Term Insurance for Social Sector

The second wave of COVID-19 saw an unprecedented number of deaths. Particularly, the social sector lost many prominent social and human rights activists to the pandemic. People engaged in social sector do not enjoy the same financial security and the additional compensations/perks that are provided to employees working in government/PSUs positions or MNCs. Even health/accident insurance plans offered by NGO employers often do not offer an adequate life cover. So, it becomes more important for social workers to have a good insurance policy. 

Term insurance is the purest form of life insurance policy which is for a fixed period of time. If the policyholder passes away before the end of the policy term, it provides their family with a death benefit. Typically, term plans do not pay if the insured outlives the term.

Why should you get a Term insurance?

• If you’re the primary provider i.e sole earning member of the family
• If you have a significant amount of debt 
• Ensures financial protection against death due to critical illness
• Covers against accidental death
• Ensures tax benefits
• Allows multiple payment options

What is the Insured Amount Under Term Insurances?

Financial experts suggest that the amount of life insurance should be 15 to 20 times the income of insured in order for it to be efficient and most helpful.

Types of Term Insurance Policies

1. Level Term Plans: This is the common type of term insurance plan. Under this plan, the premium varies according to your age. The lower your age while buying a level term plan the lower will be your premium.
2. Increasing Term Insurance: Under this plan, the insured can increase the sum assured at specific points in the policy term. The rate of this increase is predetermined.
3. Decreasing Term insurance: In this case, the sum assured decreases at a predetermined rate as your age increases.
4. Return of Premium Term Insurance: This policy provides that in the event that the insured outlives the policy term, all paid premiums till the maturity date is returned to the insured. 
5. Convertible Term Plans: This plan can be converted into another type of insurance plan at a later stage; for example, a whole life plan or an endowment plan. 

Does Term Insurance Covers Death Due To Covid-19? 

The answer is yes. If an individual passes away due to Covid-19 and had a term life insurance policy, the nominee will get the sum assured as death benefit. We found that for an insured who wants a 2.5 Crore life cover, premiums can be as low as INR 25000 annually. Tools such as those offered by Policy Bazaar allow you to compare plans and choose the most suitable one.

If you are planning to buy a term life insurance policy now, you should keep in mind that insurers determine the premiums of your insurance policy based on medical history. And always, read the fine-print before you buy the plan!

This edition is contributed by our summer intern Ashwin Jain