Why you need to invest in a Term Insurance Plan?

Insurance plans are only effective when they are tailored to suit the needs of a family. An insurance policy will provide cover in the event of the death of the policyholder; people invest in insurance for this very reason. But if you need to make sure that your insurance amount is sufficient enough to see your family through tough times, you need to take various factors into consideration before opting for an insurance policy. They are the current income of your family, your loans if any, your expenses etc. But at the same time you also need to consider what type of life insurance you want to invest in.

Term insurance is the simplest and also cost effective. In case of the death of the policyholder, the nominee receives a lump sum payment from the insurer. If the policyholder outlives the policy, he/she receives no benefit. But on the other hand the premium for term insurance is minimal. Hence opinion about this type of insurance is torn.

But term insurance does have some unique benefits of its own. Here are some of them.

1.      Simplicity: Term life insurance plans are straightforward. Unlike other insurance plans this type of insurance is simple and easy to understand even for the layman. This makes it easier for the policyholder to make proper, timely premium payments.

2.      Flexible: Opting out of a term life policy is much easier than getting out of other policies. In term policies if you stop paying premium the risk cover ceases and the policy ends. Nothing is payable to you as there is no savings element in the policy.  

Renewable: Many term life insurance policies are "renewable" and "convertible." Renewability ensures that you can go in for another term policy without a medical exam at the end of the first term policy. Convertibility allows you to convert your term life policy into an endowment policy for the same sum assured with associated increase in premium, should this make sense during the term of the policy.

Benefits of Term Life Insurance

Term insurance is insurance that is valid for a specific period of time and offers death benefit to the nominee in the event of the death of the insured. The premium for term insurance is low and is often the only factor that drives people to opt for term insurance.

Permanent life insurance, is exactly as the name suggests, insurance that covers you throughout your life. Premium for this type of life insurance is higher than that in term life insurance. There is death benefit that is exempted from any taxes.

Insurance is one of the best tax saving investments and for most people it is the first investment they make. But the choice between permanent life insurance and term insurance is difficult. Here are some of the benefits of term life insurance that may help you to make a better decision.

Some term insurance plans do come with maturity benefits, unlike traditional term insurance that don’t have any maturity benefits. These are called TROP. A Term Return of Premium plan provides income replacement and refunds the premiums at maturity, apart from offering all benefits of a traditional term life insurance plan. A TROP plan is a variant of pure term insurance plan and ensures maturity benefits, if the policyholder survives till the end of policy tenure.

A policyholder can enjoy tax benefits over the premiums paid for term life insurance plans with maturity benefits. The premiums paid and the amount received are exempted from income tax assessment under section 80C and 10 (10D) of the Indian Income Tax Act, 1961. Term life insurance plans with maturity benefits also offer additional term riders such as Critical Illness and Accidental Death or Disability riders.

Opting out of a term life policy is much easier than getting out of permanent life insurance policies. In term policies if you stop paying the premium the risk cover ceases and the policy ends. Nothing is payable to you as there is no savings element in the policy. However, permanent life insurance policies only give the full promised survival benefit if they are held for the full tenure of the policy. If you stop paying premiums mid-term you face a financial loss.

Get a Lower Premium at early Age with Term Insurance

The importance of insurance cannot be undermined. Insurance today is not only a choice to make. It’s a necessity. It offers the best protection against several elements that may cause you or your family to suffer.

Right from life insurance, endowment policies, medical insurance, term policy, and more, we have a wide range of products available in the market to help us secure our interests.

With a fast growing insurance sector, we have several products offered by insurance companies to help meet our needs. We can efficiently have our policies custom-planned.

There are insurance policies where you are provided with coverage for the set tenure and also includes an investment component (ex. ULIPs). All you have to do is consider your present and future lifestyle and requirements that may arise in the long term and make plans that should include not only savings, investments but also quality insurance for you and your family.

What is a term life insurance? A type of life insurance, term insurance is the coverage that can be availed for a pre-decided tenure. Such policy has pros and cons of it own. However, it is one of the most sought after life insurances for a range of factors. Some of them are:

1.      Term insurance is one of the most affordable types of insurances. This is what makes it popular among masses.

2.      The EMI is cheap thanks to its affordability. This puts less pressure on the income unlike whole life insurance which is expensive.

3.      You can also have your term insurance converted into whole insurance or endowment policy. This is the flexibility other insurance types may not grant.

4.      It provides death benefit to the beneficiaries in the event that the insured dies - you may choose a lump sum or monthly  payouts. This ensures the financial needs of the family are cared for.

5.      The lump sum can be used to pay off loans or debts as well.

One low point may be that if the term gets completed, there is no payout if the insured is well and hearty. You can either choose to continue the plan and extend the term or get done with the policy.

There are many insurance companies that may provide you with quality term insurance. With some of them, you can have your plan customized. Start with comparing policies offered by companies that you trust. Such sites are easily available on the internet. The minimum entry age to avail term insurance is mostly 18 years and the maximum is anything between 55-60 years. Tenure range is between 5 to 25 years offered by different insurance companies. 

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