A 2 crore term insurance plan is a form of life insurance protection plan that helps protect the financial future of the policyholder’s family. Notably, a term insurance plan is a pure protection plan so they do not have an investment component. Such a plan is designed to pay a high cover to the policy beneficiary in the event of the sudden death of the policyholder. The high cover amount acts as a reliable safety net for the policy beneficiary and allows them to meet their expenses and other obligations with ease even in the absence of the insured.
Notably, a 2 crore term insurance plan, or a term insurance in general does not extend a maturity benefit. This means the high-cover plan terminates with the end of the policy term. However, the entire promised sum is disbursed to the policy nominee in the event of the insured’s death under circumstances covered under the plan. Today, some insurance companies have also designed term life insurance plans with a return of premium option. This type has been designed to ensure that individuals do not lose out on the entire sum of maturity.
If individuals outlive the policy term, insurance providers return the premium individuals paid to avail of the protection. However, such an amount may be subject to deductions and charges based on the terms and conditions of the insurer.
How does a term insurance plan work?
A 2 crore term insurance plan offers a high financial cover to the insured’s family in exchange for the regular premiums for a pre-defined period. In the event of the insured’s death during the active term, the policy provider disburses the sum assured to the policy nominee. This high cover value allows them to meet their immediate and upcoming expenses and also acts as a substitute for the insured’s income. Typically, a two-crore term insurance plan works depending on how the insured plans and approaches it. Here’s how individuals tend to approach term plans –
Select the desired sum assured
The first step is to decide on a robust protection level for the family or a sum assured based on the insured’s family’s needs and future expenses.
Select the death benefit payout option
Next, individuals should decide upon a suitable death benefit payout option from among options like a lump sum payout, part payments, or monthly income. Notably, the payout option may vary among insurance providers. This is why it is important to discuss with providers to understand the options.
Pick a suitable term and payment schedule
Individuals should next select a suitable period for which they need insurance protection. Subsequently, they should choose a suitable premium payment schedule be it monthly, quarterly, annual, or semi-annual payment options that suit their payment capacity.
What does a 2 crore term plan cost?
A 2 crore term plan comes at an affordable premium to allow more individuals to benefit from its extensive cover amount and lucrative features. While the premium is essentially affordable the amount tends to depend on several factors. For instance, these factors tend to influence the premium of a 2 crore term insurance plan –
Sum assured
It is said that the premium amount of an insurance policy is directly proportional to the plan’s sum assured. For instance, a term plan with a 10 lakh sum assured would accompany a lower premium. However, that does not mean a 2 crore term plan would be out of one’s reach. Regardless, it is always recommended to pick a cover that would support their family while the premium would not strain their budget. In other words, look for a cover amount that is at least 10 times one’s annual income to support their family’s needs and account for dependents’ expenses. Similarly, a high sum assured will help to meet future expenses and ongoing debts without eroding their savings.
Policy term
As discussed, the insurance plan’s term will impact the premium significantly. Typically, longer terms ensure lower premiums as insurers are more comfortable with longer terms that do not need them to pay the sum immediately.
Medical history
Individuals’ current health status and their lifestyle habits tend to influence insurance premiums significantly. For instance, individuals with a longer medical history and pre-existing health illness are deemed risky by the insurance provider. This is why to offset the risk, individuals charge a higher premium. Similarly, individuals with a poor lifestyle and harmful habits such as smoking or drinking alcohol are more prone to developing health complications. This puts them at a risk of a premium amount.
Riders
Rider benefits are additional benefits that individuals can add to their term life insurance to further increase their coverage. Riders help to customize coverage benefits, making plans more useful for individuals and their specific needs. However, adding one or more riders to existing plans also increases the premium amount. This is why individuals should ascertain their financial standing and analyze their needs for such riders before adding them to the base plan.
What to Consider Before buying a 2 crore Buy Term Insurance
To ensure one avails a plan that suits their needs, individuals should look for a few things before purchasing a comprehensive plan like a 2 crore term insurance plan.
Some of the key features to consider include –
Sum assured: individuals should make sure the sum assured, i.e., 2 crore is enough to support their needs and provide their dependents with a reliable financial safety net. A high sum assured would help individuals ensure that the future of their family is secured.
Inflation rate: Individuals must factor in the ongoing and anticipated inflation rate to ensure that the coverage they seek would be enough to meet future needs. Inflation-adjusted coverage would help meet expenses and support financial growth with ease.
The Claim Settlement Ratio: This ratio denotes how an insurer has fared in a year in terms of settling claims. Typically, a high claim settlement ratio of over 90% suggests that an insurer has settled a majority of the claims it received in a given period. Individuals should check the ratio online to gauge the company’s standing about claims and plan their purchases accordingly.
Since a lot depends on the sum assured, individuals can benefit more than one way from a two crore term insurance plan. They should also identify their needs and requirements beforehand to make the most of such plans.