Hey, are you planning to buy a term plan soon? Kudos! That’s indeed a wise decision. However, do you know how much term insurance coverage you need? What coverage would be sufficient? Rs 50 Lakhs, Rs 1 Crore or Rs 2 Crores? Too many questions? Time to churn out the best answers. Read on.
What is Term Insurance Coverage?
Term Insurance Coverage, commonly known as term plan cover or sum assured in a term plan, is the amount that your family or the nominee will get, in case you’re not around. The important point to consider here is that the appointed nominee will get this sum of money only if the unfortunate event happens during the policy period of policy term.
Now, how would you know how much term plan cover would be sufficient for your loved ones after you? The next section shall clear all doubts pertaining to this question.
Points to Consider for Term Insurance Coverage
The following are the important points that should be considered when buying a term plan and deciding on your term plan cover:
Your current income
This is an important aspect. As a basic rule, your term insurance cover should not be less than 10 times your current salary. However, this amount is still less, considering the ever-increasing inflation and other depreciating factors. If you’re very young and have no liabilities, it is alright to go for a cover of Rs 1 crore or even less to suit your budget. In such a case, you can always increase your sum assured later during the policy term. Plans like Max Life Smart Secure Plus give this option of increasing your life cover later, if needed.
Your monthly expenses
Assessing your monthly expenses is utmost important when deciding on your term plan cover. Because your premium will be based on the life cover you choose. The higher the cover, the higher will be your premium. But if you analyse properly, you will be able to strike a balance between your expenses and the premium you’d be paying.
If you’re someone with a long-term expense, like a huge home loan, say of Rs 75 lakhs, it’s better if you choose a term plan of no more than Rs 2 Crores. If not required, you can also tone it down to Rs 1 or Rs 1.5 Cr. If no such liabilities are there, your term plan coverage must be a good Rs 2 Crore, of course depending on your income.
If you’re married, have older parents and/or also have children, buying a term plan becomes a must. With this, the number of dependents directly adds to the total family expenses. So, make sure to keep in mind things like your child’s higher education, marriage and your parents’ health etc. All these require a good amount to cover and the same should be considered while deciding the cover amount or sum assured.
All said, there are 3 most popular term plan covers that people opt for: Rs 50 lakhs, Rs 1 Crore and Rs 2 Crore. In the following section, we’ve listed the best term plans for each amount;
Best Term Plans in India for 50 lakhs, 1 crore or 2 crore coverage
Rs 50 lakhs is a basic coverage that you can get from your term insurance policy. However, it is usually not enough. The goal should be to land with a minimum term plan coverage of 10x your annual income and maximum 20x your annual income.
So, if your annual income is Rs 10 lakhs or less, your best bet is to go for a Rs 1 crore of term plan cover. The following are some of the best term plans in India:
Max Life Smart Secure Plus Plan
This plan can be customized starting from Rs 10 lakhs to an unlimited amount. However, this amount is subject to the approvals received at the time of underwriting. Various factors affect this amount like your current annual income, your financial responsibilities and lifestyle habits etc.
Although it’s a pure term plan with only death benefit, if you prefer, you can enhance the benefits with critical illness rider and permanent disability rider at minimal additional cost.
Other benefits include a return of premium option (up to Rs 3 lakhs*), in case you survive the policy term along with the option of taking a policy break, twice throughout the policy term. In addition, the plan also offers up to 20% lower premiums to women customers.
You can buy Max Life Smart Secure Plus plan for Rs 50 lakhs, Rs 1 Cr or Rs 2 Cr, if you’re between 18 – 60 years of age and avail of the coverage till the age of 85 years.
This plan is suited for all age groups, income groups and life cover, owning to its flexible customization options.
HDFC Life Click 2 Protect Super Plan
HDFC Life offers its basic pure term insurance policy under the name of HDFC Life Click 2 protect Super Plan which offers the following features and benefits to its policyholders:
- Comes with 3 options of Life, Life Plus and Life Goal
- Offers the option to avail early exit
- Same-day claim payment is claimed by the insurer
You can buy this term plan till the age of 65 years and get coverage till you’re 85 years old. Also, just like Max Life Smart Secure Plus plan, there is no upper capping on the death cover. But if you’re more than 65 years old, this option ceases for you.
ICICI Pru iProtect Smart Plan
ICICI Pru is a popular life insurance provider in the country and offers its iProtect Smar Plan under the term plan category. The plan offers accidental death coverage for an amount up to Rs 2 crore (this is a rider). Along with this, you can also availd of their critical illness rider which gives coverage against 19 critical illnesses. However, if this is an important aspect for you, then you must consider Max Life Smart Secure Plus as the plan offers critical illness rider under which you get coverage against as many as 64 critical illness.
You can avail of this plan if you’re between this age group: 18 – 65 years and stay covered till the age of 99 years. This is higher than both the aforementioned plans of Max Life and HDFC Life. If your concern is to get covered till 99 years, then you may consider this particular plan. However, mostly by the age of 99, all of our liabilities are done and dusted with – which means you may not be needing a life cover till 99 years of age. The other two plans that can be put in this category are Tata AIA Sampoorna Raksha Plan and Bajaj Allianz Smart Protect Goal Plan.
How Much Insurance Cover You Need: FAQs
To find the best term insurance coverage, you must multiply your annual income by 10 to 15 times. If your annual income is Rs 10 lakhs, your term coverage should be Rs 1 crore, if not more.
The top 5 term plans in India are Max Life Smart Secure Plus, HDFC Click 2 Protect, ICICI Pru iProtect Smart Plan, Bajaj Allianz Life eTouch and Tata AIA Sampoorna Raksha Supreme Plan.
Yes. Almost all the insurance companies provide the critical illness rider with their vanilla term plan. Max Life Insurance offers coverage against the highest number of critical illnesses, with their rider – 64 illnesses covered. Others include Tata AIA, Bajaj Allianz Life and ICICI Prudential Life etc.