₹1 Crore Term Insurance

The thought of the well-being of our loved ones in our absence is very common. We often think, if something unexpected were to occur, how would our loved ones lead their lives, especially financially? It is a tough topic to consider, but planning for the future is non-negotiable.

In such situations, a term plan comes to the rescue. Specifically, ₹1 Crore term insurance offers a substantial life cover, ensuring your family is financially secure in the event of your untimely passing.

What is ₹1 Crore Term Insurance Plan?

A ₹1 Crore terminsurance plan is a type of life insurance policy that provides a death benefit of ₹1 Crore to the nominee(s) in case of the insured’s demise during the policy term. The best term plan for ₹1 Crore offers financial protection to the insured’s family or dependents by providing a substantial sum assured, which will help them sustain a comfortable living.

Why Do You Need a ₹1 Crore Term Insurance Plan?

Life is full of uncertainties, and securing your family’s financial future should be a top priority. A term insurance plan with ₹1 Crore coverage can provide your loved ones financial stability in the face of unfortunate events. It is an essential tool for anyone who has dependents or financial obligations.

But why ₹1 Crore specifically? Here is why it makes sense to go for this amount of coverage:

Ensuring Financial Security

If something happens to the family’s primary breadwinner, the family will struggle to manage household expenses, ongoing loans, or children’s education. A ₹1 Crore term insurance plan ensures your family doesn’t face financial struggles in your absence. The lumpsum payout is designed to cover significant expenses like home loans, children’s future education, and even day-to-day living costs, giving your loved ones a safety net when they need it the most.

Affordable Premiums

One of the biggest advantages of a ₹1 Crore term insurance plan is its affordability. Unlike other types of life insurance, term insurance offers a substantial amount of coverage at a relatively low cost. Especially if you are young and healthy, the premiums for such plans are surprisingly affordable. For example, for a young professional, the monthly premium for a ₹1 Crore cover can be as low as ₹500-700, depending on the insurer and the individual’s health conditions.

Coverage for Critical Life Goals

Life goals like buying a house, funding your children’s education, and ensuring a comfortable retirement require long-term planning. But life can be unpredictable. With a term insurance plan of one crore, your family can still meet these goals even if you are not around. It takes care of your long-term financial commitments, leaving your family free from worry.

Riders for Additional Coverage

Many insurance plans offer additional riders to cover specific situations such as critical illness, accidental death, or disability. Adding these riders to your one crore term insurance plan can increase coverage and ensure that your family receives financial aid even during medical emergencies. It is a way of customizing your insurance plan to fit your unique needs.

Peace of Mind

The real value of insurance isn’t just in the payout; it is the peace of mind you gain knowing your loved ones are financially protected. You can focus on achieving your life’s goals without worrying about what might happen if you are not around. A term insurance of ₹1 Crore gives you that assurance to live your life confidently.

How Does ₹1 Crore Term Insurance Plan Work?

A ₹1 Crore term life insurance policy offers a significant death benefit of ₹1 Crore to your family in the event of your untimely death during the policy term. This benefit is determined by factors such as your Human Life Value (HLV), which estimates your economic worth over a lifetime. The policy remains active for a specified term, and you pay a fixed premium throughout this period.

For example, if you purchase ₹1 Crore term insurance for a 20-year term, your family will receive ₹1 Crore within those 20 years of your absence. Term insurance premiums can be quite affordable, often starting as low as ₹500 to ₹1,000 per month, making it a cost-effective way to secure your family’s financial future.

Why Buy ₹1 Crore Term Insurance Plan?

You should consider the best term plan for ₹1 Crore for several reasons. Let us take a closer look at a few of these:

Higher Coverage at Lower Premiums

By purchasing a ₹1 Crore life term insurance policy at an early age, you can secure a high coverage amount at relatively lower premium rates. For example, a 30-year-old non-smoker may pay as low as ₹500 per month for a ₹1 Crore term plan, which increases significantly if bought at a later age. Starting early ensures you lock in low premiums while maintaining substantial financial protection.

Security Against Financial Liabilities

A ₹1 Crore insurance plan can provide financial security to your family in your absence. This amount can cover a variety of financial responsibilities, including housing loans, children’s education, or even supporting day-to-day expenses. For instance, if your family has a home loan of ₹50 lakhs and additional liabilities of ₹20 lakhs, the ₹1 Crore sum assured will ensure they are not burdened with debt while managing living expenses and future goals.

Frees Up Earnings for Investments

When you purchase a ₹1 Crore term plan, you obtain long-lasting protection for a low price. As a result, you may plan your savings and investments more effectively for wealth generation and place your money in appropriate financial instruments.

Comprehensive Coverage

You can enhance the basic one crore term insurance with various riders to increase the scope of coverage. Riders like critical illness coverage, accidental death benefits, or premium waiver in case of disability can provide additional security. For instance, opting for a critical illness rider may cover up to ₹25-30 lakhs for major health conditions like cancer or heart disease, offering a comprehensive safety net.

Maximize Tax Savings

With a term insurance policy, you can save on taxes under Section 80C of the Income Tax Act, 1961, by claiming deductions of up to ₹1,50,000 annually on premiums paid. Ensure the premium is less than 10% of the sum assured to qualify.

Additionally, under Section 10(10D), the death benefits received by beneficiaries are fully tax-exempt, with no limit on the claim amount.

Who Should Opt for ₹1 Crore Term Insurance Plan?

There is no set process for acquiring a term insurance plan with a ₹1 Crore cover. However, if you belong to one of the following categories, you may want to give it some thought:

Sole Breadwinner in a Family

If you are the only person responsible for your family’s financial well-being, you should consider a ₹1 Crore term plan to ensure your dependents are adequately protected in your absence. For instance, if a sole breadwinner earns ₹1,00,000 per month, this coverage can help replace their income, ensuring the family can maintain their standard of living and cover expenses like education and housing.

Young Parents

If you are a young parent with dependent children, opting for this coverage to secure their children’s future financial needs of education and living expenses is a wise decision. For example, the average cost of higher education in India can exceed ₹15 lakhs, so a ₹1 Crore policy ensures a child’s education is funded even in the absence of parents.

Newly Married Couples

Couples starting their journey together can protect each other financially with a ₹1 Crore term plan, providing financial stability and security in case of unforeseen events. This ensures that, in the absence of one partner, the survivor would not be burdened by financial stress while adjusting to married life.

Individuals with Home Loans and Debt

A term plan of ₹1 Crore can be a smart financial investment if you have significant financial liabilities to cater to. If you have home loans or other debts, your family can use a ₹1 Crore term plan to cover those liabilities. For instance, if someone has a home loan of ₹50 lakhs, the coverage can assist the family in managing ongoing costs and living expenses.

Individuals with Education Loans

If you have education loans or plan to take on such loans, you can safeguard your family from the burden of repayment by opting for adequate term insurance coverage. With average education loans ranging from ₹5 to ₹10 lakhs, a ₹1 Crore policy can significantly ease this financial strain on surviving family members.

Business Owners

As a business owner, you can secure your business and provide financial protection to your family by opting for a ₹1 Crore term plan. This will ensure business continuity and family financial security in your absence.

How to Determine the Right Coverage Amount?

One crore term insurance is a huge amount for the sum assured. If you are confused about how much amount will be enough for term insurance, use term insurance calculator that considers the following factors:

Your Age and Income

The first step is to consider your current age and income level to assess your financial obligations and future earning potential.

Purpose of Buying Insurance

Defining the purpose of the insurance, whether it is to replace lost income, cover debts, provide for dependents, or leave a legacy.

Dependents’ Needs

Evaluate the financial needs of your dependents, including their living expenses, education costs, and any outstanding debts.

Financial Liabilities

Always consider existing financial liabilities such as loans, mortgages, and other debts that would need to be covered in your absence.

Factor in Inflation

Consider inflation to ensure that the coverage amount maintains its value over time and can sufficiently meet future expenses.

Consider Long-Term Financial Goals

Align the coverage amount with your long-term financial goals, such as retirement savings or funding children’s education.

Consult a Professional

Seek guidance from a financial advisor or expert who can provide personalized recommendations based on your circumstances and goals.

Benefits of Opting for Higher Coverage

Buying a term insurance plan with higher coverage offers a long list of benefits. You must be aware of these benefits to enjoy its full potential. Let us take a quick look at the one crore term insurance benefits:

Cost-Effective Option

While the premium for higher coverage may be slightly more, it often provides better value for money in terms of coverage per rupee spent, especially when considering the potential financial impact on your family’s future.

Fixed Premiums

Many policies offer fixed premiums throughout the policy term, which means you won’t have to worry about increased costs even if your health deteriorates or as you age.

Extensive Cover

Higher coverage ensures your loved ones are adequately protected against various financial uncertainties, including outstanding debts, future expenses, and providing for their lifestyle.

Additional Riders

With higher coverage, insurers often offer additional riders such as critical illness, accidental death, or waiver of premium, providing more comprehensive protection tailored to your specific needs, albeit at an additional cost.

Sum Assured Options for Term Insurance Plans

Term insurance plans typically offer a range of sum-assured options, which can vary depending on the insurer and the specific plan. Common sum assured options for term insurance plans may include:

Fixed Sum Assured

With a fixed sum assured, you receive a predetermined amount of coverage that remains constant throughout the policy term.

Increasing Sum Assured

The sum assured gradually increases over time if you opt for this option, either at a fixed rate or linked to inflation, to account for rising financial needs and expenses.

Decreasing Sum Assured

When you opt for decreasing sum assured, you can cover specific liabilities like loans or mortgages, where the sum assured decreases over time in line with the reduced outstanding balance of the loan.

Level Sum Assured with Return of Premium

Some plans offer a level sum assured where, if the policyholder survives the policy term, the premiums paid are returned, providing a form of savings along with protection.

Customizable Sum Assured

Certain insurers allow policyholders to choose a sum assured based on their individual financial needs and obligations, providing flexibility to tailor the coverage amount accordingly.

Key Considerations When Purchasing a ₹1 Crore Term Insurance Plan

You can make an informed decision and select a ₹1 Crore term plan by considering the following factors:

Assess Claim Settlement Ratio

The Claim Settlement Ratio (CSR) indicates the percentage of claims settled by an insurance company against the total number of claims received. It is a vital metric to consider when buying term insurance. Opt for an insurer with a high CSR, ensuring a smooth settlement process for your nominee in case of an unfortunate event.

Evaluate Solvency Ratio

The solvency ratio is a measure of an insurance company’s ability to meet its debt obligations. It is the ratio of an insurer’s available capital to its liabilities. A higher solvency ratio indicates a healthier financial position. Always choose an insurance provider with a solvency ratio significantly above the regulatory requirements.

Review Critical Illness Benefits

Many term insurance plans offer additional critical illness benefits, which cover life-threatening diseases like cancer, heart attack, etc. Evaluate the critical illness benefits offered by different insurers to ensure comprehensive coverage.

Examine Premium Amounts

Premium amounts can vary significantly among insurers. While seeking affordable premiums is reasonable, ensure that the coverage provided justifies the premium paid. Compare the types of premiums in term insurance from various insurance companies and choose one that offers the best value for your money.

Understand Policy Exclusions

Every insurance policy has exclusions detailing the circumstances under which the policy will not pay out. Understanding these exclusions is crucial to avoid future misunderstandings. Be clear on what is and is not covered by reading the policy document carefully.

Explore Add-On Riders

Add-on riders provide additional coverage and customization options. Some of the common riders such as accidental waiver of premium, and income benefits can be useful for policyholders. Choose riders that align with your specific needs to enhance the overall coverage of your policy.

Decide on Policy Tenure

The policy tenure or the term of the insurance is an essential consideration. It should cover your financial obligations and ensure your dependents’ financial security adequately. Choose a tenure that covers your working years and your dependents until they are financially independent.

Utilize Enhanced and Flexible Features

Many term insurance plans now offer enhanced and flexible features, such as increasing the coverage for significant life events like marriage or childbirth. Choose a plan that allows you to adjust your coverage as your life stage changes.

Simplify Claims Process

A simplified and hassle-free claims process is essential during challenging times. Choose an insurance provider with a straightforward and efficient claims process. Online claim intimation and minimal documentation can make the process less stressful for your nominee.

How to Choose the Best Term Insurance Plan for ₹1 Crore?

By considering various factors, you can select the best term insurance plan for ₹1 Crore that meets your financial needs.

Calculate the Premium for ₹1 Crore Term Insurance

Utilize online premium calculators or consult with insurance agents to calculate the ₹1 Crore term insurance premium amount based on factors like age, health status, and policy duration for your ₹1 Crore term insurance.

Explore Additional Benefits

Look for term insurance plans offering additional benefits such as critical illness coverage, accidental death benefit, or waiver of premium, enhancing the overall protection offered by the plan.

Steps To Buy ₹1 Crore Term Insurance Plan

By following certain steps, you can easily purchase the ₹1 Crore term insurance, ensuring the financial security of your loved ones:

• Research: Before you begin, research the ₹1 Crore Term Insurance Plan to understand its features, benefits, and premiums.
• Visit the website or visit a nearby branch for more information.
• Select the Plan: You must select the policy you want to buy. In this case, choose the ₹1 Crore term insurance.
• Enter Personal Information: Keep your details ready as you have to fill out the policy form. Now fill out the application form with accurate personal information.
• Choose Coverage: In this case, you have to select the coverage amount (1 Crore) and the policy term.
• Premium Calculation: Calculate the premium amount based on your age, policy term, and other factors. This will help you know how much coverage you are getting.
• Provide Health Details: It is important to answer health-related questions honestly. This will affect your premium and coverage.
• Customization: you can customize your policy according to your requirements.
• Review: It is crucial to thoroughly review the terms and conditions, coverage, and other policy details before making any decision.
• Submission of Documents: After final reviewing, submit the required documents online or physically to the nearest office, as per your convenience.
• Medical Examination: You have to undergo a medical examination if required. The insurance company may arrange for a medical examination at your convenience.
• Policy Issuance: After the payment and verification of documents, the policy will be issued to you.
• Follow-up: To know how your plan is proceeding, you should follow up regularly. This is to ensure the policy is active and the premium payments are up to date.

How to Calculate Whether ₹1 Crore is Enough Coverage for You?

One can easily calculate how much term insurance is enough for their family in the future by using a term insurance calculator.Basically, the term insurance cover required should be the present value of all future goals and expenses after subtracting the accumulated wealth and assets.

Let us look at this using an example.

Suppose you are 30 years old and your family’s annual expenses amount to ₹4,00,000. Assuming the yearly inflation rate to be 8%, your family’s expenses for the next 30 years will amount to approximately ₹4.8 Crores.

Consider the other expenses. Suppose you have an existing car and home loan with an outstanding balance of ₹55 lakh. Additionally, you want to keep at least ₹20 lakh for your children’s education. Finally, you want an additional ₹80 lakh as retirement corpus for your spouse.

Adding all of the above, the total comes down to approximately ₹6.35 Crores. So this must be the total amount your family would need. However, you may also have some accumulated wealth or assets, so you must subtract those from this amount. Let us assume you have ₹20 lakhs in various investments that can be readily accessed. So, after reducing this amount, your total insurance requirement would be ₹6.15 Crores.

In this example, it is clear that though ₹1 Crore seems sufficient, it depends on factors like your expenses, inflation rate, loan obligations, existing investments, and more. You should therefore check all these factors and determine your specific requirement before buying a ₹1 Crore plan.

Conclusion

If you had purchased a policy without the necessary calculations, your family might have faced financial troubles in the future. Hence, do not use an arbitrary number like ₹1 Crore for your term insurance. Carefully consider the financial requirements in the future and come up with an amount.

FAQs on ₹1 Crore Term Insurance Plan