People looking for term life insurance coverage frequently ask us, “How much term life cover do I need? ” The amount of life insurance that each person needs will vary depending on a variety of circumstances. In this post, we will discuss the factors that will influence how much life insurance you need.

3 Important Factors to Consider

Before choosing any life insurance plan, consider the following three most crucial factors to take into account while deciding how much term life cover is required:

• Does it cover your financial liabilities and loans?

Even if something unfortunate were to happen to you, unpaid debts like your home loan or car loan would still need to be repaid. In addition, you can have further unpaid debts. Make a list of all these liabilities and do the math to determine your total amount owed that must be paid regardless of what.

• Does it include both primary and secondary education for your kids?

If you are the sole breadwinner for the family, you are responsible for your child’s financial stability. Your child shouldn’t be denied the education s/he needs in the event of your unfortunate demise. Hence, determine a likely cost based on the program and institution you want to register your child in.

For example, A 4-year engineering program, which costs around 5 to 8 lakhs today, by 2025, it would likely cost at least 15–16 lakhs. Further, it is likely to reach 20 lakhs by 2030 and 35 lakhs by 2040. Hence, keep the inflation rate in mind while calculating the cost.

• Does it cover replace your current income?

Your family’s monthly expenses, such as those for groceries, transportation, medical care, and housekeeping, are also covered by your current salary.

These expenses could change if an unexpected incident occurs or if you retire. Say the monthly expenses for your household are ₹ 45,000 at the moment. Due to rising prices and an improvement in the level of living, this may rise in the future. Hence, decide how much you might need to spend annually to cover the family’s essential costs.

Calculate the Coverage You Require

After you’ve finished, add up all these numbers to get an idea of the total life cover you require. Your term plan’s sum assured must cover the expenses. If it is, you can relax knowing you have enough protection. It is that simple!

The Final Step

Now analyze and compare every term life insurance plan offered on Elephant.in and buy the one that seems most reasonable. Do not forget the premium cost that you will have to pay each month or annually while making this decision.

Between 2021 and 2022, Indian ownership of term insurance plans increased from 39% to 43% ¹.

Undoubtedly, the COVID-19 pandemic has made us realize the importance of having a term life insurance plan!

It’s a type of plan that provides pay-out to your nominee(s) in the case of your unfortunate demise.  This pay-out will not only protect your loved ones from a sudden loss of income but also help paying back the unpaid loans such as home loans, student loans, etc.

Even though it’s smart to buy term insurance early, you still have time! So, yes! It is worth buying term insurance in your 50s. Here’s why:

5 Benefits of Buying Term Insurance in Your 50s

Here are the five most important benefits of buying term insurance in your 50s:

1. Replace Lost Income and Pay Living Expenses

Irrespective of your age when you die, a term plan can help your dependents make up for the lost source of income, especially if you were the sole breadwinner. The pay-out received can help them pay their living expenses.

2. Meet Your Family’s Lifestyle Needs

Over time, our lifestyle requirements change. Alongside, inflation keeps rising and that brings down our purchasing power. The pay-out that your nominees get from term insurance can financially aid them to maintain their lifestyle.

3. Protection against Liabilities

You may have taken out loans to buy a house, a car, and other assets. You can rest assured that even if you pass away, the burden from these loans won’t put your family in financial danger. If something tragic happens, the payment from the term plan might be able to pay off the loan(s). Moreover, his gives them peace of mind to focus on their own needs.

4. Financial Security for Children

Your kids are growing and so are their costs to have a stable livelihood. The maturity benefit of term insurance can also help financially secure the future of your children, at least until they start earning themselves.

5. Tax Benefits

Taxpayers may claim specific tax benefits in accordance with the guidelines set in the Income Tax Act. The most often claimed tax benefits fall under Section 80C and Section 10(10D). Please note that the tax norms are subject to change.

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To conclude, you can enjoy the above benefits irrespective of the age at which you opt for term insurance. So, compare and buy the best term life insurance plan most suited for your and your family’s future financial security.

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Tax Disclaimer: Tax benefits are defined by the Income Tax Act of 1961 and are subject to any future changes. It is suggested that you consult with a tax consultant.
Sources: https://www.business-standard.com/article/finance/term-insurance-ownership-has-risen-to-43-from-36-in-two-years-ipq-survey-122022300838_1.html

A Term Insurance Policy is one of the most basic and traditional forms of life insurance. There must be someone to look after the expenses of your family and term insurance does this job in your absence.

These plans protect your family against unforeseen circumstances by offering financial security for managing their expenses if you are not around. A specific time period assigned to the term insurance plan is known as the plan term. In case a policyholder dies during the plan term, your family is paid a sum assured by the insurance company.

Term Insurance can be broadly classified into 6 types, based on their coverage and term insurance benefits:

1. Level Term Plan

It is the most simple and basic form of term insurance where the sum assured is fixed throughout the policy tenure. Nominees will receive benefits after the death of the policyholder.

2. TROP (Term Return of Premium)

This insurance plan comes with a maturity benefit wherein the total premium amount will be returned to the insured if he/she survives the policy tenure.

3. Increasing Term Plan

While maintaining the premium amount at the same value, the policyholder has the option to increase the assured sum annually during the tenure.

4. Decreasing Term Plan

Unlike the increasing term plan, the sum assured keeps on decreasing every year to meet the decreasing insurance requirements of the policyholder. This policy comes in handy if the insured person has taken a huge personal loan or is paying an EMI.

5. Convertible Term Plans

With these plans, the policyholder can convert this plan into any other type of insurance plan at a future date. For instance, if you have bought a term insurance policy for 25 years, but after 5 years, if you want to convert it into whole insurance, an endowment plan, etc., you can change it without any hassle.

6. Term Plan with Riders

This type of plan comes with rider options such as critical illness cover, death cover, etc., which can be purchased with the term insurance by paying a small premium.

Life throws a lot of surprises, and these surprises may be bitter sometimes. You can visit Elephant and opt for online term insurance to protect your family against the uncertainties of life.

The outbreak of the COVID-19 pandemic turned everybody’s life upside down. As we faced infinite hurdles, we understood just how unpredictable life can be. The reality of the increasing death rate encouraged us to buy term life insurance. Better to be safe than sorry!

Term life insurance offers life coverage up to a certain period of time, i.e. the ‘term’. In case, the policyholder dies during the active years of the policy, then the family of the deceased receives a pre-decided monetary benefit from the insurance provider. In case the policyholder does not pass away, the policyholder gets an agreed sum of money on the maturity of the policy

• Coverage: The most common mistake we make is, calculating the required amount of coverage. You must consider the aspects such as age, average monthly expenses, current loans, and lifestyle. Experts recommend buying a policy with a death benefit of at least 7-10 times your annual gross income.
• Policy Period: The next important point to consider is the policy period. When you purchase a policy, choose the maximum available policy period. Opt for a term insurance plan at an early age if you want higher insurance coverage at a low premium.
• Right Insurer: It is important to consider the following parameters before choosing an insurance provider:
• Claim-settlement Ratio: It is the ratio of the number of claims settled by an insurance company and the number of claims filed by the policyholders. It is advisable to go for the insurance company with the highest claim-settlement ratio(CSR)
• Solvency Ratio: It highlights the insurer’s ability to pay out policyholder claims.
• Provide accurate information: Many companies reject claims on account of discrepancies filled in the form. Fill correct details, especially:

1. Date of Birth
2. Medical History(If you are a regular drinker, smoker, or may be suffering from an acute disease, do not hide these details from your insurer)
3. Family Medical History
4. Profession
5. Any other insurance policy you hold.

• Choosing Ad-on: Choosing suitable riders is an added benefit that provides additional coverage in the term insurance plan.
• Critical Illness cover: On being diagnosed with critical diseases mentioned in the policy by the insurer, a lump sum amount is paid to the policyholder.
• Waiver of Premium on critical illness: Future premiums are waived off if the policyholder is diagnosed with a critical illness mentioned in the policy during the policy tenure.
• Waiver of Premium on disability: If a policyholder becomes permanently disabled during the tenure policy, your future premiums would be waived off.

Before buying a term insurance plan, there are a lot of points that you should consider. Be sure to compare various plans on Elephant.in before finalizing the one you want to buy.

The first thing to remember is that having depression or anxiety doesn’t have to hold you back from getting life insurance, as most people have a mental illness at some point during their lives. And from the past ten years, the percentage of young adults experiencing mental illness has significantly increased. If you have a complex mental health history, it can be challenging if you have never shopped for life insurance. Under this blog, you can get a clear idea about employee life insurance and make the process more comfortable than ever.

Can you get employee life insurance if you have depression or anxiety?

If you die, life insurance is there to provide a financial cushion for your family or loved ones. Even if you are dealing with mental health challenges, there is a life insurance policy out there for nearly everyone. As insurers want to know how likely you are to die when you apply, your health is one of the main things that insurers consider. You might be wondering if life insurance covers people with depression and other mental illnesses if you have a mental health diagnosis. How severe it is and how it might affect your life expectancy will decide the impact of depression or anxiety on your life insurance.

For instance, it might not have much of an impact if you have a history of mild anxiety and depression that is well-controlled. Your insurance company will ask you health questions, including questions about your mental health when you apply:

• Are you being treated by a medical health professional or therapist?
• Which medications or other treatments are you taking?
• How severe is your condition?
• When were you diagnosed?

You might also need to take a medical exam and provide details on current and past prescriptions depending on the type of policy, such as employee term life insurance. 

Ideas for getting covered with depression or anxiety:

• Learn to be honest- If your insurer finds out later that you lied, it can decline to cover you or deny your family a life insurance payout later. Still, it might feel awkward to discuss personal details about your anxiety and depression. Your life insurance company will be better equipped to help you find the right fit if you are honest about your condition.
• Look around- If you have a history of health issues, then some life insurance carriers might be more lenient than others.
• Avoid giving up. There are life insurance options available where you are not required to take a medical exam if you don’t qualify for term life insurance or permanent life insurance.

How will mental illness affect employee term life insurance?

It may not impact your rates much if your depression or anxiety is mild and you’re under professional care. It could raise your rates or prevent you from qualifying at all if it is severe and you’ve been hospitalized or are at risk of suicide. Your loved ones receive a cash payment called a death benefit to use for whatever they need if your policy is still active when you die.

Financial worries are the most painful ones that each of us undergoes in our daily life cycle. Death is not invited and if there occurs an unpredicted death, it may affect our family badly if our financial state is low.

Life insurance cover is a good goal as it will provide security for the family. A part of our income can be safely handed to the life insurance cover every month or year as per our convenience and can get super befitted. Few insurance policies are very flexible, and they also get differ in the rates and the types of covers that are chosen like term insurance benefits, term or permanent life insurance, or even whole life insurance and premium life insurance.

Life insurance also provides income tax benefits that include free of tax for any death, thus beneficiaries can be free from paying the tax and even no tax for the cash whose value grows time by time. However, 10% of tax is to be paid as income tax if we earn more than the limit that is as per the quote each insurance policy undergoes. Yes, it is more important to know about each insurance policy in the insurance market before buying it. There are chances to buy life insurance policies even with pension funds. For pension fund insurance, there will be tax relief based on the premium. Hence, everyone can get premium life insurance based on the age and premium they pay.

Talking about the age limit, the minimum age to enter term insurance is around 18 years and the maximum age is 69 years (pensioner included). Also, the term will get varied with the basic pay too. Term insurance will suit the people who have loan issues and if the budget is too low. Term insurance tax benefits may vary based on the TDS (tax deduction source). To avail of insurance tax benefits, one must have the annual premium at least 10 times. All the tax benefits are calculated by the income tax rules. Section 80C and 10D are the tax acts that are used in current tax benefits calculations.

Plan to go for 10 times plus for an annual premium and get benefited. If the sum is less than 10 times the annual premium, then 10% of the amount will be deducted. However, the beneficiary gets free on tax payments when the plan holder is no more. Plan holders aged below 45 years can have 10 times the annual premium, and the plan holder of age above 45 years gets seven times the annual premium. Insurance policies are a bit difficult, but if the plan holder chose the right one, then it will be more beneficial for the plan holder and the beneficiary.

Planning for life insurance based on income is the best thing one must have in mind before entering into the insurance policies. Let our family settle well even in the absence of the family head (income source).