What You Need To Keep In Mind While Comparing E-Term Plans?

In our fast-paced digital world, insurance has undergone a transformation to align with the demands of today. This innovative shift reflects the changing times, presenting a streamlined and accessible experience for individuals seeking coverage. An example of this evolution is the E-term plan, which is gaining popularity among those in search of life insurance solutions.

What is an E-Term plan? What are its benefits? Let's get the answers to these questions in this article -

What Is An E-Term Plan?

The E-Term plan, also known as an online term insurance plan, stands out as the most fundamental and cost-effective life insurance option. Exclusively available on the internet, this insurance variant ensures that, in the event of your demise within the policy tenure, a predetermined sum, known as the sum assured, is provided to your family. And, if you outlive the policy term, no payouts are issued.
To uphold this commitment, regular premium payments are essential. Like a standard term insurance plan, it is a pure risk protection plan, so it does not offer a maturity benefit. The primary distinction lies in its exclusive online accessibility. This unique feature makes it an ideal choice for citizens in the era of digital India. The E-Term plan not only serves as a financial support system for your family during challenging events but also ensures that safeguarding them is conveniently just a click away.

Benefits Of E-Term Plan

Here are the top 2 reasons why the E-Term plan is worth every penny –

Easy Purchase Process

Obtaining an E-Term Plan is a quick and straightforward process, enabling you to compare and purchase a plan within minutes, all from the comfort of your home.

Transparency

These plans prioritise transparency, providing clear details on policy features, benefits, premiums, etc. You have the ease of accessing and comparing different plans offered by various insurance companies, reading through policy documents, and comprehending the terms and conditions before finalising your purchase decision. This open approach empowers you to make an informed choice, steering clear of any surprises or hidden costs in the future.

Things To Keep In Mind While Comparing E-Term Plan

Here are some key factors to consider when you are comparing E-Term insurance plans -

Cover Amount

The primary goal of a term insurance plan is to establish a financial safety net for your family. This means you need to ensure that the sum assured you choose is sufficient enough to address your family's financial needs in the future. There are two methods to calculate the required sum assured for your family.

Manual Calculation

You can calculate the cover amount manually using this formula -

• Living Expenses Fund (Basic needs, groceries, monthly bills, etc.)
• Major Expenses Fund (Children's education, wedding, etc.)
• Major Liabilities Fund (Loans/liabilities)
• Existing Funds (Savings, fixed deposits, etc., multiplied by the appropriate risk factors.)

To ensure the adequacy of the sum assured for your family's future needs, it's crucial to consider inflation. Consequently, you should multiply the calculated cover amount by 2.5 to 3X. The resulting figure represents the gap in your family's financial safety. Subtract this amount from your existing life insurance coverage (if any), and then buy the best E-Term plan to bridge this gap to cover adequate protection while taking into account the inflation. This approach ensures that your family's financial well-being is effectively safeguarded against the impact of inflation and any potential gaps in coverage.

Calculate Using Our HLV Calculator

You also have the option to determine the coverage amount by using our Human Life Value (HLV) Calculator. Upon completing a brief questionnaire, our Human Life Value (HLV) Calculator will process your responses and efficiently determine the appropriate cover amount for your family - in just 2 minutes!

Premium Payment

Considering that you will be committed to paying policy premiums over an extended period, you need to ensure that the amount aligns with your budget. Compare the premiums offered by various term insurance plans and opt for the one that strikes a harmonious balance between affordability and coverage. You need to compare E-term plans with the same coverage and features. This approach will guide you in finding the ideal policy that not only fits your budget but also meets your expectations effectively.

Policy Tenure

Determining the appropriate policy tenure involves a careful consideration of factors like your age, financial objectives, and the duration during which your family relies on your income. A practical approach is to subtract your current age from the age at which you anticipate achieving your specific financial goals, retire, or end your earning phase. Certain plans offer coverage until age 85 or even 100, allowing you to choose a policy period that matches your preferences and your family's needs. Selecting a plan with your preferred policy tenure ensures that your coverage aligns seamlessly with your family's financial goals.

Customisation Options

Some of the customisation options or features you need to consider while comparing E-Term plans -

Premium Payment Options

When purchasing an E-Term plan, you have the flexibility to tailor the premium payment options to your preferences. The available choices include:
• Limited Pay Option
You make premium payments for a specified number of years and receive benefits throughout the entire policy duration.
• Regular Pay Option
Premiums are paid consistently throughout the entire policy tenure.
• Single Pay Option
You make a one-time lump sum payment at the time of policy purchase, enjoying policy benefits for the entire policy term.

Claim Payout Option

Depending on your family's financial situation, you have the flexibility to decide how your family receives the claim payout. Here are some of the claim payout options available under the E-Term plan –
• Single Lump Sum Payout
As the name suggests, your nominee or family receives the entire claim amount in one single payment - a lump sum, providing immediate financial assistance.
• Monthly Income Payout
The insurer offers your nominee or family a fixed monthly amount for a specific period. This amount will serve as a substitute for your regular monthly income and provide ongoing financial support to your loved ones.
• Lump Sum + Monthly Income Payout
It is a combination of the above two options. The insurer will provide a portion of the claim amount as a one-time lump sum payment and allocate another portion to be distributed in regular monthly payments.

Riders

Riders serve as convenient add-ons that you can easily include with your E-Term plan to broaden its coverage. They are designed to enhance the overall protection offered by your base policy and provide an extra payout in specific situations. Explore riders that provide an additional payout for accidental death/disability and critical illness. Additionally, make sure to verify if the policy incorporates a waiver of premium due to accidental disability or critical illness rider. With these riders, you have the option to stop paying premiums if you experience disability or critical illness, offering a valuable financial cushion during challenging times.

Increasing Cover Option

This option automatically increases the cover amount at predefined intervals, gradually reaching a maximum limit, all without requiring any action on your part. This option is designed to effectively manage the impact of inflation, ensuring that your family remains sufficiently covered. It provides a hassle-free solution to adapt to the challenges of rising costs, offering continuous reassurance that your family's financial protection is maintained at a level that meets their evolving needs.

Important Note!

Before making your final decision, it's crucial to ensure a comprehensive understanding of all the terms and conditions associated with the policy. Carefully read through the policy wording, understand the inclusions and exclusions. Scrutinise all details, particularly scenarios wherein claim under the policy might be considered invalid.
Take a close look at the premium breakup before proceeding with the payment. Verify that the policy document accurately reflects what you have paid for. Remember, there is a free look period for E-term plans, during which you can thoroughly review the policy you have acquired. If you find anything unsatisfactory or encounter elements that do not align with your preferences and your financial security as envisaged by you, you have the freedom to cancel the policy within this free look period. Importantly, during this period, no penalty or cancellation fee will be imposed for returning the policy.

Wrapping up!

The emergence of E-term plans as a fundamental and cost-effective life insurance solution has revolutionised the digital insurance landscape. These plans, accessible exclusively online, offer swift and transparent processes for individuals seeking financial security for their families. Before making a purchase, thoroughly review the terms and conditions of the policy to ensure it aligns with your family's needs and goals.