Written by Sajja Praveen Chowdary, Business Unit Head, Term Life Insurance, Policybazaar.com
By now, all of us are well aware of the uncertainty caused by Covid-19 and its recurring variants. With several people losing their loved ones to the deadly virus, the need for financial security and protection has become a priority. As a cascading effect, awareness around having term life insurance has increased manifold. This irreversible change has set in after observing that the second Covid-19 wave in India spared none, including the young, the aged, healthy or otherwise.
We live in a time when health issues and financial emergencies are just around the corner. Covid-19 has only reiterated the importance of a secure future for families. Such adversities often turn out to be painful and severely costly for patients. From detecting Covid-19 in a patient to the end of their standard treatment, the calculated cost of medical treatment can go up to lakhs of rupees. In such a case, if, unfortunately, the earning member passes away, it can lead to substantial financial pressure. Having a term insurance policy can effectively help ease this pressure for the policyholder’s family.
Why Must We Act Now?
Covid-19's new strains have been known to give way to several developments in the insurance market. For instance, insurers now demand a compulsory three-month waiting period for Covid-19 infected people seeking term insurance. Additional conditions include extra medical tests such as chest X-rays, etc., for people with no existing policies. Other crucial factors for eligibility include the severity of the infection and hospitalisation history. In light of these developments, buying a term plan without further delay is a wise investment for securing your future and also of your loved ones.
How Age Affects Premiums
Owing to the Covid-19 situation, there has been a significant rise in the number of life insurance claims over the past two years. In an attempt to cushion the impact of this global calamity, insurers have spread out their portfolios. However, this might lead to an increase in the premiums of term plans. Nowadays, having a term plan of at least Rs 50 lakhs is compulsory for safeguarding your dependents in case of any medical emergency.
Therefore, it is essential to get a term insurance plan as early as possible in life. Delaying this purchase not only keeps your loved ones unprotected but also turns into a more significant expense later as the cost of the premium increases with age. Ideally, the best time to buy a term plan is in your 20s or 30s, as you can choose from a variety of term plans at the lowest prices.
Tackling Financial Emergencies Amid Covid-19
The Covid-19 scare has reiterated the transitory nature of life and heightened sensitivity toward term insurance plans. Customers are now getting term plans not merely for investment purposes or as tax-saving instruments but as a means to protect their family’s financial future. As a direct impact of Covid-19, protection products are becoming the foundation of financial planning. The awareness that has transpired due to the pandemic has driven people to delve into the insurance ambit and seek out the most suitable insurance plans.
Over the last two years, the majority of people who have purchased term insurance have opted for plans offering coverage of Rs 50 lakh to Rs 1 crore and above. Hence, the ideal sum assured of a term plan should be 15–20 times the annual income, and the policy tenure should last till the retirement age. Since India's most common retirement age ranges between 61–81 years, insurers are adapting to provide adequate solutions during unprecedented times.
Leveraging Protection With Suitable Add-ons
The purpose of add-ons is to provide extensive coverage and added security. During the pandemic, add-ons or riders for term plans have made medical and financial dilemmas hassle-free for policyholders. Extending the safety net of a plan, add-ons like accidental disability rider, waiver of premium rider or critical illness rider, etc., can prove extremely helpful for recovering patients. For example, There may be cases where a family's financial condition could be adversely affected due to a permanent disability. Here, accidental disability riders can be a huge boon. Similarly, there are cases where an affected policyholder cannot afford the premium amount due to a disability and subsequent loss of employment. In such a case, the waiver of premium add-on takes care of the remaining premium amount and unburdens the policyholder and their family.
On the one hand, where people are growing more careful and are looking to buy term covers for risks reduction and management, insurers are also adopting a similar course of action. Such changes directly indicate how the market is maturing with trending times. Hence, now is the time to gauge your requirements and select a term plan that you can depend on amid the Covid-19 outbreak.
The author is the Business Unit Head, Term Life Insurance, Policybazaar.com
