In these times of high inflation, Rs 20 won't buy you much. But it is enough to buy Gopal Gidwani a term insurance cover of Rs 49.99 lakh. The 38-year-old Pune-based professional pays an annual premium of Rs 7,652 for the Anytime online term plan from IndiaFirst Life Insurance he bought two months ago.
Term insurance policies have become very popular in the past 12 months. "Premium rates have come down, companies are advertising term plans in a big way and the online channel is very convenient. This is why sales of term plans have shot up," says Amitabh Chaudhry, CEO and managing director of HDFC Life. The company launched its click2protect online term plan earlier this year. Aviva Life Insurance, which launched its i-Life plan in May 2011 has sold more than 18,000 policies in the past 10 months. Aegon Religare Life Insurance has sold nearly 25,000 i-Term plans.
Financial planners contend that a term plan is the best form of insurance because it gives a very high cover at a low price. The premium of a term plan is a fraction of what you have to shell out when you buy an endowment plan, a money-back policy or a Ulip with the same coverage. Of course, this is also because there is no investment component in a term plan. The entire premium goes in covering the risk. Before you buy a term plan, here are a few things to consider.
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