It is well known that life can be unpredictable and fraught with dangers like illness, injury, casualty, etc. Uninvited risks like these change a person’s life financially and emotionally.
It is essential to establish a financial strategy for such unforeseen life circumstances. Term plans, the most straightforward type of life insurance, may help you protect your family’s finances at the lowest possible cost.
What is term insurance, you ask?
Term insurance is a contract that legally binds the insured and the insurer and provides death benefit to the beneficiary if the life insured dies during policy tenure.
Let us list the key characteristics of a term plan that makes it essential for you and your family to purchase life insurance.
- Economical –
The term plan’s accessibility may just be its most remarkable quality. A pure term plan gives life insurance for the sum assured, or predetermined amount, and the policy term, or predetermined period.
No maturity bonus can be provided if the life insured survives the policy term. Because of the plan’s simplicity and the fact that insurers must cover only casualty claims, it is an economical option.
The actual type of life insurance plan, known as a term plan, provides the family with financial security in case of any casualties of the breadwinner. Compared to other life insurance policies like whole life plans, money-back plans, or unit-linked insurance plans, the premium for term insurance is the least expensive.
- Simple to buy –
The ease with which you may purchase clothing, shoes, and home items online is the same ease with which you can buy a term plan.
Comparatively speaking, purchasing a term plan may be more straightforward than purchasing other financial products or forms of life insurance. The structure of a term plan is clear, so you don’t need to worry about what returns the premium may provide or where the corporation may put your money.
It is a straightforward plan that calls for you to choose a suitable sum based on your financial goals, way of life, financial obligations, etc. You can also use online term insurance calculators to get the correct total assured amount. There are two methods for purchasing term insurance:
Purchasing insurance through a broker or agent, or another insurance intermediary
With a few clicks and an online connection, you can purchase insurance products directly from the insurance company in a digital setting at your convenience.
- Term plan with the premium return –
Pure-term plans do not have any maturity value, which causes some consumers to be hesitant towards making the purchase.
However, there is another type of term plan, known as a term plan with a return of premium, which, if the insured lives out the policy term, offers a maturity value equal to the return of all premiums paid.
Because they provide death and maturity benefits, these plans can be slightly more expensive than those pertaining to standardterm insurance (whicheverhappens first). In a TROP, the payment at maturity may differ from plan to plan and from business to business.
- The option of staggering claims payout –
All term plans provide lump sum benefits to the nominee in case of a casualty claim. Some term plans offer staggering claim payouts, wherein a portion of the claim amount is payable as a lump sum, and the other share is expected as a monthly or yearly income.
A partial lump sum payment helps the family deal with the financial crisis they may be experiencing because of the loss of an income-earning member. The remaining amount payable as a staggered payout as monthly income may assist the family in meeting their monthly financial obligations.
- Modularity in premium payments –
Term insurance policies allow you to make payments annually, biannually, quarterly, or monthly. In addition to the standard premium, some term insurance plans provide single or limited payment options.
With such flexibility, the policyholder may select the best method of premium payment based on his/her financial situation and convenience. Using an onlineterm insurance calculator may help you understand the premium costs, which can meet your needs and be easy on your pocket.
- Provides refund –
Companies that provide life insurance give rewards if you choose a more significant sum assured under term plans. The insurance firms provide lower premium rates for nonsmokers, and females live as a token of remembrance for a “normal life” with no adverse risk.
It is crucial to evaluate your financial demands and select a suitable amount of term insurance. Knowing the fundamental characteristics of a term plan can enable you to choose the ideal product based on your needs, finances, and budget.
The finest financial choice is to knowwhat is term insurance and purchase a plan early in life. This may allow you to achieve larger financial goals andkeep you worry-free for the rest of your life. Always err on the side of caution.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.