What is 2 Crore Term Plan Insurance

Affordable life insurance is available through term insurance coverage. A term plan offers the insured person life insurance for a predetermined period. These insurances are typically relatively affordable because they don't give any investment benefits. One of the affordable life insurance options available are term policies.

What Is A 2 Crore Term Plan?

A 2-crore term insurance plan is a term insurance policy that offers a sum assured of Rs. 2 crores. 2 crores of Indian rupees could appear like a large sum of money at first for some. However, if your account for inflation, your annual expenses, living costs, future financial goals etc. it might act as a suitable financial cushion for your loved ones. The premium you may have to pay depends upon several factors like your age, income, lifestyle, smoking habits, riders if chosen, etc. and may vary from person to person.

How Is the Premium For A 2 Crore Term Plan Computed?

Your term plan premium is based on a number of variables. Here are some examples of what they are:

● Plan Tenure –

The length of the policy will have a big impact on your premiums when you get term insurance. Longer-duration term plans will have cheaper rates.

● Sum Assured –

Your sum assured directly relates to the cost of the term insurance premium. For Example, compared to a 2-crore term plan premium, a Rs.20 lakh term insurance premium would be less expensive. You must be careful when choosing the sum assured because your premium is based on it. As a general recommendation by experts, you should get insurance that is at least 10 to 15 times your annual income¹. Make sure the payment from the term plan will help take care of financial needs, debts and household expenses, among other costs of your nominees in case of unfortunate demise of the person insured.

● Personal Habits and Health History –

Your premium amount may vary depending on your current health behavior. For Example, your premiums will be greater if you currently have a sickness or have a family history of heart disease. Your insurance company will increase your rate if you have a lifestyle habits such as smoking or drinking as indulging in these habits on regular basis decreases the life expectancy by illnesses. Therefore, it makes sense to buy a term plan while you're still young and healthy.

Things To Consider Before You Buy Term Insurance

There are a few things you should think about before buying a 2-crore term insurance policy:

● Inflation –

Consider inflation when estimating how much your family will require in the future. If you're thinking about your child's financial future, consider a higher rate.

● Sum Assured –

Verify that the money assured is sufficient. Keep in mind that if your settlement is insufficient, your family can face financial hardship.

● Ratio of Claim Settlement –

A claim settlement ratio will be available on each insurance company's website. It indicates the percentage of claims that were resolved during the preceding fiscal year as against the number of claims received.

● Solvency Ratio:

It indicates the strength of the cash flow within a company and how financially capable it is of settling the claims received.

Why You May Want To Consider 2 Crore Term Insurance Plan

Some Reasons Why You May Consider a sum assured like Rs.2 Crore, in your Term Insurance Plan are as Follows –

1. Enhanced coverage for better financial security

With a Rs.2 crore term plan, the death benefit payout is will be ₹2 Crore. This may give your family adequate financial assistance to help them face their financial needs in your absence, subject to outstanding debts and/or daily expenses. When the coverage is enough for you, you can enjoy better financial security, knowing, that in your absence, your family’s financial needs may be suitably taken care of.

2. Helps in goal fulfilment

If you have multiple goals, a good corpus is needed to fulfil them. The payout from the policy would help your family meet their different financial goals in your absence like a child’s higher education, buying a home, retirement planning, etc. The plan would give sufficient funds to your family so that most of your goals can be fulfilled even when you are not around.

3. Affordable coverage

While a Rs.2 crore term plan offers an optimum sum assured, the premiums might usually be affordable. You can break down the premium payment into monthly, quarterly or half-yearly frequency and pay it easily.

Who Should Consider Buying A 2 Crore Term Insurance Plan?

A Rs. 2 crore Term insurance plan suits any individual looking for financial safety net of the said amount. You can assess your financial goals, lifestyle expenses, number of dependents, existing assets and liabilities and check how much sum assured is needed for the term insurance plan. You can use online term insurance calculators to find an ideal sum assured level. If the ideal sum assured is up to Rs.2 crore, you can consider buying the Rs.2 crore term insurance plan.

When Should You Consider Buying A 2 Crore Term Insurance Plan?

If the said coverage amount meets your financial requirements, feel free to get yourself a Rs.2 crore term insurance plan whenever you wish, as long as you meet the age criteria. However, it's a smart move to consider purchasing the plan at a younger age because:

1. You can get covered earlier

2. You can lock in lower premiums

3. You can enjoy long-term coverage

Conclusion

A term insurance policy provides financial protection to the family if the life insured passes away prematurely. When buying a term insurance plan, it is feasible to opt for an optimal coverage amount sufficient to take off your family’s financial needs. So, understand how a Rs.2 crore term plan works, how much it costs and assess its suitability. If the plan fits your and your family’s financial needs, you can buy the coverage and get complete financial security.

FAQs

1. How long does it Take to Get a Claim Payout?

The time for paying out the claim depends on when the claim has been made and whether or not all documents have been submitted. As per the regulation 14 (2)(i) of the IRDAI (Policy holder's Interest) Regulations, 2017, to safeguard the Policyholder’s Interests, the insurer is expected to settle any claim within a period of 30 days from the date of receiving all documents and clarification. However, Insurance companies try and pay out the claim as quickly as possible. However, if the death was due to suspicious reasons for which the insurer wants to conduct an investigation or if the documentation is not proper, claim payouts might get delayed.

2. Is a medical checkup necessary to buy Rs.2 crore term insurance?

Since the sum assured is of considerable amount, the insurance company might insist on a health check-up before issuing the term insurance plan.

3. Is a Rs.2 crore term insurance plan sufficient for my needs?

The sufficiency of a Rs.2 crore term insurance plan depends on your financial goals, existing assets and liabilities, income, number of dependents and other factors. So, you should consider all the factors to find the ideal sum assured for your coverage needs. If the ideal sum assured is up to Rs.2 crore, then the Rs.2 crore term plan would prove sufficient. However, if you have more financial goals or needs, you might have to choose a higher sum assured.

4. Can I buy Rs.2 crore term insurance online?

Yes, it is possible to buy a Rs.2 crore term insurance plan online by following the online process specified by the insurance company.

5. Which plan tenure should I choose?

You should consider a term plan at least until you retire. A 30-year-old might choose a term of 30 years in this case. A 40-year-old, on the other hand, might select a 20-year policy term. In both the scenarios, retirement age is considered as 60 years. This will vary from the organization to organization and the life goals of the person.

6. Which sum assured should I select?

As you can see from the information above, the sum insured amount is based on the financial requirements of your family. The amount you choose should ideally assist in covering any lost income as well as unpaid bills, among other expenses.

7. Are riders for term insurance required?

Although they are not always required, term insurance riders can offer additional financial security. An accidental death rider may be more useful to people such as one who work in factories or travel frequently for employment. Based on your unique requirements, you should choose the riders. Remember that your term plan premium will be impacted by the riders and add-ons you choose.

References:

1. https://www.investopedia.com/articles/pf/06/insureneeds.asp

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