Term plans are evolving. Here’s what’s new – The new age term plans
Term plans have become popular amongst individuals nowadays. The unparalleled benefits endowed by the plans are the driving USP behind its popularity. People are increasingly becoming aware that they need to ensure the replacement of their income for their family in case of their premature demise. This replacement is provided by term plans at very marginal costs making them popular. Even insurance companies have acknowledged this popularity and have made revolutionary changes in their term products. As such, today, you can find a newer and improved version of your beloved term plans which promise much more. Do you know what is new?
You might not and so here is a list of new evolved features which come inbuilt in current term insurance plans:
Different types of payout options
Gone are the days when term plans promised only lump sum payouts. Today, you can find plans where the payouts are of different types. Some common payout options include the following:
- Lump sum payout – this is the traditional payout option which has been present ever since term plans were introduced. This option pays the Sum Assured in lump sum. If you know that your nominee is investment savvy and would be able to invest the lump sum benefit in good investment avenues after your demise, you can choose this payout option. If you buy Aegon’s iTerm Plan for a Sum Assured of Rs.50 lakhs, a lump sum benefit of Rs.50 lakhs is paid on death.
- Monthly payouts – this new addition to a term plan is where the death benefit is paid in monthly instalments for a specified period of time. The duration for which monthly payouts would continue is mentioned beforehand. Moreover, in many term plans, the monthly payouts also increase on an annual or monthly basis. You can choose this payout benefit if you want your family to receive regular incomes in your absence. For instance, ICICI Prudential’s iProtect Smart Life Plan with Sum Assured Rs.50 lakhs pays Rs.41, 700 every month for 120 months.
- Combination of lump sum and monthly instalments – as the name suggests, under this payout option, the death benefit is paid partly in lump sum and partly in instalments. For instance, Aegon’s iTerm Plan also has the option of taking the benefit partly in lump sum and partly in instalments.
You have the freedom to choose a term plan depending on its payout option and your suitability.
Riders are additional coverage options which can be selected for an enhanced coverage experience. Earlier, term plans gave you a list of riders to choose from. However, today, you can also find inbuilt riders in the plan benefits. These inbuilt riders pay an additional benefit in case you face the contingency covered by the rider. Some common inbuilt rider benefits which you can find in term plans include the following:
- Accidental Death and Disability Benefit – in this benefit you get an additional Sum Assured in case you suffer an accidental death during the plan tenure. Even in case of accidental disability you get an additional Sum Assured which is usually paid in instalments.
- Terminal illness or Critical Illness Benefit – this benefit covers a list of terminal or critical illnesses. If you are diagnosed with any covered illness during the term of the plan the benefit pays the Sum Assured.
- Premium Waiver Benefit – under this benefit, the future premiums get waived off in case of an accidental disability. The plan continues as the company pays your premium on your behalf.
- Waiver of premium on critical illness – if you get disabled in case of any critical illness your premium is also waived.
Terminal Illness benefit is inbuilt in AEGON’s iTerm Plan. ICICI Prudential iProtect Smart Life Plan has inbuilt riders of Waiver of Premium in case of Accidental Disability and Terminal Illness. If you opt for Smart Life Plus plan, you get an additional inbuilt rider of Accidental Death Benefit. Aegon’s iTerm Plus plan waives the premium in case you are diagnosed with a critical illness.
Read more to understand life insurance terminologies
Understand the basics of term insurance plans by watching the below video
Online term plans
The online medium has redefined the way we transact. You can compare and buy a term insurance plan online. These plans have lower premiums since they are sold directly by the insurance company. Moreover, the underwriting rules are less stringent. You are simply required to fill an online application form, pay the premium and the policy is, usually, issued in an instant. No more elaborate paperwork and unending wait for the commencement of insurance cover.
Higher coverage tenures
Even the coverage tenures have been increased in new term plans. You can easily get coverage till 85 years of age under many plans. Moreover, some plans also allow you to convert your term plan into a whole life pan which runs till you reach 99 or 100 years or age.
Finally, here’s the sweetest deal for the last point. Term insurance premiums have become cheaper than they were before. Increased competition in the insurance market and improvement in the mortality rates have lowered the premiums considerably. Sweet, isn’t it?
Change is the only constant and term plans have embraced this motto. They have evolved and become more customer-friendly. So, if you have not bought a term plan till now, don’t wait. Buy a term plan at the earliest and enjoy the new benefits.
Read more about Life insurance policy in India – How does it works?
Read more about Top 5 insurance myths you need to know
Read more about Common terms in life insurance policies
Feel free to share your comments below: