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Term Insurance Plan for 1 Crore Online in India
Deciding to opt for a 1 crore term insurance plan is a crucial financial choice that necessitates thorough consideration. While it may be a prudent decision for some individuals, given the current lifestyle and inflation, it might not be adequate for others.
This article discusses how a 1 crore term insurance plan can fulfil the coverage needs of an average investor. It explores the key factors to consider when selecting such a policy, weighing its advantages against your financial goals and insurance requirements.
If you are considering securing your family’s future with a substantial term insurance plan, assess whether a 1 crore insurance policy suits you.
Table of Contents
1 Crore Term Insurance Plan Overview
What is a 1 Crore Term Insurance?
A 1 Crore Term Plan means that the policyholder's nominee will receive 1 crore Indian rupees if the policyholder passes away. This is one of the highest coverage options available.
While 1 crore might seem like a huge amount, it's important to understand the benefits and importance of such a life insurance plan. The payout can be utilized for various needs, such as settling debts, covering daily expenses, and funding children's education. Moreover, this plan offers additional benefits like critical illness cover, accidental death benefit, and waiver of premium, making it a comprehensive financial safety net for your loved ones.
Since it’s a term insurance plan, it provides only death benefit and no maturity value if the life assured survives the policy term. Let's explore why a 1 crore term life insurance plan is so popular among people who want to protect their families from financial uncertainty.
How Does 1 Crore Term Plan Work?
Term Insurance Plan is the essential component of any healthy financial portfolio. More than an investment option, it is a financial tool that secures your family's financial future and provides you with much-needed mental peace. A rightly planned substantial insurance cover ensures that financial obligations like children's schooling, marriage and liabilities like home loans are taken care of, and the family does not deal with economic turmoil amidst the grief that strikes with the loss of a family member. Let us have a look at how a 1 Crore Term plan would work:
Sum Assured
It provides a coverage of 1 Crore rupees to the beneficiary in case of the policyholder’s unfortunate demise during the policy term.
Policy Term
The policy has a specified term chosen when buying the policy during active coverage.
Premium Payments
The policyholder can choose the premium amount, frequency, and tenure according to their preferences.
Death Benefit
Since it’s a term plan, the death benefit is the sum assured i.e. 1 crores. This death benefit is paid to the beneficiary in case of the policyholder’s unfortunate demise during the policy term.
Maturity Benefit
If the policyholder survives the policy term, there is no return unless you have a Term Plan with a Return of Premium option that returns all the premiums paid on the policy maturity. There is no additional savings component in any case.
Rider Benefits
You can add riders to your policy in addition to the base plan. These add-ons provide additional coverage for situations like critical illness rider, accidental death benefit rider, disability rider, waiver of premium rider, etc.
How Does 1 Crore Term Plan Work?
Term Insurance Plan is the essential component of any healthy financial portfolio. More than an investment option, it is a financial tool that secures your family's financial future and provides you with much-needed mental peace.
A rightly planned substantial insurance cover ensures that financial obligations like children's schooling, marriage and liabilities like home loans are taken care of, and the family does not deal with economic turmoil amidst the grief that strikes with the loss of a family member.
Let us have a look at how a 1 Crore Term plan would work:
Sum Assured
It provides a coverage of 1 Crore rupees to the beneficiary in case of the policyholder’s unfortunate demise during the policy term.
Policy Term
The policy has a specified term chosen when buying the policy during active coverage.
Premium Payments
The policyholder can choose the premium amount, frequency, and tenure according to their preferences.
Death Benefit
Since it’s a term plan, the death benefit is the sum assured i.e. 1 crores. This death benefit is paid to the beneficiary in case of the policyholder’s unfortunate demise during the policy term.
Maturity Benefit
If the policyholder survives the policy term, there is no return unless you have a Term Plan with a Return of Premium option that returns all the premiums paid on the policy maturity. There is no additional savings component in any case.
Rider Benefits
You can add riders to your policy in addition to the base plan. These add-ons provide additional coverage for situations like critical illness rider, accidental death benefit rider, disability rider, waiver of premium rider, etc.
Let us take the Example of Mr Vikram.
Understand the Scenarios of 1 Crore Term Insurance
Death During the Policy Term
Outliving the Policy Term
Is a 1 Crore Term Insurance Plan Enough for You?
Factors for Evaluating Required Sum Assured
A correct evaluation of the required sum assured involves many factors:
- Family income
- Expenses
- Future goals
- Inflation
- Loans and liabilities
- Regularly increasing financial requirements of your family
A more accurate assessment can be done using the human life value calculator, which considers all the above factors.
Illustration
Consider the scenarios below to understand if a 1 Crore term plan is enough.
Case 1: Mr. Aryan
Aryan, a 26-year-old professional, had retired parents as dependents and an annual income of ₹10 lakhs. He planned to marry soon and buy a house afterwards. Foreseeing future responsibilities, he bought a 1 crore term plan with a tenure of 20 years as a financial cushion for his dependents.
At the age of 42, Aryan suffered a cardiac arrest. He had a dependent wife, two kids, an outstanding home loan of ₹40,00,000, and dependent parents. Considering these liabilities and future significant expenses like the kids’ higher education, the sum of ₹1 crore was insufficient. Aryan should have reevaluated his coverage once his responsibilities increased.
Case 2: Mr. Rohan
Rohan, a 30-year-old professional, had retired parents dependent on him. He was married and owned a family house. At that time, his annual income was ₹15 lakhs. He decided to purchase a 25-year term plan worth 1 crore.
At the age of 40, Rohan passed away due to an accident. He had dependent parents and a 6-year-old daughter. However, his wife was earning, and he had no significant liabilities, like a home loan. His daughter’s education was one significant expense that needed to be taken care of.
Rohan also had considerable savings since he was an active investor in different investment instruments. Given his fewer liabilities and more assets, a term plan of ₹1 crore might be sufficient.
Note: The one golden rule to having sufficient coverage is to “Review Your Term Insurance Every 5 Years” to cover all your increased liabilities and expenses. A periodic review of your term plan ensures it aligns with your evolving financial situation. Consider revisiting the policy if significant life changes occur, such as marriage, childbirth, or career advancements.
Benefits of 1 Crore Term Insurance Plan
High Coverage at Affordable Premiums
A sum assured of 1 Crore offers substantial financial security to your family at a relatively low cost. Term plans are typically more affordable than other types of life insurance.
Financial Security for Family
Ensures that your family can maintain their standard of living and cover major expenses like mortgages, education, and daily living costs in your absence.
Tax Benefits
Premiums paid for the policy are eligible for tax deductions under Section 80C of the Income Tax Act. The death benefit received by the nominee is also tax-free under Section 10(10D).
Flexibility
Many insurers offer flexible premium payment options (annual, semi-annual, quarterly, or monthly) and policy terms. Some plans also allow you to increase coverage at major life stages (marriage, childbirth).
Riders and Add-ons
Optional riders, such as critical illness cover, accidental death benefit, and premium waiver, can enhance the coverage of your term insurance plan.
Peace of Mind
Knowing that your loved ones will be financially protected, even if you are not there to provide for them, provides peace of mind.
Simple and Transparent
Term insurance plans are straightforward, with clear terms and conditions, making them easy to understand and manage.
Loan Protection
The sum assured can be used to pay off outstanding loans, ensuring that your family is not burdened with debt in your absence.
Who Needs a 1 Crore Term Insurance Plan?
A figure of 1 Crore might look extremely high, but for any average person who lives in a city, works in a private company and has school-going kids, the financial requirement at any stage would be this.
A term plan is the most affordable way to financially secure a family for unforeseen circumstances when this income might stop due to the breadwinner's demise.
Here are the other benefits that a 1 Crore Insurance cover can provide you:
High Coverage at Affordable Premiums
Term Insurance plans are the cheapest and most affordable insurance types available. They are cost-effective because they provide only Death Benefits and have no savings component.
Takes Care of Liabilities and Debts
Having a Term Plan in your financial bucket means that in case of any unforeseen circumstance when you are no longer with your family, the Term Plan will help them repay all debts and liabilities. It ensures they do not have to deal with any debts you might leave behind. With a Term Plan, you can ensure a debt-free legacy for your family.
Enhanced Coverage
Compared to whole-life plans or other insurance plans with a savings component, term Plans provide much higher coverage for a given premium. You can also enhance that base coverage by adding riders who care for other specific situations. This ensures the dependent family is financially secure and can lead a normal life.
Who Should Buy a 1 Crore Term Insurance Plan?
While a Term Plan is the basic necessity for anyone to have in their investment bucket, a 1 Crore Term Plan specifically would be suitable for these categories of people:
Young Earners
Youngsters who have just started earning and are responsible for dependents should consider a 1 Crore term plan to provide a substantial financial cushion for their loved ones in the event of their demise.
Individuals with Dependent Parents
In cases where parents do not receive a pension and are dependent on their sole earning child, Term Plan should be purchased as it would save the parents from any financial turmoil in case of any unfortunate death of their earning child. The insurance cover would take care of their liabilities and regular expenses.
Married Couples
When you get married, there are increased responsibilities. Even when your spouse is earning, your expenses and liabilities are directly proportional to the sum of both incomes. In such a case, a term plan ensures that your spouse does not struggle with finances, even in your absence.
Young Parents
Young parents must buy a term plan of at least 1 crore to secure their child's future. This will ensure that your child's education and other needs do not go for a toss if you are not there with them.
Individuals with Home Loans
If you have taken a home loan and are paying off the EMIs, that loan can burden your family in case of your unfortunate demise. These days, in any city, a decent home costs at least 1 Crore. Hence, make sure to buy a Term Plan for 1 crore dedicated to safeguarding your home.
Small Business Owners
If you are into business, most of the expenses are on credit, and at any given time, you might find yourself under a certain debt. If it is a small business, 1 Crore Term Insurance plan might suffice to take care of these debts in case of your untimely demise and make sure that your family does not have to deal with this pressure of debts at a time when they are dealing with a personal loss.
Senior Investors
Senior people, especially those nearing retirement whose major life goals like house purchase and kids’ education are over, can look at buying a 1 Crore coverage. This will provide financial protection to their dependent spouse and others in case of their unfortunate demise and take care of any pending milestones like their children’s marriage.
Who Should Buy a 1 Crore Term Insurance Plan?
Young Earners
Youngsters who have just started earning and are responsible for dependents should consider a 1 Crore term plan to provide a substantial financial cushion for their loved ones in the event of their demise.
Individuals with Dependent Parents
In cases where parents do not receive a pension and are dependent on their sole earning child, Term Plan should be purchased as it would save the parents from any financial turmoil in case of any unfortunate death of their earning child. The insurance cover would take care of their liabilities and regular expenses.
Married Couples
When you get married, there are increased responsibilities. Even when your spouse is earning, your expenses and liabilities are directly proportional to the sum of both incomes. In such a case, a term plan ensures that your spouse does not struggle with finances, even in your absence.
Young Parents
Young parents must buy a term plan of at least 1 crore to secure their child's future. This will ensure that your child's education and other needs do not go for a toss if you are not there with them.
Individuals with Home Loans
If you have taken a home loan and are paying off the EMIs, that loan can burden your family in case of your unfortunate demise. These days, in any city, a decent home costs at least 1 Crore. Hence, make sure to buy a Term Plan for 1 crore dedicated to safeguarding your home.
Small Business Owners
If you are into business, most of the expenses are on credit, and at any given time, you might find yourself under a certain debt. If it is a small business, 1 Crore Term Insurance plan might suffice to take care of these debts in case of your untimely demise and make sure that your family does not have to deal with this pressure of debts at a time when they are dealing with a personal loss.
Senior Investors
Senior people, especially those nearing retirement whose major life goals like house purchase and kids’ education are over, can look at buying a 1 Crore coverage. This will provide financial protection to their dependent spouse and others in case of their unfortunate demise and take care of any pending milestones like their children’s marriage.
Individuals with Education Loans
If you have taken out an education loan, your family may face the challenge of repaying it if something happens to you unexpectedly. A term insurance policy of 1 crore can offer significant protection, assisting in settling the remaining education loan and easing your family's financial burden.
How to Choose the Right Term Plan?
Decide a Sum Assured that is Sufficient for you
We all have our long-term goals, lifestyle requirements and other financial needs. While deciding on coverage, ensure all your financial requirements are met. Additionally, it is enough to take care of all your liabilities and other expenses in case of your untimely demise.
Compare the Premium Rates
Choose a plan that has the most competitive premium rates. Make sure to compare the plans and choose the one that best meets your requirements at the most affordable rates.
Check for the Exclusions and Inclusions
Another critical point to check in an insurance plan is the inclusions and exclusions. Check this list thoroughly so that when there is a need, you do not get surprised that your insurance provider does not cover the specific condition.
Check for the Benefits and Riders that the Policy is Offering
Check the plan entirely for all the benefits that it provides. Riders are an essential component because they increase the total coverage of your plan and cover specific conditions like critical illness, accidental death, and terminal illness.
Check your plan for all the rider options it provides, and pick the one most suited to your needs.
Check the Claim Settlement Ratio of the Insurance Provider
Claim Settlement Ratio reflects a company's credibility, and it indicates how quickly your dependents would receive the death benefit in case of your unfortunate demise. The higher the ratio, the more credible your insurer is.
Hence, you must check the claim settlement ratio of the insurance provider before opting for a term insurance plan from them.
Things to Consider When Choosing a 1 Crore Term Insurance Plan
Policy Term
Choose a policy term that covers your working years or until your primary financial responsibilities are over.
Premium Payment Term
Decide on a premium payment term that aligns with your financial planning (regular, limited, single pay).
Claim Settlement Ratio
Check the insurer's claim settlement ratio to ensure a reliable and prompt claim settlement process.
Inflation
Consider the impact of inflation on the coverage amount. You might need a higher sum assured to match future financial needs.
Health and Lifestyle
Be transparent about your health and lifestyle during application to avoid claim rejections later.
Comparing Plans
Compare different plans from various insurers based on premiums, coverage, add-ons, and customer reviews.
Eligibility Criteria for a 1 Crore Term Insurance
Documents Required to Purchase a 1 Crore Term Insurance Plan
To purchase a 1 Crore term insurance plan, applicants are required to submit the documents listed below:
Identity & Address Proof
- Aadhaar Card
- Passport
- Voter ID
- Driving License
- PAN Card
Income Proof
- Salary slips (last 3 months)
- IT returns (last 3 years)
- Form 16
- Bank statements (last 6 months)
- Profit & Loss account (for self-employed)
- Balance sheet
- Salary certificate
- CA certificate (for self-employed)
- Agricultural income certificate
Age Proof
- Birth Certificate
- School/College Leaving Certificate
- Passport
- Aadhar Card
Medical
Other Documents
- Policy Proposal Form
- Nominee Details
- Photograph
- Bank Account Details
How to Calculate 1 Crore Term Insurance Premium?
How to Calculate 1 Crore Term Insurance Premium?
To calculate the premium for a ₹1 crore term insurance plan, you need to consider several factors such as the policyholder’s age, health, lifestyle, occupation, and the policy term. Additionally, you might want to explore extra coverage options like critical illness riders or accidental death benefits.
Let’s assume a 1 crore term insurance plan details for Rohit as an example:
- Age: 30 years
- Health Status: Non-smoker
- Policy Term: 20 years
- Sum Assured: 1 Crore
- Riders: No additional riders
Read more..
Common Reasons for 1 Crore Term Insurance Plan Rejection
Common Reasons for 1 Crore Term Insurance Plan Rejection
Certain factors might lead to rejection when applying for a 1 Crore term insurance plan. Knowing these can help you prepare and address any issues before applying.
- Suicide: Most insurance policies include a suicide clause, stating that if the policyholder commits suicide within the first one or two years, the claim won’t be paid. If the insurer suspects the application is an attempt to exploit this, they might reject it.
- Participation in Hazardous Activities: If you participate in high-risk activities like skydiving, scuba diving, or motor racing, insurers may either reject your application or charge you higher premiums due to the increased risk.
- Self-Inflicted Injuries: Policies often exclude coverage for death due to self-inflicted injuries. If there's evidence that the applicant has a history of self-harm or attempted suicide, the insurer may deny coverage.
Read more
Tax Benefits for 1 Crore Term Insurance Policies
Tax Benefits for 1 Crore Term Insurance Policies
Section 80C: Premium Payments
Section 80C: Premium Payments
Under Section 80C you can claim a tax deduction for your term insurance policy premium, up to 1.5 lakh INR annually. This deduction is available to individuals and Hindu Undivided Families (HUFs).
Who Can Qualify?
If your policy was issued on or after April 1, 2012, your premium should not be more than 10% of the sum assured. The premium should not exceed 20% of the sum assured for policies issued before that date.
Section 10(10D): Maturity Benefits
Section 10(10D): Maturity Benefits
Under Section 10(10D), the money you receive from your term insurance policy, including the death benefit, is completely tax-free.
Conditions:
For policies issued on or after April 1, 2012, the premium must not exceed 10% of the sum assured. The premium must not exceed 20% of the sum assured for older policies.
TDS: If your policy doesn’t meet these conditions, a 5% tax will be deducted at the source if the payout exceeds 1 lakh INR in a financial year.
Section 80D: Health Riders
Section 80D: Health Riders
Under Section 80D if your term insurance policy includes extra health-related coverage like critical illness or accidental death, you can claim an additional tax deduction for the premium paid for these riders.
How Much Can You Deduct?
If you are under 60, you can claim up to 25,000 INR. If you are a senior citizen, you can claim up to 50,000 INR. This deduction is separate from the 1.5 lakh INR limit under Section 80C.
FAQs about 1 Crore Term Insurance Plan
What will be my premium for a 1 crore term insurance plan?
Should I buy a 1 crore term insurance plan or an endowment plan?
What is the minimum income requirement to purchase term insurance of ₹1 crore?
What are the eligibility criteria for buying the best term insurance plan for ₹1 crore?
When should I buy the best term insurance plan for 1 crore?
How do I buy a 1 crore term insurance plan online?
What is the minimum age to purchase a 1 crore term insurance plan?
What are the riders benefits available on a 1 crore term insurance plan?
What happens to a 1 crore term plan on maturity?
How does the critical illness rider impact the overall premium and claim settlement process for a 1 crore term insurance plan?
What are the specific tax implications of a 1 crore term insurance plan?
How do insurers assess the risk profile for individuals seeking a 1 crore term insurance plan?
How does the Human Life Value (HLV) concept influence the decision to opt for a 1 crore term insurance plan?
What are the key factors when comparing different 1 crore term insurance plans?
Other Important Articles Related to Term Insurance
Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
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