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Cheap & Affordable Term Insurance in India

Looking for Cheap & Affordable term insurance in India? Read on for more information on how to find the right coverage for your needs.

Low-cost Term Insurance in India

Home / Life Insurance / Term Insurance Benefits / Low-cost Term Insurance in India

In today's uncertain times, having financial security and protection for your loved ones is crucial. One of the best ways to ensure financial security is by purchasing a term insurance policy. However, many people often shy away from purchasing Term Insurance due to the perception that it is expensive. Contrary to popular belief, many affordable term insurance policies are available in India. In this guide, we will provide you with all the information you need to know about low-cost term insurance in India.

What are the types of low-cost Term Insurance?
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Here are the types of term plans available to those looking to get life insurance

Normal Term Plans
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In case of a policyholder's unexpected death during the policy term, a Normal Term Plan pays out a death benefit. However, unlike Regular Life Insurance, no bonus is paid out at the end of the policy if the insured person lives past the policy term. You can get the maximum sum assured for a decent cost in life insurance, and the premium is far lower than it would be for a Normal Term Insurance policy.

Level Term Plans
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The sum assured remains constant during the policy's duration, and the beneficiary receives a death benefit upon the life insured's passing.

Return of the Premium Term Plans
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Return of Premium Term Plans offers the death benefit if the policyholder dies within the policy period. If the policyholder survives until the end of the insurance term, they will get a full refund of their payment, less any applicable taxes. The premium for a Return of the Premium Term Plan is typically twice as much as the cost for a Regular Term Plan. You also can only cancel your coverage after the policy's expiration date. If you stop making premium payments or cancel the plan before the end of the term, the insurer is under no obligation to return any already-paid premiums.

Increasing Term Plans
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In these policies, the policyholder can increase the sum insured annually during the policy's term for the same annual premium. This justifies a higher premium than that of level-term policies for these plans.

Decreasing Term Insurance Plan
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A decreasing term insurance plan provides life coverage that decreases every year for a fixed term. These plans are typically used to cover specific liabilities, such as a home loan or personal loan, where the outstanding amount decreases over time. The premium for this type of plan is also fixed and remains the same throughout the policy term.

Convertible Term Plans
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A provision in these plans allows the policyholder to switch to another form of insurance plan later. For instance, if you get a 20-year term insurance policy but decide after 5 years that you'd rather have an Endowment Policy, a Whole Life Insurance policy, etc., you can easily switch to the alternative.

Term Plans with Riders
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In addition to the standard term plan, you can add riders such as Accidental Death Insurance and Critical Illness Cover for an additional premium. Suppose a person purchases a rider and is later granted a Premium Waiver Benefit, they will not have to pay premiums for that rider anymore.

Advantages and specifics of low-cost Term Coverage
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Low-cost Term Insurance provides affordable Life Insurance with no accumulation of cash value, making it a great option for those who seek to protect their loved ones without having to pay high premiums. Here are some benefits.

Easy cancellations
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You can cancel your plan after a specific grace period if you don't need it.

Refund of premium
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 If you ask for early policy termination, you might not get the entire premium back.

Lifelong cover
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 Lifetime protection is available for those who want to be insured for the long haul but are still determining when they'll retire. However, premiums must be maintained for a considerable time.

Reasonable premium amount
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The premiums for a Low-Cost Term Insurance Plan are quite low compared to the long-term return on investment.

Standard with premium return
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The Low Premium Term Insurance Plan combines the best features of both Regular Term Insurance and premium refund policies.

How is low-cost Term Plan different from other Term Insurance Plans
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In a traditional long-term policy, you must maintain payment of the premium throughout the policy. In the event of your untimely demise, your designated beneficiary or nominee will receive the predetermined payment.  Term Return of Premium (TROP) is another choice. However, sometimes, the premiums for these policies can be significantly higher than those of standard term insurance policies.

The Low-cost Plan gives you more flexibility than the other choices by allowing you to skip payments whenever you need to. You can stop being insured and receive a refund of all premium payments once you no longer have any financial obligations or are retired and have more than enough money.

Who should buy Low-cost Term Insurance?
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Term insurance is a popular type of life insurance in India. It is a pure protection plan that provides financial coverage to the policyholder's family in case of the policyholder's untimely demise during the policy term. Term insurance is a low-cost option with high coverage, making it an attractive choice for many people. Here are some situations in which buying low-cost term insurance in India makes sense.

Young working professionals
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 Young working professionals who have just started their careers and have financial dependents, such as parents or spouse, should consider buying term insurance. The premiums for term insurance are low when bought at a young age, so it is an ideal time to buy it.

Newly married couples
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 Newly married couples who have started a family should consider term insurance to secure the financial future of their dependents in case of an unforeseen event. Term insurance can provide a financial cushion to the family to take care of their expenses and other financial obligations.

Individuals with high-risk jobs
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Individuals working in high-risk jobs such as mining, construction, or aviation should consider term insurance as it provides financial security to their dependents in case of an accident or sudden death.

Single parents
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Single parents who are the sole breadwinners of their family should consider term insurance to secure their children's financial future in case of their untimely demise.

Small business owners
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 Small business owners who have taken loans or have financial liabilities should consider term insurance to secure their business and family's financial future in case of their sudden demise.

What are the documents required to apply for a low-cost Term Plan?
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To apply for a Low-Cost Term Insurance policy, you will need to provide the following information.

Before you buy a Term Insurance policy, you should be aware of the kinds of plans available and documents required. Under a low-cost plan, you can cancel your Term Insurance Policy without losing your premium amount.

Should you invest in a Low-Cost Term Plan?
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Compared to the Normal Term Plan and the Return of the Premium Term Plan, the brand-new Low-Cost Term Plan is far more reasonable. In case of the policyholder's untimely demise, the sum assured is paid to the nominee. As with a standard Term Plan, the policyholder can request a refund of premiums paid (less any applicable non-refundable fees or taxes) by simply notifying the insurer of this decision. 

Suppose you're thinking about purchasing a term policy, it's a good idea to research the insurers that provide it. Also evaluate how it stacks up against a Normal Term Plan and Return of the Premium Term Plan. premium, coverage, customer service, renewability, ease of purchase, claim settlement ratio, claim settlement process, etc., should also be considered. Read the policy's terms and conditions before purchasing the Low-Cost Term Plan to avoid unwelcome surprises.

What are the Long-term considerations of Term Insurance Plans? 
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Most affordable term insurance policies cover the insured for 35 to 40 years. The policyholder can end the policy in the 25th year if the term is between 40 and 44 years or at age 65, whichever comes first. The policyholder may end coverage in the 30th policy year or at reaching age 65, whichever comes first, for terms of 45 years or more.

The exit option is only accessible if the policyholder keeps the plan in place for a long time. It's important to remember that policies have varying terms for when you can cancel your coverage.

Who favours Low-Cost Term Insurance Plans? 
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Industry professionals say cheap-term policies appeal to the subset of consumers who worry they will have wasted their money on insurance premiums if nothing bad ever happens to them. If the policyholder exercises their right to end their coverage, their premiums will be significantly reduced.

For those who have amassed sufficient assets and accomplished their life goals by their fifties, a Low-Cost Term Insurance plan may be unnecessary. People who avoid term insurance because of lack of return on investment can consider this alternative.

Customers who worry about losing the sum assured for term cover if they outlive the policy period favour low-cost policies.

Determining factors for Term Life Insurance rates
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Here are some factors that determine the rate of Term Insurance plans.

1. The impact of age on premiums: Your age plays a significant role in determining Term Life Insurance premiums. Generally, the younger and healthier you are when purchasing a policy, the lower your premiums will be. As you age, the likelihood of health issues increases, and so do your insurance premiums. Buying this policy early in life is advisable to secure the most affordable rates.

2. Health and its influence on rates: Your overall health is another critical factor that affects term life insurance premiums. Insurers will often require a medical exam to assess your health status. Factors such as weight, blood pressure, cholesterol levels, and pre-existing conditions can influence your premiums. Individuals with excellent health can expect lower premiums, while those with health concerns may need to pay higher premiums. Maintaining a healthy lifestyle can help you secure better rates.

3. Occupation and its effect on premiums: Your occupation can also impact the policy rates. Insurers consider specific jobs riskier than others due to factors such as exposure to hazardous materials, heavy machinery, or dangerous environments. If you work in a high-risk profession, you may face higher premiums or have difficulty finding coverage. On the other hand, if your job is considered low-risk, you're likely to enjoy cheaper rates.

4. Hobbies, lifestyle choices, and premiums: Insurers consider your hobbies and lifestyle choices when determining premiums. If you engage in high-risk activities such as skydiving, rock climbing, or motor racing, you may face higher premiums or even exclusions related to these activities. Additionally, lifestyle choices like tobacco use, excessive alcohol consumption, or a history of drug abuse can negatively impact your Term Insurance rates. 

5. Length of term and coverage amount: The policy period and the sum assured you choose will also influence the policy rates. Generally, longer terms and higher coverage amounts result in higher premiums. However, these factors should be carefully considered based on your financial needs and goals. Balancing the term length and coverage amount with your budget will help you find the most affordable and suitable Term Life Insurance policy.

Tips to make Term Insurance affordable
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Here are some tips to lower your Term Insurance premium.

1. Compare quotes from multiple insurers
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Getting quotes from various insurance agencies before deciding the best option is a great way to find affordable Term Life Insurance. Premiums can vary significantly between companies, even for the same coverage.

By comparing multiple quotes, you can identify the best rates and find a policy that suits your needs and budget. Utilise online comparison tools or work with an independent insurance agent to gather and evaluate different options.

2. Considering shorter terms and lower sum assured
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As we saw earlier, your term length and coverage amount heavily influences the insurance premium. If you want to save on costs, consider opting for a shorter term or lower coverage amount. However, exercise caution when making these adjustments to ensure you don't compromise the financial security of your loved ones. 

3. Improving health and reducing risk factors
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Taking proactive steps to improving your health and mitigating risk factors can lead to affordable Term Life Insurance rates. Here are some ways to enhance your health and minimise risks.

  1. Maintain a healthy weight: Obesity might lead to various health complications, which may result in higher premiums. A balanced diet and regular physical activity can help you achieve your health goals and maintain a healthy weight.

  2. Manage stress: Chronic stress certainly impacts your health, contributing to higher blood pressure, heart disease, and other issues. Practice stress management techniques such as meditation, exercise, or therapy to maintain optimal health.

  3. Quit smoking: Tobacco use is a significant factor in determining life insurance premiums. Quitting smoking can drastically improve your health and help you secure lower Term Insurance rates.

  4. Limit alcohol Consumption: Excessive alcohol use can lead to various health problems, including liver disease and increased cancer risk. Limiting your alcohol intake can positively impact your overall health and insurance rates.

  5. Practise safe hobbies: If you engage in high-risk activities, consider adopting safer hobbies or taking precautions to reduce risks associated with your current hobbies.

Is the cheapest Term Plan the best option for you?
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Let’s understand if the cheapest option is the best one for your needs.

Understand the trade-offs
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While finding affordable Term Life Insurance is essential, focusing solely on the cheapest option may not always be the best approach. The lowest-priced policies may come with compromises, such as limited coverage, less reputable insurers, or exclusions that may not adequately protect you and your family.

Balance cost and value:
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Instead of fixating on the cheapest Term Insurance Plan, consider a balance between cost and value. Evaluate each policy's features, the insurer's financial strength, and customer service. This approach ensures you obtain a comprehensive policy that offers affordable and adequate protection for your family's financial security.

Frequently asked question
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Here are some common questions about low-cost term insurance in India

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Who should buy a low-cost term insurance plan? 

Everyone should buy term insurance! Whether you're a parent, a newly-married couple, a working woman, a young professional, a taxpayer, self-employed, an SIP investor, or even a retiree, term insurance offers significant benefits. 

Is a medical test required while purchasing Term Insurance?

Yes, a medical test is required while purchasing term insurance. Factors including your age, family’s medical history, the selected guaranteed amount, and lifestyle choices (smoking, drinking, etc) are considered to determine the premium amount before purchasing a Term Insurance. 

Is term insurance available for NRIs?

Yes, Term Insurance is available for NRIs (Non-Resident Indians).