I have joined TFL a month back and delighted to read your excellent articles.

    I have never invested in Term Plan and understood it will be my first priority. Below are the invested plans i have. Can you suggest which one i can discontinue after investing in Term plan.

    Policy Premium Sum Assured Start Date
    Maxlife – Life Maker Unit Linked Plan 15000 366390 2007
    Maxlife – Wholelife Participating 25000 1214444 2008
    Reliance – Automatic Investment Plan20000 110000 2008
    Max Life Personal Accident Rider -1.1 500000 2008

    Am 31 years old , married and have a kid of 3 month old. Having house loan.

    Thanks in advance
    Rathna

    • Hi Rathnabalaji,

      Exiting any insurance policy should rest on the real benefits you will be deriving from it. All policies have some exit loads which you have to take into consideration. For ULIPs the fund performance is also a significant factor.
      Analyse on all these points and then decide about continuation of a policy.

  52. Hi Hemanth..
    Can you provide the settlement ratio of all these companies? I understand better the settlement ratio, higher the premiums.

  53. Hi!

    I always wonder after reading abt life insurance that if it is so important for an individual to get himself insured then why government makes it compulsory for everyone to have atleast a basic term plan.
    I am not saying that it is not important thats why government has not made it compulsory.
    I feel it should be compulsory like vehicle insurance but not able to understand the reasons why is it not done till now?
    May be you can throw some light on it.
    Thank You

    • Hi Yogesh,

      Insurance need should be realized by individuals rather then taking it because it is mandatory. If you know why it is to be bought, you will buy adequate coverage else most of us will end up just meeting the mandatory criteria.

      • Hi Vikas,
        You are right in saying that it should be realized by the individual , however if it becomes compulsory then people will have to forcefully make it part of their financial planning and that way more people will try to find out more about this…it will certainly increase the penetration in the society and personally i dont see any kind of harm in doing it… moreover it would be beneficial for the insurance industry as we are talking about increasing FDI in insurance sector… this way more companies will get to target more people with simple product… Intricacies can always be taken care of if someone really has good intentions…

  54. Dear Sir,

    I am puzzled with my planning related to Term Plan.
    Currently i have a term plan from LIC for 25 lacs for which I pay Rs 8425/- as premium.It is 3 yrs old term plan and has been taken for 30 yrs. Now I am re-planning my term plans and have decided to take a cover of 1 crore from 2 different company. I have choosen Aviva (for 50 lacs – premium is 5600) and HDFC Life (for 50 lacs – premium is 7500). Now my queries are :

    1. Should I stop LIC and buy from Aviva and HDFC for 50 lacs each? In this case, i will have to pay 7500+5600= Rs 13000 and will have to stop 3 yrs old LIC term plan.
    2. Should I buy only from Aviva for 50 lacs and continue with LIC also. In this case, I will have to pay 8425+5600= Rs 14000 but I wont be able to get insurance of 1 crore but LIC will remain continued.

    Please advice me..what should i do…i am very confused??

    Regards,

    Sandeep

  55. Dear Sir,

    In addition to the above mentioned 2 options that i have mentioned, i am thinking of one more option :

    3. Is it advisable to stop my 3 yrs old LIC term plan of 25 lacs, and take another term plan from LIC for SA 10 lacs for which i will have to pay Rs 5000/- and buy from Aviva for SA 75 lacs for Rs 85000/-. In this case i will have a term insurance of 85 lacs paying total premium of 8500+5000 = Rs 13500/- and will have LIC also as one of the company.

    Thanks,

    Sandeep

  56. Hi
    Am 40 and applied for Aviva I Life online term plan for 50L by paying premium of 7965, Now after the medical reports they have increased my premium to 16k almost 100% because of diabetic condition. I have declared the same in the proposal form too. They have shared me the medical report everything is normal as per the medical report reference range except for diabetic which was showing as fair control. Is this can be the reason for 100% increase of premium. On what basis they calculate this percentage?

    I do have another offline term plan from aviva for 50L which was done on 2011, was issued at normal rates cos that time I did not have diabetic.

    I think all the insurance companies charges the extra loading for diabetic or any other health condition it can be even more than 100% or 50 %, 75% etc depends on insurance co. I think in my case there is no second opinion going for another insurance co and complete the formalities cos don’t know how much they charge.

    In my opinion its better to settle with Aviva by paying extra premium cos as the age increases the premium will also increase. And also one more advantage will be both the plans which I hold now offline(50L) which was purchased in 2011 and online plan (50L)which is under proposal now will be with the same insurer in case of claim it can be settled without any hassle cos both the plans are with same insurer and for both the plans medical tests are conducted.

    What’s your though about this case am I correct in my judgement pls give your opinion?

  57. I brought an HDFC click to protect insurance in month of April which got rejected due to my ITR ( it had all the income from other sources ). Now , I have filed ITR for assessment year 2016-17 and I have shown a salary income of 105000 and business income of 2,50,000 and 3,50,000 from other sources . Now on the basis of new ITR , am I eligible for HDFC Click to protect term insurance?

    Pls help. Anticipating a timely and helpful reply from your end .

    Regards
    Shubham
    9999900000

  59. Nice article. This was something I realized quite late after having bought Jeevan Anand. Trying to figure out what to do with my JA policy before I go for Term insurance. 🙂 Going to gothru your next article “how to exit mis-sold policies’. 🙂

  60. I had got an email from you which I supposedly understand that you want me to click in to your website and read my interesting article specially I am in decision making to take an term insurance. What made me confused after clicking and coming to your website was that you do not seem to be active after February 2017. Are you on the business..help me figure it out as to should I stay connected or not. Thanks a ton!

  62. Very nice articles…Thanks for throwing valuables inputs on this…. appreciate it 🙂 and hats off to whole team!!!

    I’m going for home loan but the loan provider asks me to take the insurance on total home loan amount!!! which I really don’t want to go for it, if this can be served by the Term plan. Please share your valuable inputs.

    • Hi Sharieff
      If you have a Term Plan which has enough coverage that covers both your Human life value and home loan principal than you don’t need to take a separate insurance for the home loan amount..

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