Get A Term Plan

Protecting the living standards of your family and helping to achieve your unfinished goals in your absence is best met through pure term plans.

The advantage. The premium that pure term plans charge is the lowest among life cover policies as they provide life insurance for only a specified number of years. Term plans don’t offer any returns as they focus only on providing cover and have no savings element. If you outlive the policy, you will not get anything, but if you die during the term of the plan, your nominees will get the sum assured. So, if your aim is not to use insurance as an investment avenue, but to protect your dependents from a financial crisis in case you die prematurely, a pure term will suit you best.

What to look for. As term plans don’t have any surrender or maturity value, purchase decisions are often based on premiums. However, your choice should be guided by other factors too. Choose plans that provide maximum terms. It does not make sense, for instance, if a 30-year-old person buys a term plan for just 25 years.

Also, try choosing plans that cover you for the maximum age. If you expect to have financial dependents till late in your life, look for term plans that have a high maturity age. Most term plans provide coverage till age 60 or 65 years, or even as high as 70 years.

Some plans allow hikes in cover at regular intervals without any financial or medical underwriting. Higher incremental premiums may be required as age advances, but they may still prove helpful in circumventing age-related health problems.

Why buy early? The right time to buy term cover is when one finds someone financially dependent on oneself. It’s better to buy early as, apart from low premium at low ages, there are other reasons: the health status of the person goes a long way in deciding the premium, and even whether the policy would be issued to him at all. There are stringent medical tests, but they are worth it.