Tips for Buying Term Insurance for Salaried Individual

If you’re a salaried individual, your loved ones may be dependent on you for all their needs, especially if you’re the primary breadwinner. Like, if your parents have retired, they may need your care and financial support for their day-to-day expenses and medical bills. If you have kids, they may depend on you for their education and comfortable lifestyle. All of these obligations are quite seamlessly manageable while you’re earning.

But, what if something happens to you? How will your loved ones cope without your financial support?

Of course, losing a loved one causes an unthinkable amount of emotional grief, and you cannot undermine the financial aspects of this, too. Your sudden loss can leave your family members bereft and they may find it difficult to manage their daily needs, education, lifestyle, and future goals.

How do you make sure this doesn’t happen? With term insurance! In this article, we’ll discuss what term insurance is and some tips for buying the right policy.

Term insurance is a type of life insurance which provides your family members with an assured sum of money if you pass away while the plan is in force. This money acts as a protective shield and your loved ones can use it to meet different kinds of financial responsibilities like monthly bills, rent, education, loan repayments, and more.

However, keep in mind that term insurance is a pure risk cover. If you outlive the policy duration, you will not get any benefits.

Today’s insurance market offers a wide range of insurance products. When it comes to term insurance, different insurers sell different kinds of plans, all which have varying features, benefits, and drawbacks. Making it a little tricky to wade through.

Here’s a quick and helpful guide to buying the right term insurance plan -

Figure out the apt coverage

You buy term insurance to leave behind a sum of money for your loved ones so they can cope in your absence, making the cover amount one of the most important aspect of your plan. If the cover amount is too less, your loved ones will be left in need. If it’s too high, you’ll pay higher premiums unnecessarily.

Here’s how you can arrive at the right cover amount -

• First, calculate the ‘money you owe’. This includes the amount needed for daily needs, groceries, bills, children’s education or wedding, loan settlements, and more.
• Then, figure out the ‘money you have’. This is basically the funds you hold presently and includes savings, FDs, etc. multiplied by their respective risk factors.
• Subtract the ‘money you have’ from the ‘money you owe’. You should also subtract any existing life covers you own from this amount. This will give you the financial gap that needs to be filled by term insurance.

When you’re calculating the right coverage, another important factor is inflation. The money you feel is enough today will not hold the same value a few years later. For this, you can either multiply the calculated coverage by 2.5-3X or go for the increasing cover option which will automatically upgrade your term cover at predetermined intervals till it hits a maximum limit.

Go for the right policy period

To figure out the right term insurance policy period, factor in your present-day earnings, savings, and future financial obligations. Next, you’ll need to estimate when you’ll be able to complete all these financial obligations as well as amass sufficient wealth for the rest of your life. This, essentially, means the age by which you envision to retire. You’ll need to buy term insurance till this age, maybe with an extra 5 years.

Choose how long you want to pay the premiums for

Typically, you need to pay your term insurance premiums on a regular basis till the policy period ends. But if you want to reduce this premium payment term, you have two options -

• Limited Pay Option:
  Under this, you can finish off paying your premiums in shorter and larger instalments. There are a range of options available like 5-pay, 10-pay. 15-pay, etc. For instance if you pick the 5-pay option, you can pay the premiums in 5 years.


• Single Pay Option:
  Under this, you can pay the entire term insurance premium in a single go as a lump sum when you buy the policy.

Choose how often you want to pay the premiums

Under term insurance, you also get the flexibility to decide how frequently you want to pay the premiums. Based on your preference and convenience, you can pay them annually, semi-annually, quarterly, and monthly.

One very important tip is that you should set standing or auto-debit instructions on your bank account for your premiums, so they are paid in a timely manner and your policy doesn’t lapse.

Married and male? Go for the Married Women’s Property Act!

The fact that your nominee will receive the term claim payout if you pass away during the policy period is not watertight in all situations. For instance, if you’ve taken any loans or liabilities and these remain unpaid, the claim amount will go to your creditors first and the remainder will be given to your family. Not to mention the fact that there may also be other relatives who can demand a portion based on inheritance laws.

All of this can get nasty and worrisome for your loved ones. But, if you’re married and male, you have a unique solution. You can sign an extra addendum under the Married Women's Property (MWP) Act whilst buying term insurance, which will make sure that the claim payout goes to your spouse and children first. They can then decide which obligations to take care of first.

Pick the right claim payout option

You can also choose how you want your loved ones to receive the claim amount in the unfortunate event of your demise during the policy period. Term insurance gives you a range of claim payout options and you can pick one based on the financial obligations and your family’s financial aptitude -

• Lump-sum payout:
  Your loved ones will get the whole claim amount in one go as a lump sum.


• Monthly income payout:
  Your loved ones will get the claim amount in the form of monthly instalments for a predetermined time span.


• Lump-sum + monthly income payout:
  Your family will get a combination of both options i.e. a portion of the claim amount will be paid as a lump sum and the rest as monthly instalments for a fixed time span.

Opt for riders

Riders are hassle-free add-on covers that serve to widen your base term insurance plan’s coverage. They offer a payout on the occurrence of specific contingencies, like accidents, disabilities, severe illnesses, etc. Riders commonly available with term insurance include Accidental Death And Disability Rider [UIN: 109B018V03], Surgical Care Rider [UIN: 109B015V03], Critical Illness Rider [UIN: 109B019V03], and more.

Look at the details!

Before your go ahead and finalise your term insurance purchase, you need to pay attention to two important things

• The fineprint
  Go through the benefits, features, limitations, and other T&Cs of the different term insurance plans as well as any riders you’re planning to buy. This will help you pick a plan that caters to your needs and avoid any surprises after you make the purchase.


• Insurer’s track record
  You also need to understand how reliable and credible the insurer is, so you and your loved ones can have a smooth experience. For this, look at customer reviews, their past performance, and more.

ABSLI Salaried Term Plan [UIN: 109N141V01] This comprehensive plan is specifically designed for salaried individuals. It offers you the flexibility to tailor the plan that meets your needs. It ensures that you create a strong financial shield for your loved ones, whether it’s for your child’s educational expenses, maintaining their lifestyle, or keeping up with their everyday needs.

Key Features

• 4 plan options for your unique needs and preferences.
• Life insurance coverage up to the age of 70.
• Various death benefit payout options, like lump-sum or monthly income.
• Extra protection with the built-in terminal illness benefit.

Buying a term insurance plan requires careful consideration of all the tips we’ve mentioned above. The key purpose behind investing in term insurance is financial protection for your loved ones in your absence, which makes it all the more crucial to pay heed to the important aspects so you can get the right coverage.