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.