Investing in Pure Term Insurance Plans: Benefits and Insights

Every rainy day needs an umbrella, every ship needs a lifeboat, and every family in India needs a pure term life insurance plan. It is the most crucial tool in your insurance portfolio, and it secures your family's financial future.  

What is Pure Term Insurance?

A pure term plan is like a life insurance safety net that provides financial protection to your loved ones in case of your untimely demise. Unlike other term plans offering additional features like investment components, pure term plans focus solely on providing a life cover. This makes them cost-effective for individuals seeking maximum coverage at the lowest premium.  If you're considering buying term insurance online, exploring options like the ideal term insurance plan could be a great start.

Features of Pure Term Insurance Plan

• Policy Duration: A pure term plan offers coverage up to a specified term. You choose the policy term based on your needs. It could be 10, 20, or even 30 years. Ideally, it should cover the years you earn when you have to fulfil most of your responsibilities. The premium you pay depends on the chosen duration, your age, and the coverage amount.
• Premium Refund Option: Some insurers offer a premium refund option. If you survive the entire policy term, you get a portion or all of your premiums back. This feature is often referred to as a zero-cost term plan. At Bandhan Life, we call it the ‘Special Exit Value’, which can be availed of through our bestselling term plan. Take a look!
• Riders with Additional Benefits: You can get some extra benefits by adding riders to your pure term plan at a nominal cost. These riders can provide an additional cover in case of an accidental death or if you are diagnosed with certain critical illnesses, as specified by the insurer. They can also waive off future premiums or provide extra coverage for disability.  
• The Age Factor: In a pure term plan you can lock in a lower premium for a substantial amount of life cover, if you buy it early in life.   

Benefits of Pure Term Insurance Plan

• Affordability: Pure term insurance is generally more affordable than other life insurance options as it doesn't have an investment component.
• High Coverage: With lower premiums, you can opt for a higher coverage amount, ensuring your family is adequately protected.
• Simplicity: Pure term plans are easy to understand. There's no complex jargon or investment options to worry about.
• Flexibility: You can choose a policy term and a premium payment term that suits your needs and adjust the coverage amount as your life changes.
• Tax Benefits: Premiums paid towards term insurance plans are often tax-deductible, making it more cost-effective.
• Increased Coverage with Affordable Premiums: As you get older, premiums naturally increase. But with pure term insurance, you can often increase your coverage amount without significantly impacting your premium.
• Age: Younger individuals typically have lower coverage needs compared to those with families and financial responsibilities.
• Monthly Expenses: Calculate your family's monthly expenses to estimate the amount needed to maintain their lifestyle in your absence.
• Outstanding Loans: Include outstanding loans like home mortgages or personal loans in your calculations.
• Education Costs for Children: Factor in the estimated cost of your children's education, including school and college fees.
• Existing Assets: Consider the value of your assets, such as savings and investments, which can supplement the insurance coverage. For example, based on all the parameters above, your calculations show that you need a ₹1 crore term plan. However, if you already have assets (mutual funds, savings stocks) worth ₹50 lakh, you can opt for a lower coverage.  

Try our term insurance calculator, it can help you decide your life cover.

How to Choose the Best Pure Term Insurance Plan?

Selecting the right plan involves careful consideration:

• Insurance Provider: Research the insurer's reputation, financial stability, and claim settlement ratio.
• Claim Settlement Ratio (CSR): A high CSR indicates a good track record of settling claims promptly.
• Ease of Buying: Go for an insurance provider that offers a hassle-free buying experience with easy buying journeys, uncomplicated products, and minimal paperwork. If you're looking to buy term insurance online, ensure the provider offers a user-friendly experience.
• Cost of Premium: Compare premiums from different insurers while considering the coverage amount and policy terms.
• Terms and Conditions: Go through the terms and conditions of the policy thoroughly Beware of any hidden charges, inclusions or exclusions.  

Before You Go…

Investing in a pure term insurance plan is a wise decision to safeguard your family's financial future. It offers affordability, high coverage, simplicity, flexibility, and tax benefits. By carefully assessing your needs and choosing the right plan, you can provide a strong safety net for your loved ones.

Frequently Asked Questions

1. What benefit is typically offered by a pure term plan?

A pure term plan primarily offers a death benefit or a life cover. If the insured passes away during the policy term, the nominated beneficiary receives the sum assured.

2. Which is the purest/ most basic form of term insurance?

A pure term insurance plan is considered the most basic form, focusing solely on providing a death benefit without any investment or savings component.

3. What is the maturity benefit payable in a pure term policy?

In a pure term policy, there is no maturity benefit. The policy ends at the end of the policy term, and no money is paid if the insured survives the term.

Remember, life insurance is a crucial financial tool. Choose a plan that aligns with your specific needs and provides the best possible protection for your family.