Ever wonder what your family will do if something happens to you? Will they be taken care of, and who will handle their monthly expenses?
Without thorough insurance planning, you or your family can be financially exposed to uncertain life events. However, with proper planning and the right insurance plan, you can look after your family, even when you are not around anymore. Proper planning helps identify critical risks that may impact your life and choose the policies that cover those risks.
One such type of policy is the life insurance term plan that provides financial support to the family after the unfortunate demise of the policyholder.
What is a Life Insurance Term Plan?
A life insurance term plan is a policy that provides financial protection to the family in case of the unfortunate death of the policyholder. It is a contract between the insured and the insurance company for a defined period, with a monthly premium paid each month for that specific time.
A life insurance term plan is the purest form of insurance as it offers the most affordable premium rates. The term policy pays out a tax-free lump sum to a beneficiary upon the insured’s death. You can select the time or term of coverage while buying a term insurance policy that fits your needs.
How is Life Insurance Term Plan Different from Other Types of Life Insurance?
Now that there are different types of life insurances, let’s see how the one we are discussing is different than the rest.
Term Insurance Vs. Life Insurance: Policy Coverage
Life insurance term plan provides financial security to the family in case of the demise of the insured, offering death benefit in the multiple pay-out options. Whereas life insurance provides both death benefits and maturity benefits to the policyholder. There are various life insurance plans, including whole life insurance, child, endowment, and pension plans you can choose.
Term Insurance Vs. Life Insurance: Premium Cost
The term insurance offers zero maturity benefits. Hence, the premium cost of the term plans is lower. On the contrary, life insurance charges a higher premium rate.
Term Insurance Vs. Life Insurance: Maturity Benefits
As mentioned earlier, basic term plans offer zero maturity benefits. However, a maturity or survival benefit is provided to the life assured in term insurance with return of premium (TROP); if they survive the policy period. In life insurance, the maturity benefit is provided as a total sum assured to the policyholder if they survive the policy tenure.
Is Term Life Insurance Plan Better Than Other Insurance Plans?
Term insurance plans are the simplest and most cost-effective ways to secure your family’s future. Nevertheless, you can always select life insurance according to your requirements and budget.
Here are several crucial points that should be kept in mind before buying a term plan:
Factors to be Considered Before Buying the Plan
1. Duration of Policy Coverage
Life insurance term plans are designed for a specific period. Hence, it is crucial to consider your age when buying your term plan. It is advisable that you choose a longer term period if you buy the policy at a younger age.
2. Calculate the Insurance Amount Required
It is essential to consider your age and financial responsibilities when determining the amount for your insurance plan. Additionally, you can analyse your family’s lifestyle and financial needs in the future to determine the right coverage.
3. Choosing the Right Insurer
Nowadays, multiple companies are offering various insurance plans, and it is vital to choose the right insurance plan for you. A background check of the insurer’s financial background and claim settlement is advisable. Learn more about the insurance partner’s market reputation and customer support ratings before you make a decision.
Factors Considered While Buying the Plan
The primary factors affecting the premium cost of your life insurance term plan are your age, gender, and health. The medical history of you and your family also takes part in this. Your occupation, BMI index, lifestyle, smoking, and drinking habits also affect the premium cost.
Is it Advisable to Buy an Insurance Plan in India?
In India, many companies offer multiple insurance plans with high-resolution rates, so choosing one is challenging. Also, as India has topped the population table with 1.4 billion, opting for insurance to look after you and your family in hard times is essential.
So, what are you waiting for? Buy insurance for you and your loved ones now!
Also read: Tips to Help a Minor Get a Quality Auto Insurance Plan