5 Tips to save on a Term Plan

Mahesh who is in his early 20s has just started his professional life but he has a wise head on his young body so naturally, he wants to get an insurance cover for himself as soon as possible. As his income is relatively less, he wants to pay as little premium as possible yet get the highest cover so he opts to go in for a Term Insurance plan. Let us help him save money while he decides on the perfect Term Plan for his needs.

Opt for an online Term Plan: Like any other life insurance plan, a Term Plan is also available both offline and online. A Term Plan if bought online, is much cheaper when compared to the same plan bought offline. The reasons being:

• No middlemen like an agent are involved, thus the insurance company can offer the plan at a lower cost.
• In an effort to promote online cashless transactions insurance companies have started giving a substantial first-year premium discount for online purchases.

Additionally, if one opts for an online purchase of a Term Plan he/she will also get benefits like:

• Convenience of purchase: Mahesh can purchase the plan 24X7 when he wants to at the click of a mouse.
• The possibilities of errors are less as the insured himself will fill up the form. What he/she fills in the form can prove to be the difference between a successful claim and a rejected claim.

Start Early: As the saying goes, “An early bird catches the worm,” so if you want to enjoy the luxury of minimum premium on you Term Insurance policy with maximum life cover then you should take the policy as early as possible. Remember, new Term Insurance premiums rise steeply with age as rising age means an increase in your health risk which means higher risk for the insurer. Insurers charge a higher premium with advancing age to offset this risk.

Compare various options: If you wish to save the most from your Term Plan then it goes without saying that you must not rush headlong into the first Term Plan that you hear about. Technology has made it much easier to compare various options available for any product, compared to some years back, and insurance products are no exception. So make full use of the advantage bestowed on you by technology to weigh the pros and cons of various plans on offer and arrive at the perfect plan for your individual needs. Needs of no two persons are exactly identical, and it depends upon you to save money for yourself. If required, take the help of your friends or an advisor who is well versed in these matters.

Go for a convertible Term Plan: Our priorities change with time so if you are opting for a Term Plan ensure that it gives you the option of conversion into an Endowment Plan if you wish to do so. It will save you the hassle of going for a medical check-up as and when you decide to convert your Term Plan into an Endowment Plan.

Tax Benefit: An excellent way of saving money on your insurance needs is to go in for a Term Plan, which as mentioned above has a much lesser premium component as compared to an Endowment Plan providing the same life cover. It will not only provide you tax relief under the relevant Income Tax section but you can double your monetary benefit by investing the difference of the premiums of the said Term Plan and Endowment Plan into any of the tax efficient schemes like Mutual Funds, Equity Linked Saving Schemes and Public Provident Fund. It will not only give you an increased tax relief but also increase your income in the long run.

Follow these tips and get the most from your Term Plan.