Term Insurance

February 9, 2011   ·   0 Comments

 

 

Lesson 3:

 

Term life insurance or term assurance is life insurance which provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments and/or conditions. If the insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis.

 

Comparison of Term Insurance for a 25 Year Old person for a 10 Lac Cover from Different Companies:

S. No.

Companies

Term

Price

1)

LIC

25 Years

2,861 Rs.

2)

Met Life

25 Years

3,088 Rs.

3)

Future Generalli

30 Years

1,864 Rs.

4)

Aegon Religare

25 Years

1,710 Rs.

5)

Tata AIG

25 Years

2,438 Rs.

6)

ICICI Prudential

30 Years

2,492 Rs.

7)

ING Vyasa

30  Years

2,665 Rs.

8)

HDFC

30 Years

2,766 Rs.

9)

Bajaj Allianz

40 Years

2,812 Rs.

10)

Reliance

30 Years

2,803 Rs.

 

If we Talk on the Terms of Credibility of the Companies, then LIC always stands apart. In India, there is tremendous opportunity for Insurance Segment to Grow. A Survery Tells that Insurance Segment can grown by 100 % every year till 2020 in India. Right now, there is lot of Companies which are planning for their IPO’s such as L&T, HDFC to tap this Market. Due to Tremendous Opportunity, These is considered by private Companies & they are coming up with Aggressive plans to Sell their products & coming up with new Policies Each Day.

 

Refer this link to know how to invest in Gold and the returns offered by Gold:

 

Now Let us come back to Term Insurance. So how much Cover I need or What things should be kept in Mind while Purchasing one Insurance Plan:

1)      If you are taking Policy at Early Stage: The Term Insurance depends a lot on the Age at which you take the Policy. Early you get it, Less the Premium will be. But what if you are 25 Year Old Say, & want to take a Term Insurance. The Term Insurance are generally 25 Year Tenure Policy. At the Age of 50, If you plan to Buy a New Policy then Come out of the Myth that your Present Policy is Cheap. In that Case, always take the Policy which Offers Maximum Tenure of Cover. In Our Case, Bajaj Allianz comes with a 40 Year Policy which makes it our Pick in the Term Insurance Segment.

 

2)      IF You are Taking Policy at Later Stage: Normally we found most of the People in this Segment. These Kind of People have a much Simpler Choice. They can Pick a Policy with Least Premium which gives them a Cover till 60-65 Years of their Age. Our Pick in that Case is Aegon Religare. We are not Picking Future Generalli as they are new in this Segment & Hence, may not earn Credibility in the People.

 

One knows know Different Companies with Different Rates & can pick with which one is Comfortable with. So is it all which one should know before Buying a Term Plan. No Not Really Actually.

 

A Million Dollar Question Arise Here – Should I Buy a Term Insurance having a cover of 15-20 Times of my salary (as discussed in Lesson 1- How Much Cover one should have). Don’t my Precious Money is getting wasted from a Plan where there is no Return?

  

It Depends on the Person to Person & his Investment Strategy that he/she Should buy a Term Insurance or Not. If he/she is Investing through Mutual Funds through SIP(As Discussed in the Lesson of SIP of Mutual Fund), then he/she will be getting the Insurance Cover of Double the Amount he/she is going to Invest in the SIP. So, Rest of the Cover should be taken as Term Insurance for which Premium will be Less & Precious Money can be spared to get wasted where there will be no return. For the Other People, one can Also think About ULIPS which we will discuss in coming Chapters.

 

The Term Insurance is the Cheapest of all the Insurances which makes it a earn a Big Thumps Up from us. We will Compare Different Premiums for different Plans & their Returns in Coming Chapters & how We feel Term Insurance can be used as a very Big Asset in achieving your Financial Goals.

 

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Rajesh Singla

Rajesh is the founder & CEO of Stockssavvy, Stocks analyst,financial advisor by choice,software engineer by fate,biker,gamer,cricket lover n enthusiastic person. He believes in doing things not just to get by but to get Ahead...

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