While leading our lives at a certain livable pace, it is never too early to start thinking about buying life insurance. While most life insurance policy types are easy to understand, many of you might want to resort to the simplest option, which is a pure term plan. Here’s how a common journey of finding the best term plan follows:
- You start with knowing what the term plan is and how it works
- Then you look for companies who offer term plans
- At this point, you will need a reference guide that can help you compare different term plans
- Once you have done the feature-wise comparison, you will look for the online reviews and the insurer’s reputation in the market
- If needed, you may also ask for peer recommendations about selecting the right term insurance policy
In between all this, we all forget to include an important angle of comparison that determines our purchase decision – the cost or premium of a term insurance plan. The moment this factor comes into consideration, other important pointers like coverage, tenure, etc. seem to fade away in importance for many of you. At this stage, if there is anything that can convince an individual towards making the purchase, it is the cheapest term insurance.
The current cost of buying life insurance can be considered a reason behind the low insurance penetration in the country. Interestingly, India’s share in the global life insurance market was at 2.73% only in the year 2019 (Source).
Wondering why the cheapest term insurance plans take the center stage as you search for protecting your life? Let’s start with the fundamentals.
Term Insurance: Definition and Features at a Glance
Term insurance is a life insurance product that provides life coverage for a certain period. It requires you (the policyholder) to make periodic premium payments as defined in the policy terms to get the select coverage. At its core, a term plan protects your loved ones and secures their future by providing them the sum assured in case of your untimely demise during the policy period.
In a pure term plan, there is no guarantee of any maturity benefit. Here are some important points you must know before buying a term insurance policy:
- In the event of the policyholder’s death during the policy tenure, the selected nominee will receive the policy benefits.
- You can choose whether the nominee will receive a lumpsum amount or monthly payments as term insurance benefits.
- You can select the sum assured and policy tenure as per your preference.
Here are a few common features of term insurance policies:
- Flexibility of choice of sum assured, the policy period, and premium payment period as per your needs
- Minimum age eligibility of 18 years
- Maturity or survival benefit when you select the TROP plan
- Add-on covers available at additional prices
Recommended Read: A Complete Guide to Term Insurance
What’s in Cheapest Term Insurance for You?
Like any other purchase decision you make in life, you would agree to the fact that buying a product only because it is low in price is not always the right decision. In a similar manner, selecting the cheapest term insurance plan in India does not make sense if it does not fulfill the purpose it has been bought for.
Consider this example –
Ramesh is a 30-year-old salaried individual and he wants to buy a pure term plan. After comparing different term plans online, he selected a plan that provides a life cover of Rs. 50 lakh till the age of 60 years and costs Rs. 7,000 per annum. He thought he couldn’t afford that plan and reduced the sum assured to Rs. 10 lakh only and bought the corresponding plan available. However, when he died during the policy term at the age of 40 years, it was found that his overall liabilities and other financial needs were way beyond what the Rs. 10 lakh sum assured could cover, leaving the family in dire need of more money.
As you can see here, the cheapest term insurance also corresponds to inadequate coverage that might not be enough for your family’s financial needs in your absence. This is the reason why it is recommended not to buy the lowest premium term plan just because you can only afford it.
Cheapest Term Insurance for Your Age: How Should You Look for Them?
Accidents or loss of life cannot be forecasted, which is why it is never too early to buy a term insurance policy. To ensure that your family’s financial future is secure after you, it is important that you buy the best plan as early as possible.
However, when there is the thought of the cheapest term insurance lurking somewhere in your mind, it is always good to know how to look for the best plan at your age. Since our priorities change as we grow old, you should get a term plan that meets your goals and needs at a specific age.
When is The Right Time to Buy Cheap Term Life Insurance?
Before we get into the specifics, you need to keep your mind away from making the purchase decision only on the term insurance premium alone. Let’s get started.
In Your Twenties
Most people start their lives in their twenties. They have fewer responsibilities but with the pressure of building a career. If you have an education loan, you would also want to get the debt paid off timely. In such situations, it would be best to buy a suitable term plan for your loved ones. Since the mortality rate is quite low at this age, the premium for the term insurance will also be low.
In literal terms, you can buy the cheapest life insurance policy in your twenties without compromising on the benefits.
In Your Thirties
When you reach your thirties, both work and household responsibilities increase significantly. In many cases, the burden of such responsibilities falls on the shoulders of loved ones if something happens to you untimely. That is why the thirties can be considered the right time to buy a term insurance plan.
Whether you have loans to settle or families to look out for, you can rest assured that the benefits of the chosen term plan will take care of your financial needs. You should also know that it is up to you to select either lumpsum or monthly payout under your term insurance plan.
In Your Forties
By the time you reach your forties, you would have your loans settled. It is the time when you want to save up for the higher education of your child, plan your retirement, or build an emergency fund. This is a crucial stage of life when you need to think of your family’s future quite seriously. This can be done by buying a suitable term insurance plan, not just the cheapest one.
In Your Fifties and Beyond
Even though it is best to buy the most suitable or cheapest term insurance plan at an early age, it is never too late to buy one. In your fifties and beyond, the term insurance cost will be significantly higher. But you can buy term insurance plans at that age as well. If you are the only breadwinner in your family, it makes sense to buy a term plan at this age.
Here’s Why Price Matters as You Buy Term Insurance
The pricing does matter when you look for the cheapest term insurance plan. Ultimately, you will get life insurance benefits according to how much you pay for it. Now that you know about this interconnection, here’s how you should look at the pricing side of buying cheap term insurance in India:
- Consider your monthly or annual income and chart out the major expenses to determine a specific amount that you can easily set aside for life insurance premium
- Compare different term insurance plans and understand how to select the right one
- Merge the findings of the above two steps to find a suitable plan that also fits well into the budget. This way, you can avoid skipping premium payments while also getting adequate life cover.
Are There Any Cheapest Term Insurance Plans in India?
To answer this, we suggest you think about other different purchase decisions you make on a daily basis. These include:
- Are there less costly fruits and vegetables available than the ones you buy?
- Are there cheaper grocery items available than those you buy?
- Why do you buy what you buy in general?
The answers to these questions will take you many steps closer to buying the best if not cheapest term insurance plan.
In simple words, there is a cheaper version of almost everything you need. Whether you should buy it or not depends on the quality of the product or service. The same holds true with term insurance plans.