Simplifying Life Insurance in India
1 Crore Term Insurance Plan
Life is the most uncertain gift of nature. All it takes is just one serious accident or mishap, and a family is left shattered- not just emotionally but also financially. More so if the demised is the breadwinner of the family.
This, in today's uncertain times, when ensuring the financial security of our loved ones has become a paramount concern, a well-planned insurance is a saviour that can protect our family against such financial turmoil.
As we navigate through life's myriad responsibilities and challenges, it becomes imperative to have a robust safety net that shields our family from the unexpected. This is where a 1 crore term plan emerges as a formidable solution, offering comprehensive protection and peace of mind.
What is 1 Crore Term Plan?
The term "1 crore" refers to a sum assured of one crore Indian rupees, making it one of the most substantial coverage options available in the market. Thus, a 1 Crore Term Insurance Plan assures that the nominee will receive a sum of Rs. 1 crore after the policyholder's death
While the magnitude of this amount might initially seem overwhelming, understanding the advantages and relevance of a 1 crore term plan is crucial to making informed decisions about financial security.
Let's delve into the significance of a 1 crore term plan and why it has gained immense popularity among individuals who seek to protect their loved ones from financial uncertainty.
How Does 1 Crore Term Plan Work?
Term Insurance Plan is the essential component of any healthy financial portfolio. More than an investment option, it is a financial tool that secures your family's financial future and provides you with much-needed mental peace.
A rightly planned substantial insurance cover ensures that financial obligations like children's schooling, marriage and liabilities like home loans are taken care of, and the family does not deal with economic turmoil amidst the grief that strikes with the loss of a family member.
Let us have a look at how a 1 Crore Term plan would work:
- We know that a Term Plan is designed to last for a pre-determined period or 'term'.
- A 1 Crore Term Insurance provides coverage of 1 crore, i.e., on the death of the life assured, a total of Rs. 1 Crore is paid to the nominee.
- Term Plans provide high coverage in exchange for very affordable premiums. However, in a case where the life assured survives the policy term, there is no return unless you have a Term Plan with a Return of Premium Option that returns all the premiums paid on the policy maturity. There is no additional savings component in any case.
- The premiums for a 1 crore term insurance are not a burden and provide a substantial amount of coverage to your family. It is a very cost-effective option, especially for young, small families.
- In addition to the base plan, you also have the option of adding riders to your policy. These are the add-ons that provide additional coverage in case of situations like critical illness, accidental death, disability, premium waiver, etc.
- Throughout the term of the plan, you are covered. The only requirement being that your premiums are paid on time, failing which the policy lapses after a specific period. Also, your premium remains the same throughout the policy period.
- In case there is an unfortunate demise of the policyholder during this policy tenure, the nominee can approach the insurance provider and file a claim with them. The company then releases the death benefit to the nominee, which in this case is 1 Crore.
Illustration
Let us take the example of Mr Vikram.
Mr Vikram is the sole breadwinner of a family of 4 that includes his wife and two kids, both kindergarteners. He has purchased an insurance cover of 1 Crore, with a term of 20 years, and his wife is the nominee in this policy.
After paying regular premiums for 10 years, one fateful day, Mr Vikram met with an accident and unfortunately passed away. The family and the young kids were traumatised by this accident and were dealing with an irreparable loss.
Thankfully, the term insurance that Mr Vikram had in time purchased saved them from financial turmoil. His wife, being the nominee, received the 1 Crore death benefit that she prudently used to take care of the significant expenses and liabilities.
Why You Need 1 Crore Term Insurance Plan?
A figure of 1 Crore might look extremely high, but for any average person who lives in a city, works in a private company and has school-going kids, the financial requirement at any stage would be this.
A term plan is the most affordable way to financially secure a family for any such unforeseen circumstance when this income might stop due to the demise of the breadwinner.
Here are the other benefits that a 1 Crore Insurance cover can provide you:
High Coverage at Affordable Premiums
Term Insurance plans are the cheapest and most affordable insurance types available in the market. Their cost-effectiveness is because they provide only Death Benefits and have no savings component.
Takes Care of Liabilities and Debts
Having a Term Plan in your financial bucket means that in case of any unforeseen circumstance when you are no longer with your family, the Term Plan will help them repay all debts and liabilities. It ensures they do not have to deal with the burden of any debts you might leave behind. With a Term Plan, you can ensure a debt-free legacy for your family.
Enhanced Coverage
Compared to whole-life plans or other insurance plans with a savings component, term Plans provide much higher coverage for a given premium. You can also enhance that base coverage by adding riders that take care of other specific situations. This ensures that the dependent family is financially secure and can lead a normal life.
Who Should Buy a 1 Crore Term Insurance Plan?
While a Term Plan is the basic necessity for anyone to have in their investment bucket, a 1 Crore Term Plan specifically would be suitable for these categories of people:
Individuals with Dependent Parents
In cases where parents do not receive a pension and are dependent on their sole earning child, Term Plan should be purchased as it would save the parents from any financial turmoil in case of any unfortunate death of their earning child. The insurance cover would take care of their liabilities and regular expenses.
Married Couples
When you get married, there are increased responsibilities. Even when your spouse is earning, your expenses and liabilities are directly proportional to the sum of both incomes. In such a case, a term plan ensures that your spouse does not struggle with finances, even in your absence.
Young Parents
Young parents must buy a term plan of at least 1 crore to secure their child's future. This will ensure that your child's education and other needs do not go for a toss if you are not there with them.
Individuals with Home Loans
If you have taken a home loan and are paying off the EMIs, that loan can burden your family in case of your unfortunate demise. These days, in any city, a decent home costs at least 1 Crore. Hence, make sure to buy a Term Plan for 1 crore dedicated to safeguarding your home.
Small Business Owners
If you are into business, most of the expenses are on credit, and at any given time, you might find yourself under a certain debt. If it is a small business, 1 Crore Term Insurance plan might suffice to take care of these debts in case of your untimely demise and make sure that your family does not have to deal with this pressure of debts at a time when they are dealing with a personal loss.
How to Choose the Right Term Plan?
1. Decide a Sum Assured that is Sufficient for you
We all have our long-term goals, lifestyle requirements and other financial needs. While deciding on coverage, ensure all your financial requirements are met. Additionally, it is enough to take care of all your liabilities and other expenses in case of your untimely demise.2. Compare the Premium Rates
Choose a plan that has the most competitive premium rates. Make sure to compare the plans and choose the one that best meets your requirements at the most affordable rates.3. Check for the Benefits and Riders that the Policy is Offering
Check the plan entirely for all the benefits that it provides. Riders are an essential component because they increase the total coverage of your plan and cover specific conditions like critical illness, accidental death, and terminal illness.
Check your plan for all the rider options it provides, and pick the one most suited to your needs.
4. Check for the Exclusions and Inclusions
Another critical point to check in an insurance plan is the inclusions and exclusions. Check this list thoroughly so that when there is a need, you do not get surprised that your insurance provider does not cover the specific condition.5. Check the Claim Settlement Ratio of the Insurance Provider
Claim Settlement Ratio reflects a company's credibility, and it indicates how quickly your dependents would receive the death benefit in case of your unfortunate demise. The higher the ratio, the more credible your insurer is.
Hence, you must check the claim settlement ratio of the insurance provider before opting for a term insurance plan from them.
FAQs About 1 Crore Term Insurance Plan
What will be my premium for a 1 crore term insurance plan?
Should I buy a 1 Crore term insurance plan or an endowment plan?
What is the benefit of buying term insurance at an early age?
How to find the cheapest term insurance plan?
How does a term insurance plan differ from an accidental insurance plan?
Is the death of an insured person considered for claim in a term plan, if he/she dies outside India?
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Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
