Awareness about Term Life insurance has increased manifold. Many people are either already insured or wanting to insure themselves. Buying term insurance is very convenient nowadays. With the ease of online insurance plans and Low-cost insurance, it has become an important part of a long term personal financial plan. While the loss of a near & dear one is emotionally devastating, term life insurance at least helps you to ensure that the financial loss does not worsen the tragedy.
We can calculate insurance cost online with few clicks based on some general questions but your final premium is based on your health and medical history and other factors. While applying for Life insurance policy, insured has to disclose facts & various personal details like age, height & weight, Income, health, habits etc.
Cost of insurance differs from person to person. Mainly life insurance cost depends on mortality rate. Any factors Which increase the chances of mortality increases your cost of insurance. Higher the risk higher the cost. There are many factors which affect mortality. Few of them are not in your control. These include your age, health & medical history of yours and family or whether you have any pre-existing medical conditions. However, you can control or change few of your unhealthy habits which will reduce your cost of insurance.
Your height and weight are one of the most important factors which affects your life insurance cost. Insurance companies needs to determine whether you are healthy person by calculating your BMI (body mass index). Based on this insurer decided if you are overweight or underweight as per their pre-decided measurement of weight in proportion to your height. Overweight / Underweight puts insured at more serious health issues like diabetes, stroke, heart attack etc. If you are able to control your weight and maintain a healthy BMI i.e. balanced weight as per your height, you will be able to save more on insurance cost.
2. Smoking & Drinking
Insurer ask question in the application form about your drinking and smoking habits of individual. If you are smoker then question like how many cigarettes you smoke in day and if you are drinker then question will be asked about how many units of alcohol you drink per week / day. There is substantial difference in life insurance premium for non smoker and non drinker individual’s.
3. Adventurous Sports
Any individual who enjoys and involved in activity like trekking, bungee jumping or sky diving, car racing etc. are classified as highly risky and can result in high life insurance cost.
4. Working in a Risky job
Your job and current profile also plays a crucial role in deciding insurance cost. If you are working in merchant navy or mining job or as pilot or any other high risky job, it increases professional hazard. Insurer charges lesser premium to people who works in administrative job and higher premium to people who working either in high risk job or may be posted in an area where life risk is very high.
5. Taking Drugs
If you are habitual of taking illegal drugs like Marijuana, cocaine etc. it will impact your life insurance cost. If you are tested positive during pre medical test for insurance either you are asked to produce more documents to prove you don’t consume drugs or, your insurance policy application could be denied outright. Once your application is rejected, for life time while applying for any policy after that you have to mention reason for rejection of the previous policy.
6. Lying on your Insurance Policy
Insurance is contract of utmost good faith. As insured you are expected to disclose all the fact related to your life insurance policy. Any act of non discloser is deemed as intentional and if found at the time of claim, will result in rejection of claim by insurer. So It’s advisable to disclose all the fact and personal details while filling the application form.
Nowadays hectic and stressful lifestyle has affected health of many people. Working for extended hours, junk foods, poor diet, no time for exercise etc. its established that they are associated with poorer health. Insurer evaluates various factors like your height & weight and medical condition, if not found healthy, increase your cost of insurance.
These were the 7 habits that you should control to reduce your insurance cost drastically.
Related Article: Types of Health Insurance policies amid COVID-19
Smart investors never fail to set realistic and long-term financial goals to ensure a secure future for themselves as well as their dependents against all unforeseen events. They do the same by investing in term insurance plans which is nothing but life insurance in its purest form for rendering comprehensive financial protection to your loved ones. However, in most of the cases investors fail to conduct adequate research before deciding on a term insurance plan which in turn makes them vulnerable to unscrupulous agents. Keeping such things in mind, today we are going to take you through the four main factors to consider before choosing the right term insurance plan.
- Deciding On The Cover Amount
You need to consider aspects such as your financial responsibilities, age, basic expenses linked to your lifestyle habits, family’s future financial obligations, loans as well as make adequate provision for the rising costs associated with inflation while deciding on the cover amount. Ideally, your cover amount needs to be 20 times your annual income if you are between 25 to 35 years of age while the cover amount needs to be 10 times of your annual income if you fall in the age segment of 45 to 55.
- Determination Of Policy Tenure
- Based On Corresponding Financial Obligations – You can take note of your upcoming commitments to decide on a suitable policy period. Thus, if a house loan has been taken by you for a span of 30 years, then it is required to avail a term life cover at least for the same time to keep your family covered from any unfortunate event and financial burden associated with the same.
- Based On Your Retirement Plan – 60 is the average retirement age for most people. You need to ensure that your term insurance cover extends up to your working years to cater to the financial requirements of your family if you retire before time or any other unfortunate event follows suit.
- Based On Your Age – If you are looking for a low-premium term plan offering high cover, then you need to start with your investments early. A 40 years’ term is advisable if you are in your 20s whereas a term of 10 to 15 years can serve you well if you are in your 50s.
- Herein, it becomes imperative to note that the premium stays constant for the entire policy period once it has been fixed and usually an insurance company covers people up to the maximum age of 75 to 80 years.
- Deciding On Payout Options
The payout option chosen by you will have a big role to play in deciding the premium amount of your term insurance policy. You can opt between a lump sum payout with monthly income or simply a lump sum payout. The first option can provide you with regular monthly income coupled with life cover which becomes payable over a span of 10 years. While the simple term plans offer a single sum as death benefit, certain insurance companies offer investors with monthly income and life cover in exchange of higher premium.
- Deciding On The Right Insurer
With a large number of insurance companies offering varying plans, it becomes imperative to opt for the one which suits you in the best manner possible. You can do the same by paying special attention to the points mentioned below:
- Solvency Ratio – This refers to the ability of an insurance company to settle all claims in extreme scenarios. According to IRDAI guidelines, all insurance companies need to maintain 150% solvency ratio for minimising chances of bankruptcy. A good solvency ratio can thus serve as a measure of the insurance company’s health both over short and long term horizon.
- Claim Settlement Ratio – This is indicative of the number of claims which are paid back or policies which are settled by the company. It is advisable to opt for an insurance company having a high claim settlement ratio.
- Market Reputation – You can gain greater understanding about grievance ratio as well as customer complaints by enquiring about the insurer’s market reputation.
- Financial background – This will ensure that the insurer can mitigate all its short and long-term liabilities in the case of a crisis situation.
Once you get equipped with all these information, taking the final call in regards to selection of an insurance plan in accordance with your requirements is going to become easier for you.
You cannot predict what is there waiting for you in the future. There are always lots of uncertainties and causalities coming up for you in the future and you are always unaware about it. These uncertainties cause a drastic financial crisis to your family and closed ones. You can help your loved ones by planning for your and their future and apply for a term insurance plan. Choosing the best term insurance plan for you can be a tiring task and that you must be well aware of the needs and requirements of your family at the present times and the future.
Term insurance plan is a standard risk cover plan that you can easily have for yourself. Rather than just saving your money, you should invest it in the term insurance plan to get your family secured from any future financial crisis. The term insurance plan ensures you that your family will be provided the financial security that they need in the upcoming years.
You must be clear with the fact that it is not similar to one of those whole life insurance policies but these term insurance plans are set for a particular time period of 5, 10, 20 or 30 years to provide you the term insurance coverage. The premiums that you have to pay for these term insurance plans are less than the one that you have to pay for the life insurance policies.
How can you choose the best term insurance plans for yourself?
Well, this can be a tricky question to ask as there are lots of term insurance plans in the country and you can get confused by the various options that you have in front of you. So you need to have a clear vision about what you want and which term insurance plan will be the best to secure the future of your family and loved ones.
Here are some of the secret tips that you must know before choosing the term insurance plan that will be the best one for you –
You should be clear that the term insurance plan that you are choosing should cover the individual’s human life value.
The human life value is a term that describes the salary of an individual and the loans or liabilities that an individual is having. So, whenever you are choosing a term insurance for you and for the people that are dependent on you, this must be made clear that the coverage amount should be enough to cover the individual’s human life value. If the term insurance plan chosen by you can provide the coverage for the financial need and human life value of an individual then you should choose that particular plan.
Must read : 9 Reasons to Buy Life Insurance Now
The cost of the term insurance plans can get cheaper.
The term insurance plans are already cheaper than any other life insurance plans. But this is not just it, it can get more cheaper if you choose a plan that have lower expenses which will ultimately cause the premiums of the term insurance plan to get reduced. So, for the same cover, you can get a plan that is having cheaper premiums and is affordable for you. You can also choose term insurance plans online which will be beneficial to you more as the premiums for the term insurance plans are cheaper than the offline or conventional method of term insurance plan.
You can also add on additional values to your term insurance plan to make it more useful.
The best way to make you term insurance plan more useful is to cover all the angles and aspects that are linked with the term insurance plan. You can add riders to your ongoing policy and can enjoy the additional benefits like the financial coverage for the disability, loss of job, and much more. You can easily set your riders based on the needs and future requirements of your family members.
You can always enhance your financial coverage that you will be getting from your term insurance plan.
There are special features offered by the term insurance companies to provide you extra benefits by enhancing your life’s coverage at the important moments of your life. The coverage is enhanced by the term insurance company by 50% when you get married and by 25% when you become a parent so term insurance is a smart investment for both. This enhancement comes with a greater responsibility of paying higher premiums.
You can buy a term plan from the company itself online by checking the term plans coverage.
The companies have their own websites on the internet and you can scroll through their websites to have a look at the offers and plans that they are providing on the term insurance and you can choose online term insurance plan accordingly.
These were some of the key tips to choose the best term insurance plan for you.
Someone once asked me, ‘Did you get sold to insurance or did you buy insurance?’. At first I was confused, how can someone get sold to insurance? But after few minutes I understood what he meant. Almost everyone gets sold to insurance.
Another mistake that people often make is, buying insurance from friends and family. Which could be even worse than buying it from an insurance agent. Every time your friend or relative has to reach their target, they’ll know who to approach. You’ll be stuck with paying premiums for policies you may not even want. You are paying those premiums with your hard earned money. You can use that same money elsewhere, and even profit from it. Use your money to work for you, not the other way round.
Insurance has to be bought for the right reasons. It is a very important financial tool and your financial kitty would be incomplete without it. Parents work so hard to make their children’s life easier, so that their children do not have to slog later.
Everything is becoming so expensive, that planning ahead is very important to reach your goals. Specially if you have a lot of people dependent on you. ‘Life is uncertain’ is a fact, no one can change it. So it always better to have your loop holes covered, before you come to that stage. It’s hard enough your family has to suffer the loss of your life, but don’t put a financial burden on them too. Life insurance policies are not only meant for covering the loss of your life but you can also cover the financial loss of any goal too.
Let us now look at some reasons why you need insurance, some of them might even surprise you. Here goes:
1. Basic Cover For Your Financial Loss :
This is one of the most common reasons why you need insurance, to cover your financial loss. Your family will be so devastated at the time of your death, that they will not be able to think straight. This insurance cover will help them get back on their feet and also cover the immediate expenses that come along the way. This way, you can save your family the trouble of not worrying about their financial needs.
2. Tax Benefits:
Some people buy insurance to obtain the tax deductions available to them. The best thing about life insurance is that their maturity claim as well as the death claim are both tax free. Even the premium amount is available for deduction under section 80C. The premium claimed can be, up to a maximum amount of Rs. 150000/-, since that is the limit under section 80C. After having said that, do not buy any insurance just to claim this deduction. If you are going to buy insurance for this reason, then you might as well buy a policy that will attend to your needs.
3. Financing Your Debt:
Now I’m sure you do not want your family to carry the burden of paying off your liabilities. So if you have got your other goals covered through various investments, then get your liabilities covered through insurance. For example, you’ve taken a house loan, and you still have half the amount to pay back, take an insurance cover for that amount, so even if you are not there, your family will have the finances to pay off the loan.
4. Sort Your Education And Retirement:
Life insurance just doesn’t mean insurance for your life only. It also provides cover for your income. For retirement, annuity is a very good option to consider. After investing in an annuity, you will receive a regular income till your survival. So if you haven’t considered this option, I think it’s time you do.
As for your education, there are education plans offered by the insurance companies for your children, so that in case of an unfortunate event, your child’s education will not be compromised in the bargain.
5. Earlier The Cheaper:
The earlier you buy a life insurance cover, the cheaper it is for you. While you are still young, there is a very low chance of you getting diagnosed with various diseases. So it’s always better to take insurance earlier, so you do not have to spend much when it comes to premium payment, it will be affordable.
6. Insure Your Business:
Insurance is a very handy tool if you have a partnership business. You can take insurance on your partner’s life, so that if he/she passes, the company can use that money from the claim to make up for the loss of the deceased partner. The money can also be given to the nominees of the deceased’s family, this way they do not have to give them a share in the company.
7. Regular Income:
Apart from your basic cover, insurance also provides you with regular income. So if the insured passes away, the family members will get the death claim as well as regular income will be provided to the family. This way the family can use the claim for the immediate expenses and the regular income for their monthly expenses.
8. Sometimes It Can Be Too Late:
The famous phrase ‘It’s never too late’, but in insurance, it can be too late. Do you think a person at the age of 55 or 65 or 75 years of age can get an insurance policy easily? No insurance company will take that risk, and even if they do, then the premium amount will be so high, you might not be able to afford it. So don’t wait for it to be too late.
9. Back Up To Fund Long Term Goals:
Now you may think, we have investments for that. But a lot could go wrong with your investments. In this case, we will consider how an insurance policy, can come to your rescue. For example, you are investing through SIP, to achieve a certain goal in say 10 years down the line, after 5 years, you pass due an unfortunate accident. Now from where is your family going to get the funds to continue that SIP, and how will they be able to reach that goal? But if you had an insurance policy, your family can use the death claim amount to continue with the SIPs.
I think these reasons are more than enough to at least think of buying insurance. You may have had bad past experiences with insurance, but now you are aware of the options available to you, which can help you plan accordingly. So if you still have doubts about your choice, then always consult an adviser, they will guide you in making the right choice. So get insured and get that ‘Peace Of Mind’ in return.
The modern times have seen a whole lot of progress in science and technology. There are newer and improved treatments for critical diseases which were not available earlier. As such, life expectancy has increased. However, one cannot ignore the rising incidence of diseases too.
Modern man is increasingly falling ill with major illnesses because of poor lifestyle. Heart-related ailments, cancer, organ transplants, etc. are victimizing more and more individuals. Against the cases of rising illness, medicine too has become expensive. A simple hospitalization drains you of thousands of rupees and sometimes even lakhs. Imagine if you contract a critical illness. Do you know the costs involved? It will definitely be in lakhs depending upon the disease.
Critical illnesses and their treatments damage your health and your savings. Having a critical illness plan, therefore, becomes necessary. These plans help provide the required funds for managing your critical illness.
You might be thinking that “I already have a health insurance policy, then do I still need a critical illness plan”. Well, it is important to know that your basic health insurance policy does not cover the critical illness. These are usually excluded from your mediclaim. So in case you are diagnosed with critical illness, your health insurance policy will not come to your rescue.
Do you know what such critical illness plans are and how they help?
What are Critical Illness Insurance plans?
Critical illness plans are health insurance plans which pay a lump sum benefit on diagnosis of a critical illness. The plan covers specified illness. When you are diagnosed with any of the covered illnesses, the chosen sum insured is paid immediately.
If you are wondering “Is COVID-19 covered under critical illness plans or not?” Let me clear that COVID-19 is not considered to be a critical illness as per insurance companies. Your normal health insurance covers the coronavirus treatment as per IRDA guidelines.
So what all diseases are covered under critical Illness plans? Let us have a look:-
- Heart Attack
- Multiple Sclerosis
- Major Organ Transplantation
- Kidney failure
These are some of the diseases covered under this plan. The number of diseases covered varies as per plans and insurers. It usually is in the range of 8 to 40. It is suggested that you check the list of critical illnesses covered before buying the plan.
Why do you need one?
As stated earlier, critical illness plans are helpful when you suffer from a critical illness. The reasons why a plan is advised are as follows –
1. It helps in supplementing your health insurance coverage
If you already have a health insurance plan you can avail the coverage for the treatment of your illness. But would the coverage be sufficient? Critical illnesses require extensive treatments and such treatments don’t come cheap. As a result, your health insurance coverage might fall short of meeting the expenses of the illness.
When you have a critical illness plan you get an additional payment on diagnosis of a major illness. This payment helps supplement your health insurance coverage. You can, thus, avail specialized treatments with the additional funds which you get.
2. The plan benefit can be put to any use
Yes, a critical illness insurance plan helps in supplementing your health coverage. But what if you have other expenses to take care of? Where would you get the required funds? From a critical illness plan for sure. The benefit of a critical illness plan is that you receive lump-sum benefit irrespective of expenses incurred. This compensation received can be used anyway. You can use it to avail specialized treatments, for paying off loans, meeting lifestyle expenses or on your recovery. There is no restriction on the fund’s usage. Isn’t it great?
3. You can save taxes too
If the above-mentioned benefits are not enough, you also get the tax advantage when you buy a critical illness plan. The premium which is paid for buying the plan is exempted from tax under Section 80D of the Income Tax Act. The limit is Rs.25,000 which increases to Rs.50,000 if you are a senior citizen.
Types of Critical illness plan
If you are to protect your pockets from the brunt of expenses incurred on critical illnesses, you better equip yourself with a critical illness plan. Even if you have health insurance, invest in a critical illness plan for better protection. You can buy the plan two ways –
- As a rider
- As a standalone plan
A rider is an additional coverage clause which can be added to a basic life or health insurance policy by paying an additional premium. Though riders are good, a standalone plan is better because of the scope of coverage available. Standalone critical illness plans provide better coverage than riders. They cover more illnesses and can be customized too.
So, include a critical illness plan in your portfolio. You would have to part with a couple of thousands in premiums but the benefits far outweigh the cost. In today’s age when diseases are rampant it is better to be financially prepared, isn’t it? You may download the fintoo App and buy a suitable critical illness plan.
Have you got your health expenses covered? Or are you still confused whether to take a family floater or an individual health cover? Well, whether you fall sick often or not is not the point, health insurance plan is to cover the risk of your medical bills going over budget. Some people fall sick quite often in a year, whereas some fall sick maybe once or twice a year, there are some who also fall sick, every time the weather changes, this is normal.
But what happens, when there are viruses going around, like COVID-19?
Medical bills are bound to go over the top. This is something no one can predict, as it doesn’t happen often. So if you are still thinking that you do not need health insurance, then think again.
For a family, with a husband, wife and children, there are 2 options of health insurance. One is individual health insurance and the second family floater. Under individual health insurance, each member of the family gets a separate health insurance policy, whereas under family floater, there is one cover spread over all the family members.
For example, Mr. Jay, 33 years of age, his wife Mira 31 years and one son Vijay, 9 years. Jay is thinking of buying a family floater worth Rs 5 lakhs, so this 5 lakhs is for all the family members. This means that if the medical bills of all 3 of them come up to 6 lakhs in a year, they will be reimbursed only till 5 lakhs.
Now let’s take the same above example, but in this case, Jay wants to buy individual policies for his wife and child. So he takes a policy of Rs. 3 lakhs per person. This way if each of their medical bills come up to 2.5 lakhs, they will all be able to claim their amounts.
Must Read :- How Much Life Insurance Do You Really Need?
Now let us throw some light on lesser known facts:-
- In a family floater policy, when a child becomes an adult. They have to be moved out of the family floater cover. The maximum allowable age of a dependent child varies from 18 years to 25 years. It is different for different insurers. Beyond this specified age, they are treated as adults. They have the option to buy an individual cover without impacting the continuity benefits such as waiting periods. It will remain intact with the insured who is taking an individual plan.
- In individual cover, the entire sum insured is for an individual and it is not shared among all the family members like family floater cover. If we look at the amount of cover available here, the better option is individual health insurance policy. But all good things come with a price, here the price to pay is higher premium than a family floater.
- Family floater Cover works on the principle that it is very unlikely that all the family members get admitted to the hospital in the same year. Therefore, each member could utilise the maximum limit of cover.
- The premium of family floater plan is decided based on the age and health of the eldest member who carries the maximum risk. This could prove to be a disadvantage if the health of even one member is below average. It will have an impact on the premium.
So what should you do?
We would suggest that you go for a family floater health Insurance Plan if you have little kids, and no major disease or illness. Floater plans will offer you better cover at lower cost than multiple individual plans.
But in case your family has a history of chronic issues, floaters will be inadequate and therefore buying individual health cover will help in the long run.
If you have any further queries, you may download our fintoo App to discuss with our experts to guide the best insurance product for you and your family. Stay Healthy!