cioreviewindia Team | Friday, 16 July 2021, 05:16 IST
Life can be uncertain and unpredictable. You are surrounded by all kinds of risks, including disability, disease, and death. When you are met with such risks, you can leave behind a world of pain for your loved ones as well as a financial gap. Therefore, it is important to plan for these eventualities with the help of a term insurance plan that will help you secure your family’s financial interests, even in your absence.
The best term insurance plan provides your loved ones with comprehensive coverage at a low premium that you can easily afford through the years. But what is term insurance plan, and how does it help you achieve that objective?
A term insurance plan is a pure life insurance policy that gives death benefit to the policy beneficiary in the event of the policyholder’s death.
Here are some features of a term plan that makes it a necessary addition to your investment portfolio.
The most attractive feature of a term policy is its affordability. These plans are designed in such a way that they provide expansive coverage with a sum assured for a specific tenure at very low prices. In case the insured person passes within that duration, the insurance company will deliver the death benefit to the policy nominee as promised.
However, there is no maturity benefit payable if the policyholder survives the term. It is the simplicity of the plan that makes it such an affordable option as the insurers are only required to pay the death claim.
As is with everything else these days, it is possible to buy a term plan online with ease. Thanks to online tools, such as the term insurance calculator, it has become incredibly easy to find the right policy and invest in it from the comforts of your home.
A term plan calculator takes all the pertinent details related to your health, medical, and occupation into consideration to calculate the appropriate sum assured. Moreover, when you buy your term insurance plan online, you can also save on the premium costs as they may be relatively lower.
If you are worried about losing the amount paid in premiums in case you outlive the policy term, you can opt for term insurance with a return on premium. It offers maturity benefit at the end of the policy term equal to the premiums you paid throughout the policy period. Such plans are relatively more expensive, but they give you a dual benefit of death and maturity benefit, whichever happens first.
Term plans come with a lumpsum benefit that is offered to the nominee in case of policyholder’s death. However, for some people, managing this huge amount can be a challenge as the death claim money may not be used appropriately. To overcome this risk, the policyholder can choose another payout method where the partial claim amount is paid as a lump sum, and the remaining amount is paid monthly or yearly.
The family members can use this partial amount to overcome a financial backlog that may have been created due to the policy holder’s sudden demise and loss of income. At the same time, some insurers may allow nominees to take the entire sum in one go, even if the insured person opted for a different payout option at the time of buying the policy.
Term plans offer the insured person flexibility to pay their premiums monthly, annually, semi-annually, and quarterly. This helps an insured person to choose the best payment method that is suitable to their budget.
Life insurance companies offer discounts and rebates if you choose a higher sum assured for your term policy. At the same time, non-smokers and women also get special discounts on premiums for being relatively low-risk to the insurance provider.
Keeping all of this in mind, you can calculate a suitable sum assured for your term insurance plan. An underestimation of the cover amount will defeat the purpose of buying insurance, and over-insurance will make it financially unfeasible to sustain over a long period of time.
Hence, make sure you educate yourself about the basic features of a term insurance plan, so you are able to buy the best plan as per your budget and financial objectives. Besides, when you buy term plans at an early age, you can leverage the benefits of low-cost premium and the longest possible policy duration.
When you are looking to buy a life insurance policy, be sure to check out websites of reliable insurance providers, such as Max Life Insurance, and use the available online tools to compare policies. Doing so will help you take an objective decision after carefully assessing the plan benefits, features, and cost of the premium. Since it is a long-term commitment, it is advisable to educate yourself about these things before investing.
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