Term insurance was introduced in India as late as 2009. Since then it has zoomed in popularity riding mainly the attribute of affordability.
A very significant collateral benefit has been the fact that due to premiums coming down, insurance has become popular among the people, simply because it has become far more affordable. Due to this fact, a large number of people are exploring a Rs 1 crore cover, which was quite unimaginable even a few years ago.
Term insurance premiums
The premium of term insurance usually depends on a variety of factors. These are age, gender, lifestyle habits, policy term, occupation, features of the plan like add-on benefits and occupation of the person insured.
Now let’s see what premium does one need to pay to buy Rs 1 crore insurance cover on life.
Buy insurance early
Let’s take an extreme example first – a person begins paying a premium at 18 years and buys cover till the age of 85. The monthly payment that one has to make is Rs 893 a month. It will remain unchanged throughout his/her life.
What happens if the person begins paying for insurance up to the age of 60? In such a situation, the premium reduces by Rs 561.
Begin at 25
Let’s consider that the person starts working at 25 and only then he/she buys insurance cover. In that case, the premium rises to Rs 676 per month, if the cover is purchased till he/she turns 60.
If the cover is purchased till the person turns 85 – after beginning at 25 – the premium will rise to Rs 1,061.
Morale of the term insurance story
The sooner one buys insurance, the easier it becomes on the pocket. Starting early to pay less is a general principle that pervades the entire financial services world. As one grows older, it becomes more and more expensive to buy a big coverage.
Experts often advise to settle for an insurance cover that is between 10 and 15 times the annual income of the person insured.
Quantum leap in 2015
In 2015, major private insurers such as Tata AIA, HDFC Life, ICICI Prudential and SBI Life stepped into the term insurance market and flooded customers with options.
Term insurance has become extremely popular in India since the premium is far cheaper than endowment policies. It can really offer significant cover at a small cost. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
