We all have witnessed significant changes in our lives post pandemic. Amidst the rising rate of inflation in India and across the globe, maintaining your standard of living and planning for financial emergencies is not easy. Whether you are the sole breadwinner in your family or have other supporting hands around, it is crucial to safeguard the financial future of your loved ones with a term insurance plan.
While the selection of sum assured under a term plan is based on several important factors, you might have heard of ‘1 crore term insurance’ policies. Wondering what they are? You’ve come to the right place.
Here, we will cover various aspects of the 1 crore term insurance plan to help you understand if it is meant for you.
What is 1 crore term insurance?
A 1 cr term plan refers to the policy that provides a sum assured of Rs. 1 crore payable to the policy nominee in the case of the unfortunate demise of the policyholder. One of the reasons behind the rising popularity of 1 crore term insurance is that it helps attain mental peace for the policyholder, knowing that the loved ones will have a substantial financial backup. In the current scenario of rising prices of commodities and essentials, you can ensure that your family will have the required resources to live comfortably in your absence.
However, there are certain things you must know before buying a 1 crore term insurance policy, such as:
- It is up to you to decide whether you want to select the sum assured of Rs. 1 crore, less than this, or even higher than this.
- The premium of a 1 crore term plan will be calculated based on your current age.
- While a 1 crore term insurance plan looks like an attractive option, it may or may not be suitable for you, depending on your current income and the corresponding regular expenses.
- It is up to you to decide whether you want to buy a one crore term insurance plan with or without add-ons/riders (available at an additional premium).
Why Do You Need 1 Crore Term Insurance?
Amidst the rising uncertainties related to our lives, a lot of people turn towards buying a suitable term insurance policy to ensure financial safety for their family members.
In many cases, regular income from salary or business is not enough to fulfill the needs of a family. The rising financial burden of loans and their EMIs followed by the desire to live a good lifestyle often makes individuals feel stressed about financial planning. In such situations, a 1 crore term insurance plan can be of great help to them and their loved ones.
In case of the policyholder’s demise, the amount that the beneficiary will receive (Rs. 1 crore) will be enough to let the family members lead a comfortable lifestyle. Besides this, they can also repay any existing loans the burden of which falls upon their shoulders.
Also Read: WHAT ALL SHOULD YOU KNOW ABOUT TERM INSURANCE?
Why Does Buying a 1 Cr Term Plan Make Sense?
There are several reasons why you can consider a 1 crore term insurance plan, including the following:
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Higher coverage at affordable premiums
Depending on your current life stage, you can get a term plan with a sum assured of Rs. 1 crore at a premium you can easily afford. The earlier you buy, the better.
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Adequate financial security against liabilities if any
An amount of Rs. 1 crore can provide your family the much-needed financial help when you are not around. They can use this money to pay for regular needs, outstanding loans, or child education fees without having to ask others.
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Helps in financial planning
When you buy a 1 cr term plan at an early age, say 30 years, the premium stays the same for the chosen plan tenure in most cases. It means even if the chosen insurer increases the rate of the same plan later in time, you will pay the same premium throughout the premium payment tenure. This means you can invest or save money more efficiently over time.
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Adequate coverage with riders
Besides the basic sum assured of Rs. 1 crore in your term plan, you can also include riders, such as a critical illness benefit, accidental benefit, or waiver of premium by paying a price over and above the 1 crore term insurance premium.
How does the 1 Crore Term Insurance Policy Work?
The 1 cr term plan works as same as any other basic term plan. Let’s go over its working to know how you can benefit from the same:
- For a 1 crore term insurance plan, you need to select a policy period for which your life will be covered under the chosen policy.
- In case of your demise within the stated term, the policy nominee will be eligible to receive the death benefit of Rs. 1 crore as per the plan’s terms and conditions.
- Buying a pure term plan (without any rider) with a sum assured of Rs. 1 crore will not result in a financial burden provided you have bought it at an early age and with a considerable policy period.
- Throughout the chosen policy period, the premium payable will remain the same. You will be covered under the plan as long as you continue paying the premium on time.
How to Determine If a 1 Crore Term Plan is Right For You?
While the selection of 1 crore term insurance is quite common among policy buyers, you might want to know if it is suitable for your needs. A sum assured of Rs. 1 crore is indeed, substantial coverage to your family and can ensure that your loved ones are financially secure when you are not around. However, it may not be the right choice for you given the current financial responsibilities you shoulder.
Wondering how to determine if a 1 crore term insurance plan is the right choice for you? You need to consider the following factors:
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Age and Income
Considering your current age and income will not help you select the right sum assured but also the right policy period. While it is important to consider your age to select the life cover, you should not think of it as an excuse to put off term plan purchase to a later date.
Keep in mind these two things related to the age and income:
- The earlier you buy a 1 cr term plan, the lower will be the premium payable for the chosen policy period.
- The premium should not result in financial constraints otherwise. Use an online term plan premium calculator to check how the premium varies as you change the policy period while keeping the sum assured at Rs. 1 crore.
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Financial Needs of Your Dependants
With the rise in the inflation rate, almost everything becomes costlier than ever before. Whether it is about paying for regular household needs, child’s education, or parent’s healthcare needs, the sum assured you select should cover them all in an ideal scenario. Hence, if you think that the benefits of a 1 crore term insurance plan would be enough for your family, you should go for it.
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Liabilities If Any
You might have borrowed different kinds of debts, like a student loan, car loan, home loan, or personal loan. In your absence, the loan repayment responsibility may fall on your loved ones. Since you do not want them to face any financial setbacks after you, you can ensure financial security for them with a one crore term insurance policy.
Is It Better to Opt for Coverage Higher Than Rs. 1 crore?
At the core, the life insurance coverage you require should be based on your financial and personal circumstances. It should cover your dependents in terms of their basic living expenses at least. In general, it is advisable that the sum assured you select should be 5-10 times your annual income. Similarly, you can zero in on the right sum assured by multiplying the annual earnings with the number of years left before retirement. All this can give you a good idea to select a sum assured under your term plan.
Keep in mind that you need not force yourself to buy a 1 crore term insurance plan if you cannot afford to pay the premium without fail during the policy period.
On the other hand, if you can accommodate the 1 crore term insurance premium within your earnings, it will be one of the best financial decisions you make to protect your family.
You May Also Like to Read: What is Claim Settlement Ratio?
Who Should Buy Term Insurance with a Life Cover of Rs. 1 Crore?
While there is no hard-and-fast rule for individuals to buy a term plan with a sum assured of Rs. 1 crore, it is quite suitable for people falling under the following categories:
- If you are young, healthy, and do not need to handle financial responsibilities in your family
- If you are the sole breadwinner in your family and can afford to pay the 1 crore term insurance premium
- If you are aged between 25 to 35
- If your annual income is at least Rs. 5-7 Lakhs
- If you have multiple dependents to care for
- If you have outstanding debt repayments and want to build a financial safety net for your loved ones
FAQs
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What is the eligibility criteria to buy the best 1 crore term insurance plan?
The main criteria are your current age and income. If you are above 18 years of age, you can buy this type of term plan. Other terms may vary depending on the insurer you select.
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At what age should I buy the best term insurance plan for 1 crore life cover?
If you are in your 20s and can afford to pay the premium of a 1 crore term insurance plan, you can consider buying it at that age.
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Should I select a term plan with 50 lakhs or 1 crore sum assured?
Select the life cover based on your age, health history, gender, and smoking habits.
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How to find the best term insurance plan?
Firstly, gain knowledge about how a term plan works by reading BimaBandhu. Then start comparing different policies based on their benefits and premium.
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What will be the premium of a 1 crore term insurance?
The premium varies from one individual to another as it is calculated based on your age at the time of buying the plan, health condition, gender, and income.
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How to buy a 1 crore term insurance plan?
You can buy it either offline or online as per your preference.
