Last Updated on November 24, 2023 by Asfa Rasheed
Life is unpredictable and thus life insurance becomes a critical financial option that assists people in managing their families’ financial security when they pass away. A small fraction of the population is aware of the terminology “Life insurance or Term insurance”, despite of it being one of the important financial concerns and security. Purchasing an affordable term plan from a reputable insurer is the only way to safeguard your family against your sudden demise, medical costs, inflammation, etc. However, only after conducting thorough research can we choose the ideal term plan from among the various insurance options.
Here, learn about how Term Insurance is the first step towards a secure future and much more to prevent choosing the wrong plan.
Table of Contents
What is Term insurance?
Term Insurance comes under the category of one of the least expensive kinds of life insurance. If the insured individual dies, it provides financial security through a life insurance policy to the nominee designated in the term plan. However, the total sum assured within a prescribed term insurance policy can only be obtained if the policyholder makes payments to the life insurance company in exchange.
- The policy term (a set amount of time) determines the validity of the life insurance coverage prescribed in the term plan (Eligibility of life cover up to the age of hundred years is offered by many insurance companies)
- Therefore, in the case of a standard term plan, if the insured person lives past the policy term-they will not be eligible to receive any returns. But, if the insured individual passes away while the policy is still in effect, the life insurance company will be entitled to pay out the agreed amount mentioned in the term insurance.
- It is up to the nominees to utilise this money to settle debts, cover routine expenditures, or fund their aspirations.
Term Insurance: Working Principle
After determining the term insurance policy and the level of coverage, easily verify the premium chosen online. Here, the cost of the premium is determined by several variables, including an individual’s age, health, personal habits, the amount of coverage, and the length of the coverage. Once can search for term insurance premium calculators online to gauge the average cost and coverage benefits
- Individuals will have the freedom to decide how the family would acquire the “coverage amount” in the event of something were to happen to them (Options such as regular or all at once have been provided to pay the insurance premium)
- The premium for term insurance plans is usually cheaper than other life insurance plans. In addition, the cost of the premium rises with age; the earlier you buy term insurance, the lower the premium you are entitled to pay.
- However, except for the return of premium term plans, they do not provide any insurance benefits to the policyholder at maturity.
Term Insurance – Why it is the first step towards a secure future
Knowing “what a term insurance plan is” will help you fully comprehend what it means for your loved ones. Check out the coverage features and advantages through term insurance premium calculators . The following are some of the main benefits and characteristics of term insurance:
It Provides Future Protection
To better manage your future spending, you should put more effort into establishing your financial goals as an individual before getting married. Once you get married, you must secure your spouse’s and children’s future in unfavourable circumstances. You can make plans for your family with the assistance of term insurance and its various policies, which will greatly enhance your peace of mind. Additionally, they are perfect for covering other costs, such as your children’s education, and provide ways to live comfortably.
It has Option for flexible Pay-outs
The main advantage of securing an affordable term plan is the death benefits paid to the covered person’s family. Even if you choose the most affordable term plan, make sure it offers flexible choices for receiving death benefits. The last thing you want for your family members, particularly after your death, is to make them jump from a successful claim to another.
It Provides Great Returns
Term plans also accommodate everyone’s needs since the payout is often far more than the amount invested. Term insurance gives higher returns without the hassle of having to maintain investment money. It provides regular and TROP plans and an advantage of up to 105 percent return on premiums paid at maturity.
It Offers Riders
For a small additional fee, insurance providers offer riders the opportunity to make the term policy comprehensive. This boosts the overall policy coverage while also saving money. Accidental death benefits, accidental disability benefits, serious illness cover, critical illness benefits, etc., are a few of the more well-known riders.
An Affordable Term Plan
The best action would be to purchase term insurance online since it saves time and money. Many businesses provide substantial discounts on programs, enabling you to save costs drastically. Additionally, it’s simple to compare them to assist you in choosing a plan that fits your demands and budget. Purchase a plan with a high insured amount to provide your family with additional coverage while you are away. It will be ideal to consider inflation when purchasing a policy online.
It reduces Tax Burden
Under Section 80C of the Income Tax Act, annual premiums paid toward a term plan are eligible for tax deductions. Tax exemptions on the death benefit that the nominee receives from the plan is covered under Section 10(10D).
Tips Before Purchasing the Affordable Term Plan under Term insurance
- Always cross-check the insurance company’s claim settlement ratio.
- Purchase Term insurance at a very early age.
- Compare and then purchase an affordable term plan online.
Term plans normally offer the highest levels of life insurance coverage at the lowest premium costs. In addition to covering regular expenses, you must achieve high protection and begin investing. You have more savings available for investments because of the cheap premiums, which can last for 25 to 30 years securing all the loved ones.