Tata AIA Life Insurance recently launched a term insurance plan. This product, Maha Raksha Supreme, offers two options for life cover. One is the pure protection cover, where the basic sum assured will be paid when the policyholder dies. And the other option is extra protection, which is an in-built premium waiver cover. If the insured suffers from permanent disability, the future premiums will be waived off. But the policy will continue and the policyholder will get life cover. This plan is available for anywhere between 10 and 40 years.
You can buy the pure term cover till the age of 70. Here, the policy term will be 10 years, that covers you till the age of 80. Of course, the premium will be higher for this age bracket.
The maximum entry age for the extra protection cover is 55 because the insurer entails higher risk. The premiums are higher for this option as compared to pure protection cover, says Vijay Sinha, senior vice president - product development, Tata AIA Life Insurance.
| PREMIUMS OFFERED BY VARIOUS PLANS | |
| Company* | Annual premium (Rs ) ** |
| Tata AIA Life Insurance | 13,000 |
| MetLife | 19,551 |
| Bharati Axa Life Insurance | 19,326 |
| ING Vysya Life Insurance | 29,183 |
| Source: Policybazaar.com *Offline term plans **Sum Assured = Rs 1 crore; Policy term = 25 years; Policyholder's age = 30 years (male, non-smoker) | |
Both the above mentioned covers come with additional features like 'Life State Plus Option' and in-built payout accelerator. You have to opt for this feature at the time of buying the policy.
With 'Life State Plus Option' you can increase the cover at different stages of your life, without the hassles of fresh medical underwriting. This option will be linked to milestone events in your life, but that can only be your marriage and two child births (total three times). The additional sum assured that you can avail under this option is a minimum of 10 per cent of the basic sum assured and maximum 50 per cent, subject to a total of Rs 50 lakh worth of additional cover.
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Say, you choose the pure protection cover where the sum assured is Rs 15 lakh and you opt for ‘Life State Plus Option’, you will get a minimum of Rs 1.5 lakh and a maximum of Rs 7.5 lakh of additional cover. If you choose the maximum limit, you will get only that much (Rs 7.5 lakh in this case). If you choose the minimum extra cover in the first go, you will have another Rs 6 lakh to use over the other two milestones.
Sinha advises this feature to the young. “No fresh medical underwriting is an advantage as underwriting is stringent in term plans,” he says.
Payout accelerator pays 50 per cent of the sum assured on diagnoses of a terminal illness and the remaining on death. Here, terminal illness would be an illness where death is imminent in six months.
Maha Raksha Supreme is a standard term plan with a disability rider, according to Akshay Mehrotra of Policybazaar.com. As it is not available online, the premiums are higher than for online term plans.
For instance, for a 30-year old an online term plan of Rs 1 crore (policy term = 25 years) would charge Rs 7,000-8,000. But Maha Raksha Supreme, the policyholder would have to pay Rs 13,000, almost 70 per cent higher. MetLife Insurance's term plan (offline), the annual premium for the policyholder would be Rs 19,551, while Bharti AXA Life Insurance's term plan would charge Rs 19,326.
The premium waiver rider is a good option. However, the option to increase the sum assured is not unique, most traditional plans offer it. “This product is meant to be sold by the retail agency channel and not to be bought online. Today, 70 per cent term plans are bought online. I wouldn't recommend this product over online term plans,” Mehrotra says.