A Mini Guide for Anyone Who Wants to Purchase 1 Crore Term Insurance

With a gazillion expenditures and numerous life goals, you know life isn’t financially easy. If it is not easy now when you are alive, imagine the financial catastrophe if someday something happens to you?

Ensuring financial security for your family is pivotal – it doesn’t matter if you are in the best of your health or not. You don’t know what life throws at you, so it’s a good idea to be prepared for it – financially. 

Buying 1 crore term insurance can be your family’s saviour. It can provide your family financial cover of INR 1 crore against periodical premium payments in an event of your unfortunate demise. 

How Does 1 Crore Term Insurance Work?

1. You Decide the Premium Payment Intervals and the Term Period 

When you are purchasing a 1 crore term insurance, there are numerous decisions to make. For starters, you have to decide the premium payment; you can choose to pay for premiums monthly, semi-annually or annually – whichever suits you the most. 

Then comes the term period. You can consider the term period as the life of a 1 crore term insurance. Your family can only make the claim within this term period to get the sum assured. Ergo, you have to choose it wisely. You cannot go for a shorter-term period if you are young. A term period is best decided according to your age. The younger you are, the longer the period shall be, the older you are, the shorter the period shall be. 

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The minimum term period is usually 5 years, but it can go up to 65-75 years, or a lifetime, depending on the insurer you choose. 

You Make the Purchase and Pay Regular Premiums

It’s easy with term insurance. You pay the premiums regularly to get the sum assured in case of your unfortunate demise. In case, there’s any default on premium payment, your term life insurance can be deemed void. 

Benefits of 1 Crore Term Insurance 

1. Meets the Requirements 

The difference between term insurance and endowment plan is that the latter is a combination of investment and insurance instruments, while the former is just an insurance instrument. That said, a 1 crore term insurance is adequate for a family of 3-4, if you have moderate life savings to bear heavy expenses such as education fees and marriage costs. In case, all these expenses are not needed, and your family lives a moderate lifestyle, 1 crore term insurance is enough to meet the requirements.  

2. Covers Inflation

Inflation never ceases. If you are paying INR 100 for a commodity, then it’s very likely that you’ll have to pay INR 1000 for it in the future. That said, the point remains that your life savings and term insurance coverage can lose value over time. So, it would be ideal to keep inflation into account when you are purchasing term life insurance. Always aim higher than your expenses. A 1 crore term life insurance would be a safer bet to manage your expenses and cope with the effects of inflation at the same time. 

3. The Riders 

Riders or add-ons are additional policy benefits that you can use on top of your base 1 crore term life insurance policy against an extra premium.

In simple words, since term insurance doesn’t function like health insurance, and cannot provide you financial security against hospitalization, riders can give you that to provide extra benefits. 

Although most 1 crore term insurance policies offer you coverage against numerous critical illnesses upon diagnoses at no extra cost, some policies do not. In that case, you always have the option to buy critical illnesses riders to help with hospitalization bills at extra premiums. 

That said, there are other different types of riders you can benefit from. 

• Accelerated Death Benefit Rider
• Accidental Disability Benefit Rider
• Waiver of Premium Rider
• Child Support Rider
• Income Benefit Rider

4. Tax Benefits  

Premiums paid against life insurance or 1 crore term insurance policy come with tax benefits. Premiums paid in a year (less than INR 1,50,000) can be deducted while computing your taxes. 

For instance: If you have paid 30,000 as a yearly premium for your term insurance policy, and your annual income is 7 lakh p.a. Then the tax will be calculated on (7,00,000- 30,000 = 6,70,000). 

A Mini-Buying Guide Before You Make the Purchase:

• Choose an insurer with a higher claim settlement ratio to ensure that raising a claim doesn’t become a hassling process for your family. 
• Select an insurer with a high solvency ratio. 
• Pick the reliable names in the market rather than going for obscure ones even if they offer you low premiums and higher coverage. 

Image credits Kindel Media/Pexels

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