How 1 Crore Term Insurance Plan Works
Coverage Amount (Sum Assured): The key feature of a 1 crore term insurance plan is that it offers a coverage amount, often referred to as the "sum assured," of 1 crore rupees. This means that if the policyholder passes away during the policy term, the insurance company will pay a lump sum of 1 crore rupees to the nominee(s) or beneficiaries.
Policy Term: Term insurance policies come with a predefined policy term, typically ranging from 5 years to 40 years, depending on the insurer and the specific plan. If the policyholder dies during this term, the death benefit (1 crore rupees) is paid to the nominee(s). However, if the policyholder survives the entire term, there is no maturity benefit, and the policy simply expires.
Premiums: To maintain the coverage provided by the 1 crore term insurance plan, the policyholder is required to pay regular premiums to the insurance company. Premiums can usually be paid on an annual, semi-annual, quarterly, or monthly basis, depending on the policy's terms and the policyholder's preference.
Death Benefit: The primary purpose of a 1 crore term insurance plan is to provide financial protection to the policyholder's family and dependents in case of the policyholder's untimely demise. If the policyholder passes away during the policy term, the 1 crore rupees is paid out as a tax-free death benefit to the nominee(s). This amount can be used by the nominee(s) to cover various financial needs, such as daily living expenses, outstanding loans, education expenses, and more.
Nominee and Beneficiary Designation: When purchasing a 1 crore term insurance plan, the policyholder designates a nominee or beneficiaries who will receive the death benefit in case of the policyholder's demise. It's essential to keep the nominee(s) informed about the policy details and how to initiate a claim if necessary.
Medical Examination: Depending on your age and the coverage amount, you may be required to undergo a medical examination as part of the underwriting process. Your health and lifestyle factors can influence the premium rates.
Premium Payment: Timely payment of premiums is crucial to keep the policy in force. Some policies offer a grace period for late payments, but it's best to maintain a regular payment schedule.
Why do you need a Rs.1 crore term insurance plan?
Assess Your Financial Needs:
- Consider your current financial obligations, such as outstanding loans, mortgages, and other debts.
- Think about your family's future financial needs, including daily living expenses, children's education, and their marriage.
- Factor in any other financial responsibilities or goals, such as retirement savings or wealth accumulation.
Evaluate Your Income and Assets:
- Assess your current income and assets to determine if they are sufficient to cover your financial obligations and goals.
- Consider whether your income would be replaced adequately in case of your untimely demise.
- If you have dependents, such as a spouse, children, or elderly parents, a 1 crore term plan can provide them with financial security and stability in your absence.
- Ensure that you can comfortably afford the premiums for a 1 crore term insurance plan. It's crucial to make timely premium payments to keep the policy in force.
Compare Different Coverage Amounts:
- You can consider other coverage amounts based on your needs and budget. It doesn't have to be exactly 1 crore. The coverage amount should align with your specific financial situation.
Future Financial Goals:
- Think about your long-term financial goals. A term plan primarily serves the purpose of providing financial protection to your family in case of your death. If you have additional goals like wealth accumulation, consider separate investment options.
Other Insurance and Investments:
- Review your existing insurance policies and investment portfolio. Determine if a 1 crore term plan complements your overall financial strategy.
Health and Lifestyle Factors:
- Your health and lifestyle can affect the premium rates of the term insurance policy. Be prepared for a medical examination during the underwriting process.
Nominee and Beneficiary Considerations:
- Ensure you have a nominee or beneficiaries designated for the policy. Communicate the details of the policy to them so they can claim the benefit when needed.
How to buy 1 crore insurance policy in India
Several insurance companies in India offer 1 crore term insurance plans. However, the availability and terms of these plans may change over time. It's essential to check the latest offerings from insurance companies to find the most suitable 1 crore term plan for your needs in 2023. Here are some well-known insurance companies that offered such plans:-
- HDFC Life Insurance
- ICICI Prudential Life Insurance
- Max Life Insurance
- SBI Life Insurance
- Tata AIA Life Insurance
- Bajaj Allianz Life Insurance
- LIC (Life Insurance Corporation of India)