A life insurance policy is of great importance in the financial safety of a family. Life could get tough and unpredictable and if a family lose an earning member, things could get difficult to handle for them. If you have a life insurance, then your family is compensated and financially protected even in such a dire situation.
One of the most popular options among life insurance is term life insurance. But you must understand what the product is all about. Let’s discuss that in this article.
What is term life insurance?
Term insurance is a form of life insurance and is also called as the purest form of life insurance. To put it in simpler terms, in the case of the demise of the policy holder, a sum is paid to the policy holder’s family by the insurance company. Unlike regular life insurance, these are more affordable, but your insurance will get lapsed at the maturity date if you survive the term and there will not be any monetary maturity benefits. You even have the option of buying a term plan online.
Term insurance policies come with a lot of advantages, let’s go through some of them.
Term insurance benefits
- They are affordable – A life insurance is considered to be the most economical insurance policy you can buy. Among life insurance, term insurance plans are the most affordable. It is so affordable that if you are under the age of 25, you could find term life plans with Rs.1 crore insured sum for just below Rs.500 per month. This is because there is no investment here. Unlike in traditional life insurance, the money you invested will get lapsed at the end of the maturity period if the policyholder survives the term of the policy.
This affordability makes it easier for anyone to make sure their family is protected and thus it is considered one of the best things about term life insurance.
They are simple and straightforward – A term insurance is not only the most affordable, it is also the simplest as well. There are only three components to worry about when it comes to a term life insurance
- The insured sum
- Term insurance premium
All these are correlated as well. Higher the insured sum and tenure, higher the premium and vice-versa. It’s that simple.
- Higher coverage – Due to the lack of investment options, term life insurance tends to have much higher coverage. Like said above, if you are under 25, you could find term plans with Rs.1 crore insured sum for just below Rs.500 per month.
- They are flexible – Term life insurance comes with a lot of riders or add-ons. These add-ons can be added to customise the plan the way you like. Some of the common term plan riders are –
- Waiver of premium rider –
A waiver of premium rider waives the premium payments if the policyholder has some serious medical conditions which render him/her unfit to pay the premiums.
- Guaranteed insurability rider –
A guaranteed insurability rider lets you increase the coverage on your life insurance policy without any medical exam. A policy with this kind of rider has a higher premium associated with it.
- Accidental death rider –
An accidental death benefit rider provides an extension on your life insurance benefits to include an additional payout. This payout is given out in the case of the policy holder’s untimely demise as the result of an accident or within 90 days of that accident. It is necessary that the accident should be covered in the rider’s terms.
- Long-term care rider –
This rider allows you to take a portion of the death benefit every month to pay for any long-term medical care needed.
- It’s easy to purchase –Owing to its simplicity, you can buy online term plan in a few steps through a paperless process. You can also use insurance company websites to compare plans and choose a plan with the term insurance benefits you want.
Now, let’s take a look at some of the disadvantages
- No savings or investment options – Unlike regular life insurance, term insurance have no savings or investment options. Your money will get lapsed at maturity if you survive the policy period.
- Premiums increase with age – In term insurance, premiums tend to increase with age. If you are over the age of 50, term insurance could get really expensive.
Even with a few limitations, a term insurance policy is valuable and its ability to protect a family is unquestionable. If you are planning to buy one, you can easily buy online term plan from any insurance provider website. You can also use tools like the term plan premium calculator that will help you with the math.